Category Archives: Articles
What is Probate?
By Attorney Truman Scarborough
This will be the first in a series of articles on the probate process.
When someone dies, assets titled just in the decedent’s name without beneficiaries are frozen. No one can sign the deceased person’s name on checks, deeds, etc. A Power of Attorney does not help since it is effective only while the creator is living. It is similar to an employer-employee relationship. If an employer goes out of business there are no employees.
The process where the property is transferred from the decedent to the beneficiaries is called “Probate”. There are different kinds of probate depending on the size of the estate and whether there is a Will.
When there is a Will it is called “Testate Administration”. The Will by itself does not transfer property to the heirs. The Will has no authority until admitted to probate by the court. If there is no Will, it is called “Intestate Administration”, which will be discussed in a later article.
Probate can be further defined as a Summary or Formal. “Summary Administration” is available when the assets total less than $75,000 in value and there are no creditors, or when the decedent died more than two years ago. Summary Administration will be examined further in a subsequent article. When Summary Administration is not available, “Formal Administration” will be required.
In Formal Administration, the court creates a legal entity (like a corporation) called the “Probate Estate” to take the decedent’s place and hold the decedent’s assets. The person named in the Will to administer the estate, the Personal Representative (executor), is issued “Letters of Administration” by the Probate Court. This allows the Personal Representative to access and manage the assets.
Some of the problems that can delay opening probate include 1] The original Will cannot be located. 2] The Will was signed in another state and was not self-proving, requiring the Florida Probate Court to issue a commission for someone in that state to take the oath of the witnesses. 3] An autopsy is required before a death certificate can be issued. 4] A Floridian died in another state and the death certificate incorrectly showed him/her as a resident of that state 5] The person named as Personal Representative in the will is not qualified to serve.
Once appointed by the court the Personal Representative’s initial responsibilities include: 1] Sending an Inventory of assets to the court and beneficiaries, 2] Obtaining a Tax Identification Number (EIN) from the IRS, (once a person dies we can no longer use his/her social security number), 3] Opening an estate account using the EIN, 4] Publishing Notice to Creditors in the newspaper and mailing the Notice to known creditors.
Throughout the process of collecting assets, paying bills, and finally making distribution to the beneficiaries, the Probate Court must be shown that everything is proceeding as required by Florida Statutes and Florida Probate Rules. The word “Probate” essentially means “to prove.” Is the Will valid? Is the Personal Representative qualified? Who are the rightful heirs? Have debts, taxes, and estate expenses been paid? You may know that there are not any problems, but the court does not.
In the next article, we will continue the discussion by further examining a Personal Representative’s responsibilities to the court, the beneficiaries, the decedent’s creditors, and the IRS.
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.
by 
by
What Happens if a Beneficiary Dies?
By Attorney Truman Scarborough
All of our beneficiaries (those who inherit our estates) will someday die. Not planning for what will happen if a beneficiary dies can have unexpected and costly consequences. In this article we will examine some of the problems that may be encountered when a beneficiary dies 1] before the person who is making the gift dies, 2] after the person making the gift dies but before receiving the gift, and 3] after receiving the gift.
1] If the beneficiary dies before the person making the gift: The law prohibits us from leaving property to a deceased person. When there are no named living beneficiaries, transfer on death (TOD) and payment on death (POD) accounts as well as life insurance policies are paid to the decedent’s estate, requiring probate. If all the beneficiaries have died, new beneficiaries must be named.
A will or trust can anticipate the demise of multiple beneficiaries and offer a variety of options for distribution. Nevertheless, when there are no surviving beneficiaries the gift will lapse (go away) unless protected under Florida’s anti-lapse statutes (discussed below). When a specific gift (e.g. $10,000 or the home) lapses it becomes part of the residual estate (what is left after distributing specific bequests). If the lapsed gift is part of the residual estate, it goes back into the pot to be divided among the remaining residual beneficiaries. If all the residual beneficiaries named in the will or trust have died, the estate goes to those persons who would inherit under Florida Statutes when there is no will.
