Probate & Trust Administration
Probate is a court-supervised administrative process of identifying and gathering the assets of a person who has died (a “decedent”), notifying the decedent’s beneficiaries and creditors of the decedent’s death, paying any expenses required and distributing assets to those beneficiaries who are supposed to get them, either through the decedent’s Last Will and Testament or, in the event that the decedent does not have a Will, through the state of Florida’s laws of intestacy.
Many of you have probably heard of “Probate,” a term typically cast in a negative light. It is true that the probate administration process can be time-consuming and cumbersome, something that most people strive to avoid. But, the reality is that many people do not execute the necessary lifetime estate planning to avoid probate. So, for those decedent’s estate subject to probate, probate administration is an extremely important process that, except in very few and limited circumstances, must by law be managed by a qualified lawyer.
How long does the probate process take? In the best case scenario, estates not required to file a federal estate tax return close in five or six months, assuming of course that there is no litigation, such as a Will contest or a claim that the decedent was unduly influenced to make the Will or a claim that the decedent was mentally incapacitated at the time the Will was made. For those estates required to file a federal estate tax return, the estate can typically not be closed for up to eighteen months.
So, what takes so long? Although this is not an exhaustive list, here is a list of tasks that must be accomplished:
- Identification, valuation and safeguard of assets
- Identification and notification of possible heirs and creditors
- Assessment of the validity of claims against the estate of the deceased
- Publication of all legally required notices
- Management/investment of assets and real estate
- Application to the court for authorization to liquidate and distribute assets to beneficiaries and creditors
- Filing and payment of Federal and state income, estate and gift tax returns
- Objection to the filing of improper claims
- Defense of lawsuits brought by creditors, if filed
- Payment of valid claims of creditors.
- Employment of advisors and professionals to assist in administration.
- Payment of administrative expenses.
- Preparation of an inventory of assets and a formal accounting
- Distribution statutory amounts (including exempt property) or assets to the surviving spouse or dependent family members.
- Distribution of assets to beneficiaries.
- Closure of probate administration.
All of the above steps are parts of a “formal” probate administration. Florida does provide some alternate procedures in certain limited situations. “Summary” probate administration is generally available if the decedent died more than two (2) years ago or the assets of the decedent’s estate must be less than $75,000, not including the decedent’s homestead property; however, in the event that one of the assets of the estate is real estate, a summary probate administration may not be available in most jurisdictions.
Another available alternative to the formal probate administration process is known as “disposition without administration,” which only available if the estate assets consist solely of “exempt” property and “non-exempt” personal property, the total value of which does not exceed the combined total of up to $6,000 or the total funeral expenses of the decedent and total medical and hospital expenses of the decedent’s last illness.
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The trust administration process shares many similarities, yet can also be very different from the probate administration process. The creation of a revocable living trust to hold assets before and after a decedent’s death, usually to “avoid probate” or manage the decedent’s federal estate tax liability, has become increasingly popular in the last twenty (20) years.
When a trust is funded during the life of a decedent or when a trust is funded when that decedent dies, the trust formed by that decedent during his or her life must be administered following death according to the terms and conditions of the trust agreement. While there are interesting and sometimes sophisticated post-mortem planning techniques, including disclaimers, trust modifications and trust reformations, the administration and distribution of assets held in a trust following a decedent’s death is typically much easier, less time consuming and expensive than probate administration. That said, the trust administration process can be cumbersome and fraught with traps for the unwary trustee.
If you are appointed the trustee of a trust following death (or upon incapacity), that means that the decedent or incapacitated person, well. . .trusted you. That’s a tremendous honor and a tremendous responsibility. Most people appointed as trustee usually gladly accept the job of being the trustee without understanding the legal responsibilities of accepting this position, along with the real exposure that comes with serving as a trustee.
Every trust is different, depending upon numerous factors, including the terms and conditions set forth in the trust agreement, the size, nature and location of the trust estate, whether the trust was fully funded during the life of the decedent, the number and temperament of the beneficiaries, the type of assets held in trust and whether the trust owns an ongoing business. That said, every trustee should know that, if assets of the trust are administered and/or distributed improperly, the trustee could be held personally liable for the consequences of the improper administration or distribution. As such, every trustee should retain a qualified lawyer to guide the trustee through the trust administration process.
All of the tasks involved in the identification of assets, debts, beneficiaries and creditors, as well as the administration, management and distribution of such assets in the probate administration process (see Probate Administration) also apply to the trust administration process, without the court supervision. It is so important that a trustee not act without proper professional guidance from an experienced trust administration lawyer.
Sometimes, estate planning documents, such as a Last Will and Testament or a Revocable Living Trust, are improperly executed, or a person may sign estate planning documents despite the fact that he or she lacks the mental capacity required to do so. A person may be improperly influenced to sign estate planning documents he or she may not have signed but for that influence. And, in some instances, the person trusted to administer a decedent's estate or trust has intentionally or even unintentionally improperly administered or managed the probate or trust administration process.
We believe that the team at Chepenik & Trushin LLP offers the highest level of sophistication in the probate, trust and guardianship practice areas at both the trial and appellate levels.Contact us for a consultation.