The grapevine is full of rumors about probate. Some of them are true, but many of them are more than misguided. The fact that each state has a different probate procedure makes the process harder to understand. If you want to get a general grasp about some basic rules of probate in Florida, then this blog is for you. However, you should discuss the facts of your case with an estate-planning attorney before deciding whether or not probate is a viable option for your estate plan or if you are faced with going through this process.
1. Estate Taxes vs. Probate Fees – Estate taxes are paid to the IRS if an estate exceeds a specific dollar limit, which varies each year. For example, in 2012 estate taxes were owed for estates that exceeded $5,120,000. Probate fees are paid to the attorney and executor (a.k.a personal representative) of an estate for any assets that go through probate. Additionally, there are filing fees needed to be paid to the probate court and appraisal fees for estate assets.
2. Compensation for Executor – An executor is entitled to a commission payable from the estate assets without court order as compensation for ordinary services. The commission will be based on the compensable value of the estate, which is the inventory value of the probate estate assets and the income earned by the estate during administration. A commission computed on the compensable value of the estate is presumed to be reasonable compensation for an executor in formal administration as follows:
- a. At the rate of 3% for the first $1 million.
- b. At the rate of 2.5% for all above $1 million and not exceeding $5 million.
- c. At the rate of 2% for all above $5 million and not exceeding $10 million.
- d. At the rate of 1.5% for all above $10 million.
3. Probate Bond – Probate bonds are used to ensure the accuracy and fairness of a probate proceeding. They are a type of security bond taken out by the executor of an estate entering probate and are used to ensure that the value of an estate will not be altered by the executor. A probate bond is typically used in estates that have no Will to direct the distributions of the assets, or when there is reason to believe that decedent was incompetent during the creation of his or her Will. All bonds required will be for the sum that the courts deems sufficient after consideration of the gross value of the estate, the relationship of the executor to the beneficiaries, exempt property and family allowances, the type and nature of the assets in the estate, known creditors, and liens and encumbrances on the assets.
4. Property Passing Outside Probate – Probate is necessary when a person dies owning anything in his or her name individually. However, many kinds of assets pass outside probate, for example:
- a. Assets with beneficiary designations, like IRAs accounts and life insurance.
- b. Joint tenancies with rights of survivorship (the right of survivorship must be expressed in the document creating the joint tenancy).
- c. Property held in trust.
- d. Property held as tenants by the entirety (for spouses only).
- e. Automobiles.
For those of you who would like to learn more about probate in Florida we have a Free Florida Probate Handbook available for download
If you are faced with going through probate or are considering whether or not probate is a feasible option for your circumstances, contact an estate-planning attorney before taking any decision to make sure that the process goes smoothly. For an estate-planning attorney in Florida, call the Law Office of David M. Goldman PLLC at (904) 685 – 1200 or click the “Contact Us” tab at the top of the page.