If a homestead property is not a probate asset, why does it have to go through probate?

Great question.

If mom’s house was truly her homestead over the last few decades, you wouldn’t be wrong to assume that it was considered her homestead when she passed.  She was granted a homestead tax exemption on the property and she didn’t own any other real estate anywhere else in the world.

So you’re probably correct, it’s her homestead!

BUT…

In the probate world, there’s a concept known as “homestead determination for the purposes of descent and devise”.

What this means is that a probate court must determine (think “declare”) the property as a homestead property in order to release it from the stranglehold of the probate court.

In a nutshell, to inherit or take title to mom’s homestead, the proper procedure is to open probate, have the judge determine the property to truly be a homestead property “for the purposes of descent and devise”, and THEN, it’s yours.

One other benefit from going through this process is that it protects the transfer of the homestead property to the heirs or beneficiaries from claims of creditors.  In effect, by officially determining the property to be a homestead, the court is exempting the property from any debts against the estate.  (Not including the mortgage or taxes owed.)

There seems to be more confusion these days regarding the costs (expenses) associated with a probate administration in Florida. Let me try to clear things up:

Attorneys fees are determined by whatever agreement you have made with your attorney. These fees are compensation for the attorneys and law firm staff who are working on your case.

Costs (expenses) on the other hand, are characterized as those items that you must pay for towards the filing or proper administration of your case.

Note: these are not monies collected for the attorney or law firm.

Items such as:

• Clerk’s filing fees – typically $345-$400
• Notice to Creditor publication fees – typically $100-200
• Miscellaneous costs such as postage, recording & certification – varies but typically <$100
• Personal Representative’s Bond: court imposed insurance to preserve the integrity of the administration process – Varies based on value of the estate assets and court’s discretion

Again, these costs are in addition to attorney’s fees and are standard in nearly all probate cases with some exceptions.

Nearly 5 years ago, I wrote an article about what to do when you can’t find the Will of the decedent.

Recently, Lifehacker revived the Wall Street Journal‘s handy article reminding us that we all ought to revisit where and how we store important documents for easy access and peace of mind.

I’ve never been a big advocate for storing client’s estate planning documents (Last Wills, Living Trusts, etc…) simply because there is too much potential liability.  Unfortunately, I’ve never had any foolproof ideas for securely storing sensitive documents and data either.

Safe deposit boxes seem to be an obvious option, but in Florida, a court order is usually required to access an SDB by anyone other than the lessor/owner of the SDB.

So if you’re going to keep your documents at home, check out the link for some document storage inspiration.

• Gather These Twenty-Five Documents You Need Before You Die | Lifehacker

Happy New Year!!

Who should care?

If there is no Will, then surviving spouses or children of the decedent.

What is the effect of the revised statute?

Florida Statute 732.102:

732.102 – Spouse’s share of intestate estate. —The intestate share of the surviving spouse is:

1. If there is no surviving descendant of the decedent, the entire intestate estate.
2. If the decedent is survived by one or more descendants, all of whom are also descendants of the surviving spouse, and the surviving spouse has no other descendant, the entire intestate estate.
3. If there are one or more surviving descendants of the decedent who are not lineal descendants of the surviving spouse, one-half of the intestate estate.
4. If there are one or more surviving descendants of the decedent, all of whom are also descendants of the surviving spouse, and the surviving spouse has one or more descendants who are not descendants of the decedent, one-half of the intestate estate.

For example:

Jack and Jill are married. They have 2 kids together and no other children outside of their marriage. Jack dies with no Last Will and Testament.

Under the old law:

Jill was entitled to the first $60,000 plus one-half of the remaining assets.

Under the new law:

Jill inherits all of the remaining assets.*

*Note: 732.102 does not modify or have any direct effect on the passing of a decedent’s homestead property, that is, the decedent’s principal residence. Homestead descent and devise is not controlled by this new law and falls under its own set of rules.

Florida Probate Question of the Day:

How do I file a Claim against an Estate & How do I even know if the Estate is opened?

