Estate planning in Tampa Florida
is an essential part of financial planning and should be completed at a relatively early stage of life. Most estate planners suggest to undergo the process of organizing your estate either by the age of 30 or after you get married (whichever one comes first). In order to understand what estate planning is, it is first important to understand what an estate is. Everyone has an estate, and everyone’s estate is unique. Specifically, your estate will consist of the assets you own, including but not limited to, your residential property (home), your car, your life savings, furniture, financial assets etc. If you want to control where these assets will be distributed when you die, it is important to ‘plan’ how the estate will unfold over time. Specifically, estate planning involves naming the people and/or organizations that you would like to receive your assets upon your death.
Why Should I do Estate Planning?
When formulating an estate plan, it is important to discuss how you want your property to pass onto the next generation. However, many people put off the process of estate planning because they believe that they do not own enough assets, and therefore believe they do not require the organizational distribution of such assets. However, this is not a prudent strategy, as if it turns out that you do need an estate, the cost of distributing your unclaimed assets may come from the estate itself (which will be counter-productive to any of your recipients). Another issue that can occur involves something called ‘dying in interstate’. Specifically, according to Florida state law, if you have died without executing a will and/or a trust, the law will deem you to have died interstate. This in turn can have the effect of your assets ending up in the hands of unintended beneficiaries.
Wills & Trusts Tampa Florida
Wills and trusts are tools that help the now-deceased person designate what assets they would like to distribute, to whom they would like to distribute these assets to, and how to distribute the assets appropriately (for example, in a lump-sum or over slow incremental payments).
A will is essentially a written document that relays the no-deceased person’s wishes. These can include, but are not limited to, the following: naming guardians for children, naming godfather and/or godmother of children, giving cash assets to friends, or to family, and even sending certain assets to a designated charity. All wills (the legal document) go through a process called probate. In this process, the court essentially examines the wills for legal and practical deficiencies (more about this will be described below). Florida Code 732.501 governs the creation of wills within the state.
Specifically, the section enumerates the required criteria for a will to be valid. These criteria include: the fact that the testator (the person writing the will) must be 18 years or older and also needs to be so sound mind, the testator needs to have the requisite mental capacity to write a will (meaning they cannot be incapacitated or intoxicated while writing the will), the testator must sign the will in front of two witnesses, and all signature must appear at the end of the will. It is important to note that, in Florida, the state law does not recognize oral wills.
Under s.732.505, a will can be revoked from existence under certain circumstances. For example, if there is a subsequent that is different from the original will, an analysis will need to be done. Also, if the testator engages in certain acts, the will may be revoked. These acts may include: burning, tearing or destroying the will with the intent to revoke it. Note that intent is a legal term and will be defined by case law and the context of the situation.
A trust is essentially a fiduciary relationship in which one party gives another party (the trustee) their assets in order to handle the assets for the benefit of a third party (the beneficiaries). It is important to note that the law of trusts is log and complex. There are numerous reasons to create trusts, and there are many types of trusts that can exist. Therefore, only a limited discussion of trusts in Florida will occur here. Chapter 736 of the Florida code governs the creation of trusts in the state of Florida. Specifically, under Florida law, the creator of a trust can create it on his/her own, or they may create a trust within a will. The kinds of trusts that can be created are almost limitless. In fact, in Florida you can create a trust in order to take care of your pets if you like.
Formal Administration
In Florida, there are two types of probate administration: Formal and Summary. We will talk about the former in this section and the latter in the next section. In formal administration, the process starts with the petition to open at estate followed by the appointment of a personal representative. It is important to reiterate that in formal administration, the personal representative is appointed, meaning there is no choice by the deceased (or deceased’s family) as to who will be the PR. That decision will be made by the judge and the judge alone. The personal representative will then ‘administer’ the estate by securing the deceased’s assets, settle the requisite debts the deceased owes, and ultimately distributing what’s left to the beneficiaries of the will and/or trust.
Under Florida law, there are certain situations where formal administration is required and other situations where it is recommended. It is required if two conditions are met. First, less than two years must have passed since the death. Second, the non-exempt assets in the estate must exceed $75000 USD. On the other hand, formal administration is recommended when there are multiple creditors to the estate. It can also be used if the personal representative is appointed for certain affairs, including, contract disputes, mortgage litigation, and other kinds of business affairs.
Summary Administration
In general, summary administration is a more expeditious form of probate, mainly due to the fact that it does not require the appointment of a personal representative. In Florida, summary administration is governed by s.735.201 of the Florida Statutes. Under the law, summary administration applies in either of two situations. The first is if the assets on the estate are under $75,000 USD. The second if it the person has been deceased for over two years, in which there is no cap on the amount of assets allowed under estate.
There are certain important differences between summary administration and the process of formal administration (which was discussed above). One of the main differences between these two types of processes is that summary administration usually takes much less time. Specifically, it takes about 1-2 months, whereas the closing out of an estate under formal administration usually takes about 6 months. It is very important to note that this is a general observation. Meaning, although this occurs most of the time, there are unique situations where summary administration will be longer than the formal process. Overall, it really depends on the individual circumstances of the deceased person.
The other major difference, which most would characterize as the main difference, is that in summary administration a personal representative is not appointed by the court. In most situations, the probate court will simply distribute the assets to the requisite beneficiaries. Yet another distinction between these two processes comes from the fact that summary administration is usually a cheaper process. The reason for this being that it is a quicker process.
It is important to note that there are certain classes of property that are exempt from summary administration in Florida. The effect of property being exempt means that it will not be counted towards the $75,000 USD cap requirement. The property that is exempt is listed under s.732.402 of the Florida Statues. Specifically, these include but are not limited to, household furniture (couches, side tables, lamps etc.), general household appliances (that add up to a value of $20,000) and two motor vehicles. The decedent’s homestead property is also exempt.
As seen above, Tampa estate planning is an important aspect to consider when planning for asset distribution after death. Failure to plan appropriately may result in the deceased person ‘dying interstate’, which has certain legal, regulatory and practical implications. Most notably, your assets may end up in the hands to beneficiaries who you did not plan for.
One of the main tools for estate planning are wills and trusts. Either, or both, of these legal instruments can be used to better organize the distribution of your assets upon death and can also be used to determine certain guardianship responsibilities. The actual process of distributing assets under estate can occur via one of two processes: formal administration or summary administration. If you need an experience estate planning lawyer, feel free to contact our professional associates. We will make sure that your assets are allocated according to your wishes.
