You have to understand some things about probate in Florida if you want to plan your estate effectively. This process would come into play under many circumstances when assets are changing hands after someone dies.
There are drawbacks that go along with the probate process. Inheritances cannot be distributed while it is underway, and it is time-consuming.
Probate expenses whittle down the bequests that will eventually be received by the heirs, and this is a second drawback. There is also a loss of privacy, because the general public can access probate records.
There are a number of different ways to facilitate the transfer of monetary resources after you die outside of the probate process. People who are in possession of that very dangerous “little bit of knowledge” sometimes talk about the subject around the water cooler as it were. In this environment, you may hear about some so-called simple ways to avoid probate in Florida. Joint tenancy is one of these easy answers. A payable on death account can also be looked at as a simple solution by people who are not fully informed.
Let’s look at the facts
Adding a Co-Owner to Property
Joint tenancy is the condition that would result if you added a co-owner to property that you own. Let’s say that you make your daughter a joint tenant by adding her name to the deed of your home. At that point you and your daughter would share ownership of the home equally.
After you die, your daughter will inherit your portion of the home and ultimately own it in its entirety. This transfer of ownership would take place outside of the legal process of probate.
Probate would come into play if you maintained sole ownership of the home through to the time of your death. If you left the home to your daughter in your will, she would not assume ownership of the home until after the estate had been probated.
This quick and direct transfer of property outside of probate is appealing, but there are some things to consider before you dive into this “simple solution.”
Financial Difficulties & Divorce
In most cases, truly effective estate planning is going to involve arranging for the future transfer of assets to your heirs. You don’t want to give your heirs the property right away, because you may need it yourself.
When you utilize joint tenancy, you are immediately giving partial ownership of the property to the joint tenant. If you did in fact use joint tenancy to make your daughter the co-owner of your home, she would immediately own half of the property in the eyes of the law.
Therefore, the property could be attached if she was to be the target of a lawsuit. Property held in joint tenancy can also be in play during divorce proceedings.
This is one of the problems that you may run into with joint tenancy.
Another thing to consider is the fact that you can’t act independently. If you wanted to sell the home, the joint tenant would have to approve.
These are a couple of things to think about if you have heard that joint tenancy is an easy way to arrange for the transfer of property to your child.
Payable on Death Accounts
It is also possible to avoid probate in Florida through the creation of a payable on death account. These accounts are sometimes referred to as transfer on death accounts or Totten trusts. Payable on death accounts are offered by banks and brokerages. When you establish this type of account, you name a beneficiary. While you are living, the beneficiary would not be able to access assets in the trust.
After you pass away, the beneficiary would assume ownership of anything that remains in the trust, and this transfer would not be subject to probate. That’s the good news, but there are limitations when you create a payable on death account. You may or may not be able to add multiple beneficiaries, and that is part of the problem. Plus, even if you can add more than one beneficiary, you typically have to allow for an equal split of assets in the trust. This may not be consistent with your wishes.
Attend a Free Seminar
There is no reason take risks or accept limitations when you are planning your estate. If you would like to explore more solid estate planning possibilities, attend one of our seminars. The seminars are free, and there are a number of sessions coming up. To obtain details and registration information, click this link: Naples, FL Estate Planning Seminars.