A claim is a one page document that called a “statement of claim” – you should be able to find a sample online.  Google “statement of claim florida probate” and see what you get.  You might also be able to secure a copy from the county clerk’s office (the county in which the person resided when they died.)

However, if the decedent’s estate is not OPENED, then you can’t file a claim unless you’re willing to start the probate yourself (which you can do because a creditor is an “interested party” who has the right to at least initiate probate proceedings.)  You will likely need an attorney to open up the estate if that’s the case.

If you choose not to file the claim because the estate is not yet opened, then you could file a “caveat” which basically instructs the clerk to notify you if the person’s estate is ever opened.  There may be a cost involved to file a caveat so check the clerk’s office.

To find out if the estate is already opened in a Florida probate court, call the clerks’ office in the county where the person resided when they died.  Ask for the probate division – they will let you know if the estate is open and may also discuss the filing of a claim or a caveat.

Note:  If you do not file your claim within 2 years from date of death, your claim will likely be forever barred and you won’t be able to collect.

Image credit:  Images_of_Money

MUST READ:

Letters of Administration (LOA’s) are court orders.

• They are issued as PART of a FORMAL ADMINISTRATION of the estate (Probate)
  
• The court clerk will not simply give you an LOA.
  
• The only way to receive LOA’s is to start formal administration.
• The court will issue the LOA’s after a completely probate pleadings/petitions package is submitted by your attorney.
  

Now that you’re clear on what LOA’s are…

Way back in April of 2009, I wrote about the common mistake that banks make when they think they need Letters of Administration to release funds.

This hasn’t changed but I think it’s time I split some hairs to help folks understand when LOA’s are really necessary and when they aren’t.

Let’s approach this on a case by case basis:

1.  Do you need to know how much money is in the account?

If you answered YES, you won’t get that answer from the bank unless you provide LOA’s.   The bank can stay tight lipped until you present them with LOA’s showing that they have the authority to discuss the account with you.  Sometimes, you can sweet talk a bank rep into releasing a bit of information to you, but they are well within their rights (and corporate policies) to clam up if you don’t have LOA’s

2.  Do you need access to a Safe Deposit Box?

LOA’s can give you access to a Safe Deposit Box but you could also simply file a petition the court for an order to open the safe deposit box.  The problem with a simple order to open the box is that you won’t be able to remove any contents from the box and take them with you.  You would only be allowed to take an inventory of the box.  So if you find a bunch of cash in the box, you must leave the money in there until you actually have a court order distributing the cash to the intended heirs.

3.  Do you just want the account liquidated directly to the heirs?

If you answered YES, then you don’t need LOA’s.  An Order from a summary administration of the estate will suffice.  Note that summary administration IS a form of probate administration, albeit much less expensive, quicker and a more deliberate process.

4.  What if the bank is actually a brokeragefirm holding investment positions such as stocks, mutual funds, etc.?

This is a bit tricky.  Let’s say the decedent had a brokerage account at a fictitious firm we’ll call Morgan Schwabb.  The account holds several stock investments which have not been liquidated.  In this case, securing LOA’s are the way to go because you need the authority under the LOA’s to order the closing of those stock positions.  In other words, if you want to sell all of the decedent’s stock in GOOGLE, you must be the authorized personal representative with LOA’s in order to make that call.

Still unsure if you need Letters of Administration?  Fill out my contact form and we’ll chat about it!

Florida Probate Question of the Day:

Do I have to immediately share copies of the Will with the family?

Answer:

No, at least not directly.

State law requires that you “deposit the Will for safekeeping” with the clerk of courts within 10 days of learning that the decedent has died.

Florida Statutes say:

Here’s the typical policy of any probate court describing the applicable Florida Statute:

Pursuant to Florida Statute 732.901, the original Last Will and Testament of a deceased person must be deposited with the Clerk of the Circuit Court having venue of the estate of the decedent within 10 days after receiving information that the testator (a person who dies leaving a will) is dead. The statute also states that the custodian of the will must supply the clerk with the date of death or social security number of the testator upon deposit. Our office also requires that a death certificate be filed with the original will. Please be advised that there is no charge or filing fee to deposit a will with our office.

