When an individual passes away, their property and assets usually have to 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. This secondary probate is called ancillary probate.
Ancillary probate in Florida is particularly expensive relative to other states. Here are some tips on how to avoid probate in Florida if you currently own any real estate located there.
When is ancillary probate required in Florida?
In Florida, ancillary probate is required when a nonresident passes away, and they are the sole owner of the property. In other words, they owned property in Florida but didn't live there, and didn't share ownership with anyone else. Examples include real estate such as a vacation home, rental property, commercial building, or other types of tangible property such as a boat or livestock. An estate that goes through ancillary (additional) probate in other states will incur additional costs through the estate settlement process.
How much does ancillary probate cost in Florida?
The cost of an ancillary probate in Florida will depend on a number of factors, such as attorney fees, court fees, the value of the estate, and the length of probate. Florida probate is known to be lengthy and expensive, thanks to the filing of legal documents, court hearings, and attorney representation. Families who file for ancillary probate in the Sunshine State often wait at least six months before the estate can be settled, and before they can receive their inheritance. Explained in the section prior, the Florida probate code protects attorney interest by establishing fees in advance. Fees can be calculated based on the value of the state.
Can You Avoid Ancillary 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.
How to Avoid Ancillary Probate in Florida
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. The probate process can be lengthy and expensive as-is, adding a second probate in another state can sound like a nightmare. Having an interest in avoiding probate is only natural. There are several strategies that individuals can take advantage of to ensure that their property will not have to go through probate of any kind. 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.
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