Florida’s Probate and Trust Codes have anti-lapse provisions. These provide that a gift will not lapse if the deceased beneficiary is a descendant of a grandparent of the person who created the will or trust. The inheritance will go to the deceased beneficiary’s lineal descendants (children, then grandchildren). If there are no direct lineal descendants, the inheritance goes to the grandparents’ lineal descendants (aunts/uncles, then nieces/nephews). However, rather than relying on Florida’s Anti-Lapse Statutes, it is best to specify who will receive a gift if the primary beneficiary dies.
2] If the beneficiary dies after the person making the gift but before distribution: If the beneficiary survives the person creating the will or trust but dies before receiving the gift, the gift is distributed to the deceased beneficiary’s probate estate. This will delay closing the primary estate until a probate estate is opened for the deceased beneficiary to receive the distribution. A way to avoid this is by having beneficiaries direct who will receive their inheritance should they die before distribution.
3] If the beneficiary dies after receiving distribution: Once a beneficiary has received the inheritance, it is the beneficiaries. When the beneficiary dies, it will be part of his/her estate. But what if you do not want it to be a part of a child’s estate? Perhaps you prefer not to have it go to the child’s spouse. A way to prevent this is to hold the child’s inheritance in trust for him/her and specify who will receive the balance upon the child’s demise. A sequence of trustees should be named who could reasonably be expected to survive the child, first to make distributions over the child’s lifetime and then at the child’s demise, make distribution of the remaining funds to the final beneficiaries.
For further information, 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.
by by
When is probate the better way to settle an Estate?
By Attorney Truman Scarborough
Probate is required when the property is titled just in the decedent’s name without any beneficiaries. A will does not automatically transfer property to the heirs. Orders from the Probate Court are needed to access and distribute the assets to the heirs.
In a formal probate a Personal Representative (executor) is appointed by the Court to administer the estate. When everything runs smoothly, formal probate takes around six months. There are fees and court costs with probate. For estates between $100,000 and $1,000,000, Florida Statutes suggest a fee for ordinary services of 3% for both the Personal Representative and the attorney.
With a living trust, the successor trustee has immediate control of assets and is able to settle the estate without going through the court. By avoiding the Probate Court process, trusts generally save time and money.
While there are advantages in using a trust, there are risks when: 1] there is a potential for conflicts between the trustee and beneficiaries or 2] the successor trustee does not have the time, has a cavalier attitude, or lacks business savvy. A financial institution could be named to serve as trustee. But, if the estate is small, a financial institution may not be willing to serve or the fee could be prohibitive. An option is to have the Probate Court supervise the administration of the estate.
To understand why there may be advantages in going through the longer and more expensive probate process, we need to look at the issues from both the beneficiaries’ and the administrator’s perspectives.
Why probate may be helpful from the beneficiaries’ perspective: With a trust, except initial notification of beneficiaries and annual accountings, the trustee is under few time restraints. On the other hand, the Probate Code sets forth a number of timelines and requires that the beneficiaries be provided with information throughout the administration of the estate. If an estate is not closed in one year, the Personal Representative must explain the reason why to the court. Since the probate court automatically enforces these requirements, no action is generally required by a beneficiary.
With a trust, if something is wrong or nothing is happening, a beneficiary may have to retain an attorney to initiate a separate legal action. In probate on the other hand, if the Personal Representative is not property administering the estate all a beneficiary has to do is file an objection with the probate court.
Why probate may be helpful from the administrator’s perspective: A trustee is liable for damages resulting from a failure to fulfill his/her duties set forth in the Florida Trust Code. To be released from further responsibility and liability a trustee needs to bring the administration of the trust to a conclusion and obtain releases from the beneficiaries. If a beneficiary refuses to cooperate, it will likely delay settling the trust and distribution to other beneficiaries. The trustee can send a notice to beneficiaries stating that if they wish to object, they must file a lawsuit within six months. In contrast, closure is simple and direct with probate. Beneficiaries are given 30 days to object to the Petition for Discharge and proposed distribution. If no objections are filed, the court enters an Order of Discharge releasing the Personal Representative from further liability.
For further information on your estate planning options, 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.
by 
by
Can adding children’s names to property create problems?
Problems can be encountered when children are made co-owners of property with a parent. In this article, we will look at some of these issues.
