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If you have no Will, You have no control over assets–State determines beneficiaries

August 12, 2008

This article from the Fort Myers, Florida News-Press gives a great illustration of why it is so important to have a Will or other Estate Planning documents in place.  Further, as you can tell by the complexity of the issue, it’s also important to see a legal professional to guide you through the process to achieve your intended results.

Probate is quite different than it is often portrayed in movies. Most individuals do not understand the process unless they served as personal representative for a close relative who passed away in Florida. If they served in a different state, they may find the rules in Florida are different.

In the movies, the family gathers to hear the will read by the family attorney. This hardly ever happens. By the time the relative notifies the attorney about the death, the will has already been read by most of the relatives. Those who are beneficiaries will soon get appropriate notice of the probate process. Understanding this process is important to the person who signed the will, to the beneficiaries of the estate, and to the creditors of the deceased person. Understanding this process will allow the reader to evaluate the recent proposal to broaden the reach of probate which I will discuss next week.

The word “probate” comes from the Latin phrase “to prove.” If an individual dies, who will ensure that his final wishes as to the disposition of his assets are carried out? If a beneficiary was allowed to simply show the will to the bank to “get the money,” what if the will was invalid or the bank misinterpreted who should “get the money,” or if there was a lien on the money? The bank would be responsible. This potential liability would cause the bank not to act. Nothing would get distributed.

Fortunately, we have a legal process to allow the will to be proved as the valid instrument to legally pass title of the decedent’s assets to those individuals chosen by the deceased person prior to death. Although this process usually starts with the proving of the will, the term “probate” covers the entire process of winding up the decedent’s financial affairs after death, overseen by a circuit court judge.

Before we can understand the process and options, if the person had a will, we must understand the process if the individual died without a will. The person who signs the will is called the testator. If the person dies with a valid will, the person is said to have died testate. A person who dies without a valid will is said to have died intestate. To whom the estate will be distributed intestate is governed by Florida Statute 732.101 through 732.111, which may be read at the state site, MyFlorida.com.

If a person dies intestate, or if the will fails to fully determine the beneficiary, such as when the will fails to include a residue clause which says who the remaining beneficiary is after the specific beneficiaries have been paid, then Florida Statute determines who shall inherit all or a portion of the estate. It makes a difference whether there is a surviving spouse.

If there is no surviving spouse, the estate is divided equally among the lineal descendants, per stirpes, which is the Latin phrase meaning “by the roots.” For example, if the deceased had three children, one of which predeceased the person whose estate is being administered intestate and had three children of her own, the estate would be distributed one third to each of the two surviving children and one ninth to each grandchild who are the children of the deceased child. The grandchildren who are the children of the living children would receive nothing.

If there are no lineal descendants, that is no living children or grandchildren of the person whose estate is being administered intestate, then the estate will be distributed equally to the decedent’s mother and father. If only one parent is living, that parent will receive the entire estate. If there are no living parents, and no lineal heirs, then the estate will be divided equally among the brothers and sisters, and the descendants of the brothers and sisters.

If there are none of the above, then to the paternal and maternal kindred as provided in the statute. If there are none, then the estate will be distributed to the kindred of the last deceased spouse of the decedent as if the spouse had died intestate immediately after the decedent.

If there are none of the above living at the death of the decedent, then the estate will escheat, or be paid, to the state of Florida. It will be liquidated and held by the chief financial officer of the state and deposited in the state school fund. If no one entitled to the estate files a claim within 10 years of receipt by the chief financial officer, the state’s right to the funds shall become absolute. If an individual entitled to a portion of the estate is living at the time of the death of the decedent, but dies before the estate is administered, their share vests and that beneficiary’s person’s estate would have to be probated.

If the decedent died with a surviving spouse, even if the surviving spouse died before the estate was fully administered, the surviving spouse would inherit all of the estate only if the decedent had no living lineal descendants. If the decedent had living lineal descendants, the amount that the spouse would receive depends on whether the lineal descendants are also the spouse’s descendants.

If all of the lineal descendants are also the descendants of the spouse, then the spouse is entitled to the first $60,000 plus one-half of the remainder. The lineal descendants would divide the rest, per stirpes. If at least one of the lineal descendants is not the lineal descendant of the spouse, then the estate is divided one half to the spouse and one-half among the lineal descendants, per stirpes.

You may have to read this three times to figure out who would inherit your estate if you died without a valid will. The best way to avoid this situation is to sign a valid will. I say “valid will” because not every will that is submitted to the probate judge is determined to be valid. I will review the requirements for the will to be valid next week. You will have a better chance of leaving a valid will if the will is drafted by a knowledgeable attorney. When you leave a valid will, you determine who will inherit your estate.

Even if your will would leave your estate to the identical beneficiaries as the intestate statute would designate, there are additional disadvantages to dying intestate. Your will should designate who will be entitled to serve as the administrator of your estate, and who would be the alternative if that person was unavailable or did not qualify. The administrator is called the personal representative in Florida, but in some states is called the executor. If you die intestate, you must look to Florida Statute to determine who is entitled to serve as personal representative and to file the petition for administration with the probate court.

F.S. 733.301 states that the surviving spouse is entitled to administer the intestate estate. If there is no surviving spouse, the person entitled to appointment is that person selected by a majority in interest of the heirs. That means you must add the percentages and not just take a majority of the heirs. If the heirs cannot agree, then the person entitled to serve is the nearest heir in degree. If more than one applies, then the court may select the one best qualified. If no heir applies, perhaps because they do not want to pay the court costs and attorney’s fees, and the estate has creditors, one of the creditors may apply to serve. I would think most individuals would not want their creditor to administer their estate.

Other advantages of dying with a will rather than dying intestate, as well as the difference between filing formal administration and summary administration, will be discussed next week.

I will also mention the requirements for serving as personal representative and who is prohibited from serving, even if designed in the will or given preference under the intestate statute.

Source: http://www.news-press.com/apps/pbcs.dll/article?AID=/20080810/BUSINESS/808100343/1014/BUSINESS

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