Alternatives to Formal Probate
The purpose behind probate, as described above, is to collect a deceased person’s assets, pay his or her claims, taxes, and administrative fees, and distribute what is left of the assets to the beneficiaries entitled to them. An executive, or a representative of the deceased, is appointed by the court to pay any outstanding claims or taxes and distribute the remaining assets according to the will. If a person passes without establishing a will, the executor distributes the remaining assets in fixed percentages to the heirs, per Florida state law.
The executor, appointed by the court, is required to take possession of all property left by the deceased, regardless of where it is located. The Florida personal representative (or executor) is also responsible for administering the deceased’s real property in Florida, with the exception of the deceased’s homestead. Because the Florida courts have no authority over real property in other states, the executor appointed in Florida has no authority to manage or administer that property. Because of this, the beneficiaries of the real property in another state must request that a court in that state appoint an executor to manage the real property. This process is known as an ancillary administration.
For creditors to collect, a claim must be filed against the estate of the deceased in the probate hearing. This must occur either 3 months after a notice to creditors was first published, or 30 days after the executor notifies a known creditor, whichever is longer.
The executor is given the authority to represent the interests of all persons affected by the estate proceeding. Furthermore, it is also the executors responsibility to collect the deceased’s assets to pay the creditors, not just the beneficiaries.
Personal Representative’s Compensation
A personal representative, or executor, is compensated from the estate assets for their services. This compensation is earned on a commission basis, dependent on the value of the probate estate, and any income those assets earn. The commission is calculated as follows:
- At the rate of 3 percent for the first $1 million
- At the rate of 2.5 percent for all above $1 million and not exceeding $5 million
- At the rate of 2 percent for all above $5 million and not exceeding $10 million
- At the rate of 1.5 percent for all above $10 million
In addition to the standard commission, an executor may be provided with extra compensation for extraordinary services. These services include:
- The sale of real or personal property
- Bringing suit for or against the estate
- Adjusting or paying taxes
- Carrying on the deceased’s business
The court may also adjust all compensation, both ordinary and extraordinary. Before any adjustments to compensation are made, the course must consider these facts:
- The promptness, efficiency, and skill with which the administration was handled by the personal representative
- The responsibilities assumed and the potential liabilities of the personal representative
- Whether the estate benefited or suffered from the personal representative’s services
- Whether the administration of this service was complex or simple
The attorney for the executor is also compensated from the estate assets for his or her services. Florida also has existing law that dictates reasonable compensation for services provided by this attorney. The attorney’s compensation is based on the value of the probate assets and all income earned. Compensation is determined as follows:
- $1,500 for estates having a value of $40,000 or less
- $2250 for estates having a value of more than $40,000 but not exceeding $70,000
- $3000 for estates having a value of more than $70,000 but not exceeding $100,000
- At the rate of 3% for estates having a value of more than $100,000 but not exceeding $1 million
- At the rate of 2.5% for estates having a value of more than $1 million but not exceeding $3 million
- At the rate of 2% for estates having a value of more than $3 million but not exceeding $5 million
- At the rate of 1.5% for estates having a value of more than $5 million but not exceeding $10 million
- At the rate of 1% for estates having a value of more than $10 million
Like the executor, the attorney is also entitled to reasonable compensation for extraordinary services, including:
- The purchase or sale of real property by the executor
- Involvement in a will contest
- Will interpretation
- A proceeding for determination of beneficiaries
- A contested claim
- Apportionment of estate taxes
- Any litigation by or against the estate
The attorney may also collect compensation for preparing the estate’s federal estate tax return. Once the gross estate is determined, and the attorney prepares the tax return, reasonable compensation is calculated. The compensation is determined as follows:
- At the rate of .5% for estates having a value of up to $10 million
- At the rate of .25% for estates having a value of more than $10 million.
All compensation, both ordinary and extraordinary, is subject to adjustment either up or down by the court which considers the same factors as they do when adjusting an executor’s compensation.
Alternatives to Formal Probate
The value of a deceased person’s estate does not always warrant a formal probate administration. Some examples of these instances are as follows:
- Summary Administration. The fair market value of assets that can be subject to a summary administration has recently been increased. A circuit judge has the authority to authorize a summary administration for any estate in which the property subject to probate does not exceed $75,000, and the deceased died after Jan 1, 2002. Summary Administrations can also be ordered to confirm the title for a protected homestead that is being given to a surviving spouse or an heir-at-law. This can be done regardless of the value of the homestead. A protected homestead is described as the intended permanent residence of the deceased at the time of his or her death. A summary administration is also allowed for a protected homestead because creditors have no claim to this real property. If all of the beneficiaries and the surviving spouse submit a petition for a summary administration, the judge has the power to order immediate distribution of this property to the beneficiaries named in the will. However, the judge will not grant a summary administration if the deceased has creditors that the beneficiaries have not agreed to pay. Of course, creditors must adhere to the rules of filing a claim to the assets.