Parents add children’s names to accounts for various reasons. It may be so the child can access the account to pay the parent’s bills. Frequently, parents add their children’s names on accounts or deeds to avoid probate. The reason is when someone dies with assets titled just in his/her name without beneficiaries the asset is frozen. Probate is required to access the assets. A Power of Attorney does not work since it is effective only while the creator is living. It is similar to an employer-employee relationship. If an employer goes out of business there are no employees.
In probate, a Personal Representative (executor) is appointed by the Court to administer the estate. Throughout the process of collecting assets, paying bills and finally making the distribution to the beneficiaries, the Personal Representative must show the Probate Court that everything is proceeding in accordance with Florida Statutes and Probate Rules. The word probate essentially means “to prove.” When everything runs smoothly, formal probate takes around six months from the time the petition is filed with the court. There are fees and court costs. For an estate between $100,000 and $1,000,000, Florida Statutes suggest informal administration the reasonable fee for both the Personal Representative and the attorney would be 3% of the gross assets.
This leads many people to ask: “Can probate be avoided by adding children’s names to property?” Yes, jointly owned property with survivorship rights goes to the survivor. Unfortunately, this simple solution can create other problems: First, with joint bank accounts, the child has the ability to use the funds. Second, with real estate, there is a loss of control. Any further transfer will require the child’s signature on the deed. For example, a widow could add one of several children’s names on the deed to her home. But if later the mother wanted the home to go to all of her children, sell, or mortgage the property, the child could refuse to sign. Third, the property will be exposed to the child’s creditors when held jointly with the child. Fourth, only one-half of the property will receive a “stepped-up basis.” In determining the capital gain on appreciated property, the basis (the original purchase) is subtracted from the sales price. When property is inherited at death, the date of death value becomes the basis. This reduces the capital gains tax when the property is sold. Fifth, when a gift exceeds the annual exclusion of $15,000, a 709 Gift Tax Return should be filed with the IRS. Sixth, a home is not counted as an asset by Medicaid, but adding a child’s name on the title is a gift which may impede qualifying for Medicaid benefits. Seventh, with the home the parent may lose some of his/her homestead property tax exemption. Eight, if the child dies first, the property must be probated.
With some types of assets, a Payment on Death (POD) or Transfer on Death (TOD) accounts may be used to avoid probate and not encounter all these problems. Another option is the Revocable Living Trust which can be used with all types of assets and provides for incapacity.
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.
by 
by
What is Probate?
By Attorney Truman Scarborough
This is the third in a series of articles on probate. We have been looking at the “Formal” probate process which is required when the decedent died within the last two years and the value of the assets is over $75,000.
When someone dies, assets titled just in the decedent’s name without beneficiaries are frozen. No one can sign the deceased person’s name on checks, deeds, etc. A Power of Attorney does not help since it is effective only while the creator is living. It is similar to an employer-employee relationship. If an employer goes out of business there are no employees.
The process where a property is transferred from the decedent’s name to the beneficiaries is called “Probate”. The court creates a legal entity (like a corporation) called the “Probate Estate” and appoints a Personal Representative (executor) to administer the estate. Step-by-step the Probate Court must be shown that everything is proceeding as required by Florida Statutes and Florida Probate Rules. The word “Probate” essentially means “to prove.” You may know that there are no problems with beneficiaries or creditors, but the court does not.
In the last article, we looked at the Personal Representative’s (executor’s) responsibilities to beneficiaries and creditors. We will now look at the Personal Representative’s responsibilities for taxes and expenses for administration.
TAXES: The Personal Representative must file the decedent’s 1040 Income Tax Return for income received by the decedent while he/she was living. Income received after the decedent’s death is not reported on the 1040 Income Tax Return but on a separate 1041 Fiduciary Income Tax Return. To do this the Personal Representative obtains a tax identification number called an EIN from the IRS. For the portion of the year when the decedent was living, 1099s will show the decedent’s social security number. Income earned after the decedent passed away will show the EIN. A 1041 Fiduciary Income Tax Return is filed for income received under an EIN. There is a substantially higher tax rate on 1041 than on an individual 1040 return. To avoid the higher tax rate, income can be distributed to the beneficiaries. These distributions are shown on Schedule K-1s, so the income can be reported by individual beneficiaries on their own 1040 tax returns, rather than on the 1041, avoiding the higher tax rate.
