In Florida, probate can be an expensive undertaking. More than that, though, it’s time-consuming, and privacy throughout the process is a genuine concern. Probate records are eventually made public, and anyone can look at the outcome. It’s factors like these that lead many to wonder exactly how to avoid probate in Florida. Fortunately, it is possible, and this quick guide can help.
Can You Avoid Probate in Florida?
The Answer Depends on This Information: Probate isn’t always necessary, but it is in some instances. Before you begin to explore your options, make sure you know a few critical pieces of information. Know the beneficiaries, how your assets are titled, whether you have creditors, whether you’ve already used the lifetime gift exemption tax, and whether you have a will. Probate will also depend on whether there are joint bank accounts in your name if there’s a mortgage on your home, whether your cars are jointly owned, and if you have a living trust. One final factor in that decision is whether anyone is a beneficiary for your bank accounts or investments.
Four Simple Ways to Avoid Probate in Florida
Once you understand all of that information, you can begin to craft a plan to avoid probate. Taking any of these steps will help you ensure that doesn’t happen, but not all of these solutions are right for everyone.
- Get rid of your real estate: If you are not a Florida resident but own property there, you can sell it if you want to avoid probate. This may not be practical for everyone. For example, if you are a snowbird from New York who lives in the Florida home every winter, getting rid of your Florida home may not be a good idea. However, what you can do is gift your real estate to your children or another beneficiary to lower the value of your property and avoid probate.
- Joint Own Your Property or Investments: Another way to avoid probate in Florida is to add another person (joint owner) to your bank or investment account or the deed of your property. However, it must be clear that both of you will own the property or the account. For example, in Florida, if you are married, you can add your spouse’s name to your bank accounts and the home’s title and ensure that you have completed the required form called ‘Tenancy by the Entirety.’ You can also utilize the ‘Transfer upon death’ policy, but this only applies to certain assets and not to motor vehicles. There are some downsides to this option that you should be aware of. If you add an owner, it is considered a taxable gift and subject to the federal gift tax. If your joint owner is sued, the jointly owned assets could be taken in the lawsuit. Furthermore, the joint owner has full access to those assets and can do as they please with them.
- Create a Beneficiary Designation: Florida law allows you to use a beneficiary designation (‘payable upon death’) on your bank accounts, life insurance, IRA, or your retirement savings. After your death, the funds are transferred to the designated beneficiary without the need to probate. This is an excellent option if you’re fairly sure of what needs to be done with all of your assets.
- Build a Living Trust: One other way to avoid probate is to create a living trust. This written document will be under your control until your death. The living trust also allows you to make a plan in case you become ill, paralyzed, or incapacitated. The living trust is outside the reaches of the probate court even after death. However, in order for the living trust to be effective, you need to transfer all your assets to the trust. Further, you need to state clearly who will be the beneficiaries and who will get what part of your assets/property. All assets listed inside the trust are protected from probate court, but any left outside are not, and these will need to go through probate court unless you have a beneficiary designation.
There are several ways to avoid probate, but to know what method is best for you, it is essential to speak to a probate attorney. Prematurely making joint accounts with other people can be a risky undertaking, and there are countless examples where such scenarios have gone wrong. Carefully discuss your financial situation with a probate attorney and let them guide you on how to proceed. There are benefits and drawbacks with each of these methods if you want to avoid probate, so you may need some help to choose the safest method.
