When an individual passes away, their property and assets usually must pass through probate in their state of residence. However, if they were the sole owner of any real estate in a different state, then those properties must pass through a secondary probate in the state in which they are located. Probate can be lengthy and expensive already, and requiring another probate means even more expenses, time, and hassle.
Ancillary probate in Florida is particularly expensive relative to other states. Here are some tips on how to avoid probate in Florida to consider, if you currently own any real estate in the Sunshine State.
What is an Ancillary Probate in Florida?
Ancillary probate in Florida takes place when a nonresident passes away while owning real estate within the state. Examples of real estate include homes, condos, or even vacant land lots. The owner was a resident of another state for all intents and purposes, but they owned one or more properties in Florida which are titled in their sole name or tenants in common. This often occurs in the instance of vacation and rental properties.
The decedent’s estate typically passes through probate in their home state, including most types of assets and any real estate that is titled and owned in the state in which they lived. Then, an ancillary or secondary probate is filed in Florida for any real estate titled and registered there.
In our Probate Fees guide, we break down the costs of probate by state. Although fees vary from state to state, the bottom line is that probate is expensive and will eat into the total value of your estate that can be passed on to your beneficiaries. As you might imagine, adding a secondary probate process to the plate means even more expenses that can further devalue your estate.
Ancillary probate is particularly expensive in Florida for two reasons:
1. Any guardian and personal representative of the estate must be represented by an attorney “admitted to practice in Florida.” This is according to the Florida Probate Rule 5.030. This means that in order to file for ancillary probate in Florida, the personal representative of your estate must hire a Florida attorney. They cannot represent themselves unless they are the sole interested person in the estate, which is rare.
2. Florida Probate Code 733.6171 provides the typical probate fees charged by attorneys, which vary based on the estate value. For an estate valued between $100,000 and $999,999, no more than 3 percent can be charged. If your vacation home is valued at $800,000, then the probate attorney feeds could be $24,000.
Because it can be particularly expensive, many individuals planning their estates are interested in avoiding probate in Florida. Here are some tips on how to do just that.
How to Avoid Probate in Florida
Earlier, we mentioned how only real estate owned in sole ownership or tenants in common capacities must pass through ancillary probate. This is because assets and property can be owned in certain ways that can bypass the probate process entirely. If you currently own an asset or property in such a way that would require probate, it’s possible to switch to a different ownership strategy with the purpose of avoiding probate. In fact, many individuals planning their estates do so when they realize the adverse impacts of probate and find out that there are tools to help them.
Here are five common ways to avoid probate in Florida:
Trust Ownership
Joint Ownership
Enhanced Life Estate Deed
Ownership in a Business Entity
Beneficiary Accounts
1. Trust Ownership
One of the most popular estate planning tools used for the purpose of avoiding probate is the Revocable Living Trust.
A Trust is a fiduciary agreement that allows you to remove assets and property out of your personal estate by transferring them to the Trust. Because the Trust becomes the technical owner of the assets and property, they are no longer subject to probate. While you are no longer the owner, you still have the right to manage, access, use, and enjoy Trust properties during your lifetime.
If you own real estate in Florida, you have the option to title the property in the name of your Trust. If the deed is properly recorded, then the property will not have to go through an ancillary probate. You may want to work with an attorney to ensure that this is done properly.
2. Joint Ownership
The type of deed or ownership structure is important when it comes to real estate and probate. There are certain types of deeds that are not subject to probate. For instance, real estate can be titled with joint ownership with the right of survivorship. This means that you jointly own property with one or more owners who automatically inherit your property interest should pass away. This transfer of property interest happens automatically and outside of the probate process. Joint ownership is very common amongst married couples who buy real estate together. If one spouse passes away, then the surviving spouse automatically absorbs half of the property interest so that they obtain one hundred percent interest.
3. Enhanced Life Estate Deed
Although the options of transfer on death deeds and beneficiary deeds are common in other states, Florida recognizes a special type of deed called an Enhanced Life Estate Deed, or Lady Bird Deed.
When this type of deed is used, the owner has the legal right to pass the property directly to named beneficiaries outside of probate. (In this case, the beneficiaries are referred to as “remaindermen.”)
It is important to note that the owner can do whatever they want to do with the property during their lifetime. They do not have to obtain permission from their remaindermen. If the owner still owns the property at the time of their passing, then the remaindermen inherit the property. If you own property in Florida, this is a great option that can both keep your property outside of probate and provide you with a lot of flexibility.
4. Ownership in a Business Entity
Do you own or plan to own a business entity, such as a limited liability company (LLC) or a corporation? Own commercial or investment properties in Florida? Then consider transferring your property to your business property. This will legally convert the property from real estate into corporate property, helping you avoid ancillary probate in Florida. However, note that the property may still be subject to primary probate in your state of residence. Properties must be income-producing properties to be qualified as a business entity.
5. Beneficiary Accounts
Beneficiary accounts are arguably some of the lowest-hanging fruit when it comes to avoiding the probate process.
These are financial accounts that allow the owner to name one or more beneficiaries. When the owner passes away, the account is automatically transferred to the named beneficiary or beneficiaries. Accounts that transfer in this manner are not included in the decedent’s probatable estate.
According to Florida Statute 711.507, financial accounts that are payable on death (POD) or transfer on death (TOD) are considered beneficiary accounts. Thus, it may make sense to seek financial products that fall into this category.
Common examples of beneficiary accounts include retirement accounts, life insurance policies, and even some checking and savings accounts.
We explain how beneficiary designations work in full detail here.
Update Your Estate Plan Today
If you own real estate in Florida but reside in a different state, then you’ll likely want to learn how to avoid probate in Florida. This is because real estate titled and located in the Sunshine State belonging to a nonresident typically must pass through ancillary probate.
This is a secondary type of probate that runs concurrently with the decedent’s primary probate that is filed in the state in which they resided. Each state has its own set of rules and regulations that govern the manner in which real estate is transferred, thus requiring a probate process for any real estate located in that respective state. If you own property in more than one state, then you’re looking at more than one probate process.
Unfortunately, the probate process is costly and time-consuming. Not only can it eat into the value of your estate, it can create stress for your loved ones. These effects are amplified when your estate is forced to go through multiple probates. Further, the probate fees in Florida are particularly expenses. Namely, a personal representative filing for ancillary probate in Florida is required by law to hire a Florida-based attorney. Attorney fees usually cost a certain percentage of the estate (property value in the case of ancillary probate.)
For these reasons, many property owners are interested in avoiding probate. Luckily, there are several tools and strategies that individuals can take advantage of to ensure that their property will not have to go through probate of any kind, including primary probate and ancillary probate. Several of these strategies were discussed in this guide. However, avoiding probate requires intention and careful planning. Actions include setting up an Estate Plan and ensuring that the correct types of Trusts, property deeds, and beneficiary accounts are incorporated. Find out how you can seamlessly set up your Trust-based Estate Plan.
Do you need help with probate? At Trust & Will, we understand that navigating the probate process can be overwhelming– but we're here to help. Our plans provide clear, county-specific guidance and support from probate experts so you can stay on top of the process. Learn more about our probate offerings.
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