For large estates, the Personal Representative may also have to file a 706 Estate Tax Return. The Tax Cuts and Jobs Act passed in December of 2017 doubled the amount an individual can gift during his/her life and at death. An individual can now pass $11,180,000 before there is any tax. For a couple, it is $22,360,000. If the first spouse to die has not used his/her full $11,180,000, the unused balance is available to the surviving spouse.
ADMINISTRATION EXPENSES: The Personal Representative will incur various expenses including attorney’s fees. Florida Probate Rules require that every Personal Representative be represented by an attorney unless he/she is the sole interested person. The Florida Statutes show a fee for the attorney as well as the Personal Representative of 3% for estates between $100,000 and a million dollars. There are also court filing fees and the cost of publishing Notice to Creditors in the newspaper.
In the next article, we will look at a simplified form of probate called Summary Administration.
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.
by 
by
What is Probate?
By Attorney Truman Scarborough
This is the second in a series of articles on probate. In the last article, we looked at the initial court procedures for formal probate which is required when the decedent died within the last two years and the value of the assets is over $75,000. This article continues the discussion by looking at the Personal Representative’s (executor’s) responsibilities.
When someone dies, assets titled just in the decedent’s name without beneficiaries are frozen. The legal procedure used to transfer property from the decedent to the beneficiaries is called “Probate”. The court creates a legal entity (like a corporation) called the “Probate Estate” to take the decedent’s place and hold the decedent’s assets. A Personal Representative is appointed by the court to administer the probate estate.
In the process of probating an estate, the Probate Court must be shown that everything is proceeding as required by Florida Statutes. The word “Probate” essentially means “to prove.” Is the Will valid? Have creditors been notified and paid? Have beneficiaries been provided information and received their allotted share? You may know that there are no problems, but the court does not.
Through the probate process, the court assures that the Personal Representative fulfills the various responsibilities to 1] beneficiaries, 2] decedent’s creditors, 3] 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, and in the next article the responsibilities to the IRS and for administrative expenses.
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 is protecting the beneficiaries’ interests.
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.
by 
by
What is Probate?
By Attorney Truman Scarborough
This will be the first in a series of articles on the probate process.
When someone dies, assets titled just in the decedent’s name without beneficiaries are frozen. No one can sign the deceased person’s name on checks, deeds, etc. A Power of Attorney does not help since it is effective only while the creator is living. It is similar to an employer-employee relationship. If an employer goes out of business there are no employees.
The process where the property is transferred from the decedent to the beneficiaries is called “Probate”. There are different kinds of probate depending on the size of the estate and whether there is a Will.
When there is a Will it is called “Testate Administration”. The Will by itself does not transfer property to the heirs. The Will has no authority until admitted to probate by the court. If there is no Will, it is called “Intestate Administration”, which will be discussed in a later article.
Probate can be further defined as Summary or Formal. “Summary Administration” is available when the assets total less than $75,000 in value and there are no creditors, or when the decedent died more than two years ago. Summary Administration will be examined further in a subsequent article. When Summary Administration is not available, “Formal Administration” will be required.
In Formal Administration, the court creates a legal entity (like a corporation) called the “Probate Estate” to take the decedent’s place and hold the decedent’s assets. The person named in the Will to administer the estate, the Personal Representative (executor), is issued “Letters of Administration” by the Probate Court. This allows the Personal Representative to access and manage the assets.
Problems that can delay filing a Petition to open probate include 1] The original Will cannot be located. 2] The Will was signed in another state and was not self-proving, requiring the Florida Probate Court to issue a commission for someone in that state to take the oath of the witnesses. 3] An autopsy is required before a death certificate can be issued. 4] A Floridian died in another state and the death certificate incorrectly showed him/her as a resident of that state 5] The person named as Personal Representative in the will is not qualified to serve.
Once appointed by the court the Personal Representative’s initial responsibilities include: 1] Sending an Inventory of assets to the court and beneficiaries, 2] Obtaining a Tax Identification Number (EIN) from the IRS, (once a person dies we can no longer use his/her social security number), 3] Opening an estate account using the EIN, 4] Publishing Notice to Creditors in the newspaper and mailing the Notice to known creditors.
