Estate Category

What is Probate?

by Kevin R. Albaum

Probate is the legal process through which a deceased person’s debts are paid and assets are distributed to their heirs or designated beneficiaries via a court process. This article will outline the options that are available to the deceased person’s heirs or beneficiaries. If a person has a validly executed Last Will and Testament (more commonly called a “Will”), they are able to name the individuals, trusts, and/or charities they choose to receive their assets when they die. This is known as dying “Testate”. If a person does not have a valid Will in place when they die, then Florida law dictates who their heirs are that will receive the deceased person’s assets. There are four (4) different types of probate administration available under Florida law when a person dies residing in Florida (or owning real property in Florida). These different probate administrations are as follows: Formal Administration, Summary Administration, Disposition without Administration and Ancillary Administration.

Formal Administration: This method is the most common type of probate administration and often the preferred method by lawyers and courts. The process starts by the filing of a petition for administration. The court will admit the Will to probate (if there is one) and will also determine the person entitled or preferred to administer the estate. This person is known as a “Personal Representative”. The Personal Representative is issued “Letters of Administration” which is a document that gives them authority to act on behalf of the deceased person, so they can handle their final affairs such as paying creditors, filing tax returns, and transferring assets. An inventory is prepared by the Personal Representative, debts are paid (if properly presented to the court), and remaining assets are eventually distributed to heirs or beneficiaries. The formal probate is a lengthy process which will typically take anywhere from 6 months to several years. A probate attorney should be consulted to conduct a formal administration to ensure proper legal procedures are followed.

Summary Administration: This is an abbreviated court process to transfer a deceased person’s assets to the proper heirs or beneficiaries. It is available when the value of an estate is under $75,000 (not counting the homestead property and other exempt assets in the valuation). Summary administration also requires that there are no creditors owed any funds by the deceased person and/or that the individual has been dead for at least two (2) years. A petition for summary administration (and a few other pleadings) are prepared and filed with the Court. If the Court believes that the estate qualifies for summary administration, then an order is entered directing the distribution of the assets to the proper heirs or beneficiaries. The order is then presented by the heir or beneficiary to those individuals and/or companies in possession of the assets to transfer and/or re-tile them to the new owner. However, no personal presentative is appointed to administer a summary administration which can be a logistical problem sometimes if a company holding funds of the deceased person is requiring to see a document called “Letters of Administration” (which are only issued in a formal or ancillary administration).

Disposition without Administration: This type of probate isn’t technically a form of probate because there is no administration that even occurs. This method is also sometimes known as a small estate disposition and is rarely used. Most of the time no attorney is involved in the process and an individual goes to the county courthouse with all required documentation to complete. This method can be utilized if the only items a person dies owning are certain assets exempt from the claims of creditors and non-exempt personal property when the value of which does not exceed the sum of the funeral expenses and necessary medical and hospital expenses of the last 60 days of the last illness before death. If that is the scenario, an interested party may be able to submit a disposition form along with a death certificate, paid funeral bill, paid receipts of all medical and hospital expenses of the last 60 days prior to death, and the original will (if one exists) to accomplish a disposition without administration.

Ancillary Administration: This form of probate administration is available if the deceased person owned property in Florida but was not a Florida resident. The most common time this is needed if an individual owns real property in Florida but resides in another state or country. An ancillary administration often will run parallel and concurrently to a primary probate administration taking place in the deceased person’s state of residence. The procedure follows the formal administration track and it is important to work with an experienced probate lawyer.

Kevin Albaum is an attorney in the Elder Law Practice at Clark, Campbell, Lancaster & Munson, P.A. Questions can be submitted online to thelaw@cclmlaw.com.

DOCUMENTARY STAMP TAXES

By: Michael E. Workman, Esq.

If you have bought or sold real property in Florida, or if you have borrowed money in Florida, then you have probably seen references to the collection and payment of documentary stamps taxes. You may have heard them referred to as doc stamps or the stamp tax. Documentary stamps taxes have nothing to do with the preparation of the documents for a real estate closing or a loan, although you may have to pay a separate fee for such services. Instead, they are an excise tax on documents that is payable to the Florida Department of Revenue on documents executed and/or delivered in the State of Florida.

Section 201.01, Florida Statutes (2018), lists the documents that are generally subject to the documentary stamp tax. Common examples of documents subject to the stamp tax are deeds, promissory notes and mortgages. Deeds and other documents that transfer an interest in real property are taxed at a rate of 70 cents per $100, or any fraction thereof, of taxable consideration. Additionally, Miami-Dade County imposes an additional surtax on some transfers of real property. For purposes of calculating documentary stamp taxes on deeds, taxable consideration can include money paid or agreed to be paid, the discharge of an obligation, and the amount of any mortgage or other encumbrance on the real property. Promissory notes and mortgages are taxed at a rate of 35 cents per $100, or any fraction thereof, of the amount of the indebtedness indicated in the document; however, unsecured promissory notes are subject to a maximum documentary stamp tax of $2,450.

Prior to March 31, 1997, the Department of Revenue issued adhesive stamps that were affixed to documents in the appropriate amounts denoting that the documentary stamp taxes had been paid. When these adhesive stamps were used, they were initialed and dated so that they could not be used again. Now, the amount of the documentary stamp taxes is typically calculated and collected by the closing agent and remitted to the Clerk of Court with the deed or mortgage for recording. For unrecorded documents, documentary stamp taxes are remitted to the Department of Revenue using a form prescribed by the department. One of our experienced attorneys can help you with your doc stamp questions, as well as closing your transactions that trigger the payment of doc stamps.

Michael E. Workman is a shareholder with the law firm of Clark, Campbell, Lancaster & Munson, P.A., in Lakeland. Questions can be submitted to thelaw@cclmlaw.com