When a Florida resident dies, one of the first steps which needs to be accomplished is to determine whether the decedent’s assets will need to go through probate. This article briefly discusses situations where probate does NOT apply.
1. Assets with a beneficiary or POD/TOD designation. For any of the decedent’s assets which have a beneficiary designation or a POD (“pay-on-death”) or TOD (“transfer-on-death”) designation, a probate is not necessary. At the death of the owner, these assets are paid or transferred directly to the named beneficiary or designee.
Life Insurance: Husband dies leaving a life insurance policy naming Wife as beneficiary. On the Husband’s death, the policy will be paid directly to the Wife; some paperwork will need to be submitted but no probate is required.
IRA or 401K: Husband dies leaving an IRA or 401K naming Wife as beneficiary. On the Husband’s death, the IRA or 401 K will be paid (or rolled over) directly to the Wife; some paperwork will need to be submitted but no probate is required.
Bank Account: Mother owns a bank account naming daughter as POD designee. Mother dies; the bank account will be paid directly to daughter. Some paperwork will need to be submitted but no probate is required.
2. Assets titled jointly with spouse. When assets are titled jointly with a spouse as “husband and wife,” these assets pass to the surviving spouse directly. No probate is required.
House: Husband and Wife own a home jointly as “husband and wife.” Husband dies; Wife title to the home passes to Wife as a matter of law. No probate is required. At the most, the Wife might want to record a copy of the Husband’s Death Certificate.
3. Assets titled with persons other than spouse, with survivorship designation. Assets titled jointly with someone other than a spouse, which have the designation “JTWROS” or “Joint Tenants with Rights of Survivorship” pass directly to the surviving co-owner. [This is distinguished from co-ownership as “TIC” or “Tenants in Common” where the deceased person’s estate retains an ownership interest in the asset].
House: Brother and sister own a house jointly with a designation of “JTWROS” or “Joint Tenants with Rights of Survivorship.” Brother dies; sister becomes sole owner as matter of law. No probate is required.
Contra: Brother and sister own a house in their joint names but with no designation of JTWROS. Brother dies; brother’s estate and sister each own a one-half interest. Probate will be required to deal with brother’s one-half interest.
4. Assets titled in the name of a Living or Revocable Trust. When assets are titled in a Living or Revocable Trust, they pass according to the terms of the Trust and no probate is required. This is one of the reasons estate planning lawyers set up these types of Trusts. A Trust can not only avoid probate but it can also allow other benefits such as controlling how assets are distributed to beneficiaries.