Throughout the process of collecting assets, paying bills, and finally making the distribution to the beneficiaries, the Probate Court must be shown that everything is proceeding as required by Florida Statutes and Florida Probate Rules. The word “Probate” essentially means “to prove.” Is the Will valid? Is the Personal Representative qualified? Who are the rightful heirs? Have debts, taxes, and estate expenses been paid? You may know that there are not any problems, but the court does not.
In the next article, we will continue the discussion by further examining a Personal Representative’s responsibilities to the court, the beneficiaries, the decedent’s creditors, and the IRS.
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.
by 
by
When is probate the better way to settle an Estate?
By Attorney Truman Scarborough
By avoiding the Probate Court process, trusts generally shorten the time of settling an estate. However, there are risks using a trust when the successor trustee does not have the time, has a cavalier attitude, or lacks business savvy. A financial institution could be named to serve as trustee. But, if the estate is small, a financial institution may not be willing to serve or the fee could be prohibitive. An option is to have the Probate Court supervise the administration of the estate.
With a living trust, the successor trustee has immediate control of assets and settles the trust without court supervision. On the other hand, when the property is titled just in the decedent’s name without any beneficiaries, probate will be required. A will by itself does not transfer property to the heirs. Probate is needed to access and finally distribute the assets to the heirs.
The word “Probate” essentially means “to prove.” In this process, the Probate Court must be shown that everything is proceeding in accordance with Florida Probate Statutes and Rules. To understand why there are advantages in having the court involved in settling an estate, we should look at the issue from both the beneficiaries’ and the administrator’s perspectives.
Why probate may be helpful from the beneficiaries’ perspective: With a trust, except initial notification of beneficiaries and annual accountings, the trustee is under few time restraints. On the other hand, the Probate Code sets forth a number of timelines for administering an estate and requires that the beneficiaries be provided with information throughout the administration of the estate. For example, the Personal Representative (executor) must file an inventory of the assets with the court and mail a copy to the beneficiaries within 60 days of appointment. If an estate is not closed in one year, the Personal Representative must explain the reason why to the court. This keeps the process going. Since the probate court automatically enforces these requirements, no action is generally required by a beneficiary.
If something is wrong in probate, all a beneficiary has to do is file an objection with the court. But with a trust, if something is wrong or nothing is happening, the beneficiary will have to initiate a legal action. The services of an attorney would be needed to file the lawsuit which could be quite expensive.
Why probate may be helpful from the administrator’s perspective: A trustee is a fiduciary whose responsibilities are set forth in Florida Statutes. He/she is liable for damages resulting from a failure to fulfill these duties. This liability can extend for years after the trustee has made final distribution. In a hostile environment, a trustee should obtain approvals of a final accounting before making final distribution. If a beneficiary refuses to cooperate, it will delay the closing of the estate and distribution to other beneficiaries. The trustee can send a notice to beneficiaries that if they wish to object they must file a lawsuit within six months. In contrast, closure is simple and direct with probate. Beneficiaries are given 30 days to object to the Petition for Discharge and proposed distribution. If no objections are filed, the court enters an Order of Discharge releasing the Personal Representative from further liability.
For further information on your estate planning options, 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.
by by
When should a Beneficiary’s inheritance be held in trust?
By Attorney Truman Scarborough
When children have problems like substance abuse or just cannot handle money responsibly, it may not be wise to distribute their inheritance directly to them. For their protection, the gift can be distributed to a sub-trust within the revocable living trust or to a testamentary trust in the will. These trusts normally come into being and are funded after the person who is making the gift has passed away.
If a child has creditor or marital problems his/her inheritance can be placed in trust to protect it in case there is a lawsuit or divorce. When the child can reach an asset, generally the child’s creditors can as well. The trust can contain provisions preventing a creditor from reaching the trust assets. For maximum protection from creditors, the trustee should be given complete discretion on when and how much is distributed to the beneficiary.
If a disabled child is receiving Supplemental Security Income (SSI) and inherits money, the government can claim a right to reimbursement and disqualify the child from future SSI and Medicaid benefits. However, the child’s inheritance can be placed in a “Special Needs Trust” where the child can utilize trust funds without the loss of SSI. Since benefits will be lost if the rules for distribution are violated, care must be taken in selecting the trustee.
