What is Probate?
By Attorney Truman Scarborough
This is the second in a series of articles on probate. When someone dies, assets titled just in the decedent’s name without beneficiaries are frozen. A Power of Attorney does not help, since it ends when the creator dies. It is similar to an employer – employee relationship, where If an employer goes out of business there are no employees.
The legal procedure used to transfer property from a decedent to the beneficiaries is called “Probate”. In Formal Probate the court creates a legal entity (like a corporation) called the “Probate Estate” to hold the decedent’s assets. A Personal Representative (executor) is appointed by the court to administer the probate estate.
In the Formal Probate process, the Court must be shown that everything is proceeding as required by Florida Statutes. The word “Probate” essentially means “to prove.”
There is also a simplified Summary Administration which is available: 1] two years after the decedent died or 2] when there are no creditors and the assets are less than $75,000. This will be discussed in a later article.
In Formal Probate, the Personal Representative has responsibilities to 1] the beneficiaries, 2] the decedent’s creditors, 3] the IRS, and 4] for expenses in administering the estate. In this article we will look at the Personal Representative’s responsibilities to beneficiaries and creditors.
BENEFICIARIES: When someone must rely on the honesty and diligence of another person to protect his/her property, it creates a fiduciary relationship. Under the law, there are different levels of proof to show misconduct. At one end of the spectrum is the proof needed to show “beyond a reasonable doubt” that someone is guilty of a crime. At the other end is the responsibility of a fiduciary to clearly show he/she has protected the beneficiaries’ interests. A fiduciary breaches his/her duty not only when he/she fails to protect the beneficiaries’ interest but also when he/she is unable to clearly show that he/she has.
The Probate Code requires that beneficiaries be provided with a copy of the Will, Petition for Administration, Notice of Administration, Letters of Administration, the Inventory (showing date of death values), the Accounting (showing what has occurred with estate assets from the Inventory to the time of distribution), and the Petition for Discharge (which shows the proposed distribution). If not satisfied, beneficiaries have the right to file objections with the court.
CREDITORS: All reasonably ascertainable creditors must be mailed a “Notice to Creditors” advising that they have 30 days from the receipt of the notice to file a claim with the court. Other creditors have three months from the date Notice is published in the newspaper to file a claim with the court. If a questionable claim is filed, the Personal Representative has 30 days in which to file an objection with the court. Once an objection is filed, to pursue the claim the creditor must bring an independent legal action within 30 days.
Not all assets in probate are subject to creditors’ claims, including $20,000 in furniture and appliances, plus two motor vehicles. When the home is going to certain relatives, the court can determine that it is “protected homestead“ free of most creditor claims. However, the home is still subject to mortgages on the property, IRS liens, liens for work performed on the property, and real estate taxes.
For further information on estate planning you may be interested in Attorney Truman Scarborough’s Booklet on Estate Planning in Florida. It is available without charge or obligation by calling (321) 267 – 4770. His office is located at 239 Harrison Street, Titusville, Florida.