With effective estate planning, probate in Florida can almost always be avoided. This can be accomplished by establishing a Living Trust (also referred to as a “Revocable Trust”) and transferring assets into the Trust before death. Avoiding probate may also be accomplished by use of beneficiary or “pay-on-death” designations with certain financial accounts, annuities, retirement accounts and life insurance policies.
Even though these planning techniques can help avoid probate, there are some circumstances where it still makes sense to file a probate. One particular example of this involves a deceased person who had a significant amount of creditors–particularly where some of the creditor claims are disputed. Probate creates a forum where creditor claims can be resolved, and in some instances, wiped out–or what lawyers call “barred”.
When a probate is filed, one of the early steps involves putting creditors on notice of the pending estate. Creditors who are properly noticed of the probate then have a time deadline to file a claim in the probate. If the creditor receives actual notice by certified mail, then they have 30 days to file their claim. If they are put on notice by publication in a newspaper, then they have until the end of the creditor period–usually 90 days from first publication. But if the creditor misses their deadline, then their claim is forever barred. In addition, if the creditor files their claim and the Personal Representative objects to the claim, then the creditor must file an independent action–a lawsuit–in order to enforce their claim. If no independent action is filed within 30 days of the Objection, the creditor’s claim is barred.
An example of this might help. Consider Robert, a widower who had his estate plan in order. He had his real estate and other assets titled in the name of his Living Trust and he had a beneficiary designated on his IRA. As a result, upon Robert’s death, his family is not required to file a probate. However, in his later days, Robert became profligate in his spending and careless about paying his bills. At his death, he had extensive credit card and other debts, including medical bills. Among the bills outstanding, some were questionable or disputed. Even though no probate is required in order to transfer and distribute Robert’s assets, Robert’s Personal Representative (or “Executor”) might choose voluntarily to file a probate just to resolve the creditor claims.
If a probate were opened for Robert’s estate, known creditors would receive a “Notice to Creditors” by certified mail and they would have 30 days to file a claim. Unknown creditors would be put on notice by publication of the Notice to Creditors in a local newspaper. These creditors would have 90 days from the date of first publication to file their claim. If they miss these deadlines, they’re out of luck and don’t get paid. So if the Personal Representative of Robert’s estate receives a claim for $3,450.67 from a credit card company and has reason to question the claim because some of the charges were disputed, he may file a written Objection with the probate court and serve it on the creditor. The creditor must then file a lawsuit within 30 days of the Objection. If no lawsuit is filed, the claim is wiped out and the estate does not have to pay the $3,450.67.
When a person dies, it is smart to seek advice and guidance from an experienced estate attorney. He or she can guide the family through the process of determining if probate is required and if not, whether it is smart to file one voluntarily in order to resolve creditor claims.