Probate: Formal Administration

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In Florida, formal administration of probate must adhere to strict guidelines to ensure the correct distribution of a decedent’s assets. Formal administration can be lengthy, and laws are complex.

Disputes between family members and creditor claims may make the process even more stressful for the person handling affairs. The lawyers at the Lopez Law Group are ready to take on the burden to see you through an already difficult time.

What is Probate?

In Florida, probate is a court-supervised process determining a will’s validity and how a decedent’s assets will be distributed. Probate ensures the will is thoroughly examined so that the decedent’s wishes are upheld. Probate is not necessary in every case. Probate law only applies to assets an individual owned at their time of death of which another party cannot dispose.

What is Formal Administration?

Formal administration is Florida’s most common form of probate. It is generally used when an estate does not qualify for summary administration or another alternative.

Formal administration of probate begins with a petition to open the deceased’s estate. A personal representative (PR), usually a family member, is then appointed to administer the estate. The PR is responsible for collecting and distributing the decedent’s assets, settling creditor debts, and paying the decedent’s final bills and taxes. In formal administration probate, a judge must appoint the PR. It is not enough for an individual to be designated PR in the decedent’s will.

Being the PR of an estate is a huge responsibility, and there are regulations in place to prevent any wrongdoing on the PR’s behalf. Personal representatives usually have to post a bond or put the assets into a restricted depository account. A restricted depository is a bank account whose funds can only be withdrawn by court order. Both bonds and depository funds act as a deterrent for any intentional maladministration of assets.

What Are a PR’s Duties?

A PR’s duties can include but are not limited to:

  • Notifying Creditors and Beneficiaries. Under Florida law, the PR must send a Notice of Administration document to a surviving spouse and any estate beneficiaries to alert them that the administration has begun. The Notice of Administration must advise the spouse and beneficiaries of their rights and any stipulations they must meet.
    • Likewise, the PR is responsible for providing any known creditors with a Notice of Administration that includes information about the estate as soon as possible. They should notify creditors of their right to file claims in the probate case and inform them that they must file a claim within three months of the notice’s publication for it to be valid.
  • Collecting Assets. The PR is in charge of collecting and managing all of the decedent’s assets before distribution. They must also create an inventory of the decedent’s assets to be filed within 60 days of issuing administration notices. The inventory should outline each of the assets in detail, including market value.
  • Collecting Debts. The PR must collect all outstanding debt repayments owed to the deceased, including from debtors who refuse to pay.
  • Investing and Maintaining Assets. The PR may invest estate funds but must act in the estate’s best interest. The PR also has the right to borrow money, pay taxes, employ professionals, and negotiate with third parties.
  • Processing Creditor Claims. Creditor claims must be paid within one year of the administration notice. The PR is responsible for processing claims and any objections to creditor claims.

When Should You Use Formal Administration?

Formal administration can apply to any estate and is necessary in some cases. Estates with multiple creditors usually require formal administration. Similarly, complex estates that may be subject to litigation, contract issues, and mortgage negotiations will require formal administration.

Formal administration is generally required when an estate’s owner has been deceased for less than two years or when the probate estate’s value exceeds $75,000.

Note that the probate estate value differs from the gross estate’s value. A gross estate encompasses all of an individual’s assets, including partially owned assets. A probate estate includes only assets solely owned by an individual, such as:

  • A bank account or investment account solely in the decedent’s name
  • A retirement account with no beneficiaries or a life insurance policy payable to the decedent’s estate
  • Property in the decedent’s name or their name with other persons named as tenants; this does not apply if the property is a homestead.

Probate does not include assets held in a revocable trust. Nor does it include any jointly-owned property or property with a designated beneficiary. Therefore, it’s possible for an individual with a high net worth to have no probate estate at all, depending on where their assets are sitting.

If you are unsure whether to use formal probate administration, consult an attorney. We can advise you on the appropriate steps to take to uphold your loved one’s desires and avoid unnecessary litigation.

How Long Does Formal Probate Administration Take?

The more complex the estate is, the longer it will take to distribute appropriately. Probate can take anywhere from a few months to several years. Naturally, any litigation in the case will lengthen the probate process.

Do I Need an Attorney to Help Me with Formal Probate Administration?

In Florida, you must hire an attorney to be able to begin formal probate administration. As a PR of an estate can only be appointed by a judge, they must be represented by an attorney. Once you’ve hired a probate attorney, you can file a petition for administration with the appropriate Florida probate court.