Even when a grandchild is not initially named as a beneficiary, the grandchild may become a beneficiary if the grandchild’s parent dies. With a younger beneficiary, there are two reasons why a trust can be helpful. First, in Florida, anyone under eighteen years of age cannot enter into contracts. If not in a trust, funds will need to be managed by a court-appointed guardian or a custodian under the Uniform Transfer to Minors Account. Secondly, even when someone is over eighteen they may not have the maturity to handle the money.
Placing a grandchild’s inheritance in a trust does not prevent the grandchild from using the funds; it gives the grandparent the ability to specify how the funds are used. Distributions may be restricted to certain expenses, like education and health. There can be a single trust for all grandchildren under a certain age or separate trusts for each grandchild. With a single trust, one grandchild would be able to receive more funds than the others from the trust based on need.
Normally a trust provides that all the funds are distributed outright to a grandchild when he/she reaches a certain age. There are variations on ways the final distribution can be structured. For example, if the trustee believes that the grandchild is responsible, the trustee could be given the option to make complete distribution any time after the grandchild reaches 25 years of age. Once the beneficiary reaches age 30, the trustee could be required to make the complete distribution.
Selecting the trustee is very important. If family members are chosen, they should be responsible and caring. When an individual is named as trustee, alternate trustees should be named in case the initial trustee is unable to serve or continue to serve. Another option is to appoint a financial institution. Financial institutions set limitations on the minimal values for the trusts they are willing to administer. Sometimes they require that special provisions regarding their powers and liability be included in the trust.
For further information, 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. Truman Scarborough’s office is located at 239 Harrison Street, in Titusville.
by 
by
Can specific bequests disrupt an estate plan?
By Attorney Truman Scarborough
A specific bequest can be a sum of money, the home, a car, shares of stock in a corporation, jewelry, etc. that is given to a particular individual. It allows an estate plan to better reflect personal desires on how specific property is distributed. Disputes over who receives particular items coveted by multiple beneficiaries can be avoided, providing for a more amicable settlement of an estate.
Specific bequests, however, can result in confusion. What if a particular car has been replaced with another vehicle? What if there is no XYZ stock because the company was acquired by another company? What if the bank where a savings account is located was acquired by another bank? What if the stock in XYZ Corporation split and there are now 200 shares rather than the original 100? Does the beneficiary get 100 or 200 shares of stock? What if the beneficiary received the $10,000 promised in the will or trust from the decedent before he/she passed away? Is the beneficiary entitled to an additional $10,000 from the decedent’s estate? While these kinds of issues are addressed in the Florida Statutes, discuss them with the attorney who is preparing your estate plan to be sure that they are handled the way you want.
There is also the problem on how specific bequests affect the overall estate plan. A common concern is what happens if there are not enough funds to pay all the intended bequests. Specific monetary bequests (like $10,000) are, as a rule, paid first leaving the residual beneficiaries to pay the expenses and divide what might remain. If the value of the whole estate significantly decreases in value, a specific dollar amount intended to be just a small portion of an estate could become quite large in comparison to the residual gifts. This could substantially alter an estate plan from what was desired. One way to address the problem is by defining larger gifts as a percentage of the total estate rather than giving a specific dollar amount. Defined as a percentage, it increases and decreases with the overall size of the estate. If there is a concern it may be too large, it could be capped at a dollar amount. For example, the plan could provide that a beneficiary will receive 10% of the estate, but not more than $100,000.
Non-monetary specific bequests can also create problems. For example, the value of the home at the time the estate plan is developed could constitute approximately one-third of the assets. Desiring an equal division of the assets among three children, the decedent could leave the home to one child and provide that the other two children split the remainder. If expenses from the last illness deplete the decedent’s funds or the values of the other assets shrink, the home could be the primary asset of any value. The two children who are to receive the residual estate would essentially be disinherited. To prevent this from occurring, the plan could provide that the estate is to be equally divided among the three children with the one child having an option to take the home as a portion of his/her share. However, under this scenario, the child would have to use his/her own funds or finance the purchase the home.
For further information on how to prepare an estate plan, 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.
by 
by