(credit:  Brevard County Clerk of Courts)

Bottom Line:

You should deposit the Will with the clerk.  It will then become public record and anyone (including the family) may secure a copy for a small fee.

Editor’s Notes:

1.  The mere act of depositing the Will for safekeeping does not actually begin a probate proceeding.

2.  If you refuse to deposit the Will within the time prescribed, any interested party can open the probate and compel you to do so by petitioning the court.

3.  Once a probate is opened, it is exposed to the potential claims of creditors.

4.  If the Will has not been “admitted to probate” by court order in an actual probate proceeding, then you are NOT the personal representative/executor and you have no authority to act on any assets of the estate yet.

Probate can be affordable and efficient if all parties act cooperatively.

You’ve got the original Last Will and Testament and it declares you as the Personal Representative (or Executor, Administrator).

You were the “chosen one”, right?

It says that so it must be so!  Right?

Wrong.

When a person drafts a Will, they are nominating someone to act as Personal Representative (PR), Executor or Administrator of the estate.

Until a probate judge officially admits the Will to probate and subsequently appoints you as the personal representative, you have ZERO authority to act on behalf of the estate.

When someone starts asking you for items such as “Letters of Administration” or “Letters Testamentary”, they are asking for proof that the person who claims to be the PR, actually has authority and proof.

On the other  hand, there are many times that a PR doesn’t even need to be appointed – summary administration for example!

Oh and one other thing.  Convicted felons need not apply.  Even if you are nominated in the Will, you are ineligible to act as PR.

Florida Probate Question of the Day:

My mom, thankfully still alive at age 85, has informed my sister and I that under the terms of her will, we split everything 50-50. There are no other heirs. Mom’s greatest asset is her house, which she owns free and clear (no mortgage). If my sister and I won’t consent to sell it, can I sell my interest in it?

Allow me to make a few assumptions before responding:

1.  The Will either specifically devises the homestead to you and your sister; OR

2.  The Will makes no specific reference to the homestead but has a “residuary” clause which generally leaves all property to you and your sister; AND

3.  The Will does not specifically instruct the Personal Representative to sell the homestead and distribute the proceeds.

(If the Will does specifically instruct the Personal Representative to sell the homestead and split the proceeds, then your question is moot.)

Otherwise, without the consent of all heirs, there is no specific mechanism in Florida probate law to simply sell an heir’s fractional interest in homestead property.

Homestead Property and the Probate Process

You may hear from time to time that a Homestead is a non-probate asset.  While this is legally accurate, if there is no surviving spouse, transfer of the homestead property will require an order from a probate court.

1. You and your sister will need to probate your mother’s Will to transfer title to the property after her death (unless she transfers the property during her lifetime.)

2. Once you and your sister receive title from the probate court (likely via a “Hometead Determination Order”), it is no longer the probate court’s concern. In other words, what you and your sister decide to do with the property is completely up to you two.

3. If you want to sell and she does not want to buy you out, the only option would be to pursue a “partition” action wherein a judge will eventually force you two to sell the property and split the proceeds.

Tenants in common hold an “undivided” interest in the property.

Typically, when you inherit property with other heirs, you own the property as “tenants in common”.

This means each tenant has full access to the property even then only own a percentage. It is difficult for each tenant in common to sell to a 3rd party – buyers usually shy away. So again, a partition action is probably your only recourse if your sister won’t buy you out and otherwise refuses to sell.

Closing Points

The short answer is yes (with exceptions!)  All heirs will likely need to consent in order to sell the homestead property.  Note that the assumptions upon which I have based this response are born from the overwhelming number of “form” Wills and “online” Wills that I’ve seen (yet another reason to consider having an attorney custom prepare your Will!)  Remember, one size does not fit all.