- Disposition without Need of Administration. The Florida statutes allow for the distribution of assets without probate when the value of the nonexempt assets does not exceed the preferred funeral expense of $6,000 plus the reasonable and necessary medical expenses of the last 60 days of the deceased’s life. The judge will review the petition along with the receipts from the paid funeral and medical expenses. If the judge is satisfied with these records, he or she may authorize the payment of the proceeds of the bank accounts to the person who paid those expenses.
- Automobile. If the only property that requires probate is an automobile, the beneficiary named in the deceased’s last will can apply for the Florida Department of Motor Vehicles to issue a new motor vehicle certificate of title in the name of the beneficiary. This application is completed at the county tax collector’s office. The beneficiary must provide the deceased’s copy of the automobile’s title, a sworn copy of the will, and must sign an affidavit that the deceased is not indebted to anyone. If a person dies with no last will and testament, the heir of the deceased can still apply to the DMV for a new certificate of title by using an affidavit that says the estate of the deceased is not indebted, and the surviving spouse and other heirs have amicably agreed to the title transfer.
PLANNING FOR PETS
In addition to tangible property, one’s estate and disability plan can also include instructions for how their pets are to be taken care of if they pass away or become disabled. The pet owner’s durable power of attorney can specify that during the owner’s incapacity, the agent named in the durable power of attorney is authorized to pay the bills required for the care of the pets. The durable power of attorney can also specify the type of care that the pets shall receive. The bills that are usually authorized include paying for the pets’ regular exercise, grooming, veterinary care, and special dietary needs, if any.
The disability documents may also specify that it is his or her intention to keep the household pets at home with the owner as long as it is medically advisable. If a revocable trust has been established, a successor trustee can be directed to pay for the pets’ regular exercise and medical care if the owner is no longer able to provide this care. The successor trustee can also be authorized to pay family members or friends for their time spent attending to the pets. If family members are not available to care for the pets, the successor trustee may also be authorized to employ pet care in order to ensure the pets’ regular exercise and companionship. An example of this might be a pet sitter that comes to the house to walk a dog and take care of the cat. The trust may also state which veterinary clinic the animals normally visit, and direct that these animals should continue to be cared for by this clinic.
If a person is forced to leave their home because of a medical condition, their disability documents may specify that the healthcare surrogate select an assisted living facility that permits the pets to stay with the owner. If this is not possible, regular visits with the pets can be arranged. These types of arrangements only apply to household pets such as dogs, cats, or birds. Unusual pets or barnyard animals are not included in this type of care plan.
Now, we have been talking about what will happen to one’s pets if he or she became disabled or unable to care for them. However, if a pet owner dies, it is up to the person’s last will and testament to determine who will take ownership of their pets after their death. The will or revocable trust can name a person to take the pets, as well as give them an allotment of assets sufficient enough to pay for the pets’ care throughout their natural lifetime. Of course, without a trust fund being set up specifically to provide funds for pet care, there is no way to ensure that the money given to the beneficiary of the pets will be used for the pets’ care.
The creator of the will or trust can also include a provision that says if the person named to receive the pets and the subsequent funds to care for the pets is unable or unwilling to give the animals the proper care, then the gift of the animals and the money is void. In this case, the executor will arrange a suitable home for the pets, along with the money that has been allocated for the care of the animals.
Another possible option is to prepay any veterinary expenses for the animal by way of a contract with the animals vet. In this case, you would establish a contract for the life long care of the animal with either a veterinarian or a dog care manager. One may also contract with a charitable organization that will agree to care for the animal in exchange for a cash donation to the charity.
The Florida legislature has approved legislation allowing for the establishment of a trust for the care of a deceased person’s pets. According to the legislation, a trust may be created to provide for the care of an animal over its lifetime. The trust will terminate upon the death of the last surviving animal. Unless otherwise specified in the trust document, the Florida statutes regarding the administration of a trust will also apply to a trust for the care of an animal.
The property of a pet trust must be applied only to its intended use for the animals. However, a judge may determine whether the value of the trust property is greater than the amount required for the expected cost of the animal’s care. In this case, any property of the pet trust that is not needed for it’s intended use, and any property left in the trust after the pet’s death, shall be distributed as directed to the ultimate beneficiaries named in the trust.