When someone dies, the assets of the deceased must go through the process of probate, during which the oversight of inheritances, bequests, trust allocations, the settling of debts and death taxes, and the payment of funeral expenses takes place. From a legal perspective, although the estate never actually closes, the process completes the final directives and financial obligations of the decedent and satisfies the legal requirements of probate court.
In Florida, whether the deceased has a will or not, the estate will go through formal probate, summary administration, or disposition, with the latter two reserved for smaller estates or those estates whose assets are exempt from probate. Although family members often do not discuss probate in detail, once a loved one dies, it is usually the family who will have the burden of seeing the process through.
Individuals in Fort Lauderdale should understand the financial implications of probate, especially after factoring in court costs and estate taxes. Drawing up a will is a good start, but it is a good idea to also examine other estate planning tools and discover strategies that will allow individuals to preserve more of their legacy for their loved ones.
What are non-probate assets?
To understand what assets do not go through probate, it helps to know what does go through this process. Anything in the estate that the decedent owned in their name without a beneficiary designation will go through probate. A will outlines the last wishes of the deceased through beneficiary designations, but if there is no will, each state’s intestacy laws automatically allocate the order of next-of-kin inheritances.
Non-probate assets, on the other hand, are any assets owned jointly with another, such as the family home, joint bank accounts or other property held in joint ownership with rights of survivorship. Other non-probate assets include trust assets in which the beneficiary is the trust, or assets with beneficiary designations such as:
- IRAs or other retirement accounts
- Life insurance policies
- Payable-on-death (POD) or TOD designations
A trust can serve many functions depending on how the decedent set it up:
- A revocable trust is independent of a will, and the trustor can modify, change, or revoke it, or even designate a pour-over will in which estate assets automatically drain into the trust upon death, thus avoiding probate taxes
- An irrevocable trust, although unalterable, shields assets of the trust from taxation
- A charitable trust may include beneficiary designations to loved ones or even the trustor, which not only provides income but will go to charity after death
Along with selecting estate planning avenues that minimize taxes, keeping beneficiary designations current and coordinated with the will and other documents is essential.