This week, I will walk us through the steps necessary to open and eventually close a formal administration of probate. I will attempt to offer a simplified explanation of the probate process, keeping in mind that West’s 2008 Probate Code and related laws and court rules are over 850 pages, plus an index of 160 pages.
If the decedent’s assets do not qualify for summary administration, or the will directs formal administration, or there are issues such as keeping the homestead free from creditor’s claims, elective share issues, federal estate tax obligations, then the attorney will have to commence formal administration for large estates. Formal administration may also be necessary where a life insurance product names the estate as beneficiary or where assets cannot be located and banks require the letters of administration issued in formal administration in order to avoid a confidentiality issue for their deceased client.
Commencement of the estate is done by the attorney preparing a petition for administration, which is filed with the probate court in the county of the decedent’s death, together with a certified short form death certificate. The long form can be purchased when a life insurance company, for example, requires the form to list the cause of death. Cause of death is normally nobody’s business, but may be grounds for the insurance company to contest payment of the claim.
The petition, among other things, must inform the court of the decedent’s death, the decedent’s residence at the date of death, even though he may have died elsewhere on vacation, and Social Security number, and lists his spouse, if any, and his next of kin. It also states the name of the person nominated as personal representative, if qualified, and a list of assets or general nature of the assets, and whether a federal estate tax return will have to be filed. Tax matters at death are so complicated that I decided to devote next week’s article to that.
The attorney must also prepare an oath of personal representative to promise the court that the nominee will diligently and faithfully administer the estate. The oath, signed before a notary, must include a designation of resident agent, who must be a resident of the county where the estate is pending. The agent, who is typically the attorney for the estate must sign accepting this designation. Anyone suing the personal representative, either in its representative capacity or in his individual capacity, for claims arising out of the estate, may serve papers on the attorney as agent for service of process.
Once all papers, together with suggested orders prepared by the attorney for the judge’s signature, and together with a court filing fee of approximately $285, are submitted to the clerk of the probate court, the judge will review the file and may request a hearing. If everything is in order, the judge will sign the Letters of Administration, of which the attorney will purchase, from the clerk, multiple certified copies. The court may require a surety bond be purchased from an insurance company in an amount the judge deems fit, which the attorney must arrange. Sometimes the attorney can obtain the waiving of the bond, but the bond is a good protection so that the estate will be reimbursed by the insurance company if the personal representative does not do the right thing.
Often, the relatives are told by the bank all they need to cash out the account is a letter of administration, but understanding the whole process shows it is not that simple. The Letter of Administration is a form prepared by the attorney that orders and authorizes any person with assets or financial information to deliver that information and those assets to the personal representative to be held and administered according to the will. The personal representative now has court authorization to find assets and locate creditors and take other appropriate action to fully administer the estate.
The attorney will then arrange a notice to creditors to be published in an appropriate local newspaper once a week for two consecutive weeks. This notice should also be served on known creditors. The notice also sets a time limit of 30 days after the date of service on the creditor and 90 days from date of first publication of the notice, unless claims are barred because the decedent has been dead for two years. The attorney for the estate has a duty to creditors according to the U.S. Supreme Court and must carefully keep track of these many time limits. After letters of administration are issued, the attorney will prepare a Notice of Administration to be served on beneficiaries and interested parties. This notice gives time limits to any person who objects to the validity of the will or the person nominated as personal representative to file their claim with the probate court, with copy to the attorney.
The rules contain a specific procedure and time limits for creditors to make their claims. If the estate disputes the claim, the attorney may prepare an objection to the claim within 30 days and the creditor must then file an independent lawsuit to collect the claim within 30 days unless a written motion for extension has been filed with the clerk and copy served on the creditor. There is also a procedural requirement to notify the Florida Department of Revenue, in case it has a claim for back taxes. If the decedent is over age 55, there is a procedure to notify the group which administers the Florida estate recovery program for Medicaid.
There are deadlines for inventories of the estate to be filed and on whom copies must be served. There are also forms, procedures, and time limits for the personal representative to file accountings of the estate’s property and income during the period of administration. Finally, to close the estate, the personal representative must seek an order of discharge after properly investing the estate, making distributions called for in the will and obtaining the consents of the beneficiaries or holding a hearing on the petition for discharge. The estate may be further complicated by problems with the elective share of the surviving spouse, the collection of sufficient assets from the trust to pay all creditors and obligations of the estate, Medicaid recovery issues, cash security, Medicare, determination of exempt assets, the fighting among beneficiaries that is quite common, Blue Cross/Blue Shield, convenience accounts set up as paid on death transfers, joint property issues and a whole host of other unforeseen problems.
The attorney and the personal representative should not be expected to handle these matters, which involve significant responsibility and personal liability, for free. Fortunately, Florida statute sets some guidelines for payment of fees, which will be discussed next week, along with the very complicated tax issues that face the attorney and the personal representative.
Source: William Edy, Fort Myers News-Press
Nassau Florida Family Law & Divorce bLAWg www.jmmflaw.com 