An estate is whatever a person owns when they die. Estates can be very small, very large, and all sizes in between. While Florida has no state estate taxes, the federal government currently allows each person upon death to pass $11.2 million, without paying any federal estate taxes. Since most people do not have an estate worth that amount, estate taxes in Florida are not a serious concern for most people.
However, understanding how to minimize or avoid the fees, costs and time required by the probate of your estate, will allow your loved ones to quickly receive your assets in accordance with your instructions and saving on the expenses of probate will also allow your beneficiaries to receive a greater share of your estate. This is something that should be carefully considered since the advantages of minimizing or avoiding probate benefit everyone.
Regardless of the size of a person’s estate, if you own anything of value in your own name, your estate will need to be probated after your death (or if you live in another state and own real estate in Florida in your own name, your estate will also need to be probated). Prior to looking at a few examples below, let’s conservatively estimate that a probate attorney will charge $325 per hour to administer an estate, and, let’s estimate it will take 20 hours to open, administer, and close a probate estate (totally about $6,500 in attorney fees).
Example #1: If the only item of value that is left in the estate is a $15,000 bank account, then the $6,500 it might cost to have that asset probated (it could be more or less) is close to half of the $15,000 account – a very large percentage. Even if the bank account contained $150,000.00, the $6,000 is still quite a bit of money to have to spend in order to complete the probate process and have access to the funds in the bank account.
Example #2: If the estate contains only a home that is titled in the name of one of the spouses and it is the home where the couple resided, the surviving spouse will need a probate attorney to have a judge determine what the surviving spouse’s rights are in the home. In this example, there would be no money in the probate estate (because there’ only the home), and the surviving spouse would have to pay the attorney fees him or herself.
Example #3: If an unmarried parent leaves behind a minor child and the estate only has a life insurance policy with the minor child named as the beneficiary, then a Guardian of the Property would have to be named if the life insurance benefit is more than $15,000. This guardianship will stay open and under court supervision, filing annual reports until the minor child turns 18 at which time, the insurance money minus the attorney and annual accounting fees, will be turned over to the child. Depending on the amount of the benefit, these fees may end up using a very large portion of the life insurance proceeds. Another other important issue is turning over a lump sum, outright, to an 18 year old, which is what would happen in this case.
In addition, the costs of probate (including costs for Court filing and publication of the probate) need to be added to the attorney fees. Taking into account the fees and costs of probate, as well as the time needed to close the probate process (anywhere from 6 months to 2 years), it becomes clear that estate planning can save much time and money in the future, resulting in an easier and greater distribution of your estate to your loved ones.