How To Avoid Probate in Florida

How to Avoid Probate in Florida

The first question is: Why do I need to avoid Probate? The two part answer is very simple. The first is cost. Probate is incredibly expensive. The Florida Legislature wrote into the statutes the cost of Probate. It is a 3% of the total estate. Might not sound like a lot, but keep in mind that the home, bank accounts, stock accounts, etc are usually part of the gross estate. Which means it would not be hard to reach $1 MM of assets, or $30,000 of Probate fees. The second reason is time.  A quick probate takes a year. During that time, the taxes, insurance, and maintenance of the house still needs to occur.

So how do you avoid Probate? A Revocable Living Trust completely avoids Probate.   This means that you will not have to spend the money nor time in Probate.

The Revocable Living Trust also enables you to also delegate how the money is transferred to your loved ones. Meaning, all at once, or over time. For instance, imagine a family with two kids in their late teens when the Revocable Living Trust is created. Few years into the future, and the parents have a horrendous car accident and the kids now inherit a $1 MM life insurance policy.  I am not sure that giving $1 MM in cash to a young 20 year old is a great idea. For this reason, a Revocable Living Trust can help the kids navigate through life without tempting them to be wasteful with their money.

However, if the Revocable Living Trust is not properly funded, then it would not do any good. Funding the trust is simply the process of transferring assets to it. Essentially, you must change legal ownership of your assets from your name into the trust’s name, such as real estate. This also means you’ll have to change most beneficiary designations for Life Insurance policies, 401k and retirement accounts. It is not recommended to place the 401k and retirement accounts directly into the Revocable Living Trust for tax and structure consequences.