Closing the Probate Estate

A probate estate can be closed once the following circumstances are met:

  • The timeframe for creditors to submit claims has expired.
  • All creditor claims and administration expenses have been paid.
  • All taxes have been paid, and any tax returns have been filed.
  • All of the decedent’s assets are ready for distribution.

Your attorney must file a petition with the court to notify the judge that all necessary preparations are met to close the estate. Once the judge feels satisfied that all requirements are met, they will sign an Order of Discharge, releasing the PR from their duties.

However, the PR has one final task in producing an account of all the steps taken in administering the estate. The accounting must include transaction receipts and any income or disbursements.

If you wish to accelerate the process, you can avoid accounting by having all beneficiaries sign waivers and consent forms. Florida law allows any interested parties to sign waivers and consents to eliminate certain procedures, including accounting.

How Can an Attorney Help with the Probate Process?

For the most part, an attorney represents the PR in court during formal probate administration. How much additional help you seek out from an attorney is up to you. You may choose to take on the lion’s share of the work, including drawing up probate papers, acquiring asset appraisals, and filing the decedent’s income tax returns, but know that it can cause undue stress in your life. If you have the option, it’s always best to have your attorney help you as much as possible. This way, you’ll be less stressed throughout the process, and it’s less likely that an important detail will be overlooked.

Probate can get complicated, and disputes between family members are common. Trying to settle a dispute on your own often leads nowhere. A third party with no vested interest in the debate, such as an attorney, can help mediate disputes with better results.

What Happens if a Person Dies Intestate?

When a person dies without a valid will, it’s known as dying intestate. Florida has specific requirements for executing a will properly, as outlined in Florida Statute §732.502. If a will does not meet the conditions, it can be deemed invalid, and intestacy laws then apply. When a person dies intestate, their assets are handed over to a probate court. The court then dictates how and to whom assets are distributed.

Is it Possible to avoid Formal Administration Probate?

As mentioned, probate only applies to assets within the probate estate, so if a decedent’s assets are held somewhere else, probate won’t be necessary.

A common way to circumvent the probate process is to store assets in a trust. Trusts do not need to go through the probate court process to be considered valid. Trusts also offer the decedent more control over where their assets end up when they pass, which is especially important if the beneficiary is a minor or someone who is liable to spend the inheritance unfavorably.

A trust allows the grantor to decide when and under what circumstances the beneficiary will receive their inheritance. It also allows a parent to designate a legal guardian to take care of a minor in the event of their death.

Trusts are essential for beneficiaries who are mentally or physically disabled. Leaving a large inheritance to a beneficiary with a disability can bar them from qualifying for Supplemental Security Income (SSI) and Medicaid benefits. One way to avoid this is to put assets into a special needs trust. Special needs trusts are specially designed to allow the beneficiary to continue receiving benefits—the assets in the trust act as a supplement to those benefits rather than a means of living.

What Does a Special Needs Trust Typically Include?

Special needs trusts enrich the lives of disabled individuals by offering provisions in addition to government benefits. Special needs trusts are specially regulated so that the beneficiary may not spend funds on any goods or services already covered under government assistance.

A special needs trust typically supplements government benefits by offering the individual access to the following:

  • Personal grooming
  • Clothing and dry cleaning services
  • Electronics such as laptops and televisions
  • Musical instruments
  • Companionship
  • Housekeeping and cooking assistance
  • Medical insurance, therapies, and equipment

What is the Difference Between a Third-party Special Needs Trust and a Self-settled Special Needs Trust?

A third-party special needs trust is created by someone other than the beneficiary, usually a family member. In contrast, the beneficiary establishes a self-settled special needs trust. In a third-party trust, someone other than the beneficiary contributes the assets. Parents or grandparents usually establish third-party special needs trusts as part of their overall estate plan.

Both types of trust exist to maintain a disabled individual’s eligibility for government benefits. However, self-settled trusts are generally created by an individual who has just received a significant asset in their name to avoid disqualifying them from Medicaid assistance.

Florida Probate Attorneys

If you have been left with an estate that requires formal administration, you will need an experienced attorney by your side. The attorneys at the Lopez Law Group have years of experience navigating probate procedures. Our attorneys are ready to represent you and help see you through the probate process as smoothly as possible. Call us today at 727-933-0015 for a free case review.

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