Who are “Interested Persons” and Can They Be Disinherited or Blocked from Challenging a Will?

Posted By on May 18, 2016

In Florida, probate estates are created when someone passes away. At that time, and after a petition is filed, a “Personal Representative” is appointed by the Florida probate judge to oversee distribution of the property held by the estate to the heirs and beneficiaries after the creditors have been paid.

Anyone who has a reasonable expectation that they will be impacted by the administration of a decedent’s estate is considered to be an “interested person” of that estate. They have rights that they can pursue – including the right to file a will contest or to sue the personal representative for breach of his or her fiduciary duty.

 

Webster County, Nebraska courthouse courtroom 1

Interested Persons Have Standing To Challenge a Florida Will in Probate Court

Legal Definition of Interested Person in Florida Statute

Florida Statute § 731.201(23) defines an “interested person” as: “… any person who may reasonably be expected to be affected by the outcome of the particular proceeding involved.”

It is a definition that is intentionally broad. Why? It is written to cover more than the named beneficiaries or the surviving spouse. For instance, the personal representative of the estate as well as a trustee of a trust are also considered to be an interested person. See, Florida Statute § 731.201(23).

So who else is covered by this legal term?

It is not a cut and dry determination. When determining who is an interested person in a Florida Estate the answer depends upon the purpose of the proceedings involved and the subject matter that is at issue.

How Do You Know If You Are An Interested Person in a Florida Estate?

Beneficiaries to an estate usually learn they have been named in the decedent’s Last Will and Testament from a Notice of Administration that they receive from the estate’s personal representative. Under Florida Statute 733.212, the personal representative is legally required to find the people named in the will and give them notice that they are beneficiaries of the estate. The surviving spouse is also legally required to receive a Notice of Administration, as are all other interested persons.

So, the easy answer to this question is, you will know if you are an interested person to a Florida Estate because you will receive a Notice of Administration letting you know that the personal representative considers you to be one.

Is Notice The Final Answer?

However, if you are not given an official Notice of Administration by the Personal Representative, this does not mean that you are not an interested person to the estate. It means that the personal representative has failed to consider you as interested, or has made a determination that you are not qualified to be one.

This does not mean that this is true. The Personal Representative can be wrong.

Filing a Petition with the Probate Court

If you believe that you are an interested person to a Florida Estate but you did not receive a Notice of Administration, then you may need to hire a probate lawyer and file your own proceeding in the probate court to assert your claim and your rights.

For instance, under Florida Statute 733.105(1)(b), you can file for a determination of “the beneficiaries or their shares” when there is “doubt about” the “shares and amounts that any person is entitled to receive” as an “interested person.” This is a lawsuit that is filed in the probate court as part of the estate’s administration.

Can an Interested Person Be Blocked From Challenging a Will or Be Disinherited by the Decedent?

Just because someone believes that they meets the definition of “interested person” does not mean that they are guaranteed to receive property in the distribution of the estate’s assets. An otherwise valid “interested person” can be disinherited, for example, and be legally barred from getting anything from the estate.

The Case of the Disinherited Son Who Wasn’t An Interested Party

In the case of Newman v. Newman, 766 So. 2d 1091 (Fla. Dist. Ct. App. 5th Dist. 2000), the decedent died after finalizing two different wills. The first will left his son only one dollar; the second will left him nothing. When the son tried to establish his standing in the probate matter as an “interested person,” so he could file a will contest regarding the newer will, he failed. The court held that he was not able to be considered an “interested person” because the first will had never been shown to be invalid and in that will, he was cut out of an inheritance by his father.

Here’s what happened.

Arthur M. Newman, Jr. (”AM”) was married to his second wife, Ethel, when he died. They didn’t have any children together, but AM did have a son from a previous marriage, Arthur M. Newman III (”Arthur”). AM died in June 1997, and his widow Ethel (91 years old at the time) filed his will for probate.

This was his second will, dated August 1962, It named Ethel as his personal representative and left all of his estate to her, as his wife. This will also provided that if Ethel should have died before AM, then his estate would be distributed 50% to his wife’s children and 50% to his son Arthur.

This second will, leaving all to Ethel, was admitted to probate. Arthur filed a will contest challenging the will, arguing that it was a forgery. Ethel defended the will against Arthur’s challenge.

Sadly, Ethel passed away in the midst of this litigation. Her successor personal representative filed a summary judgment motion with the probate court, arguing that Arthur had no evidence that there was a forgery here. All Arthur had was an opinion given by a handwriting expert he had hired. Meanwhile, Ethel had filed the attorney’s affidavit who had prepared the contested will, swearing that it conformed to AM’s wishes.

Arthur countered not only by filing affidavits of his son (Arthur IV) and his grandson (Arthur V) but AM’s brother, all giving their opinion that the will didn’t represent AM’s wishes and that the signature wasn’t his.

Arthur also filed a Motion to Determine Beneficiaries, arguing that he was an interested person in the estate, and that because Ethel had died before the estate had been distributed, Arthur along with Arthur IV and Arthur V should be considered interested persons and beneficiaries of the estate.

The probate court did not agree with Arthur. Neither did the reviewing court when he appealed that decision.  According to the court,

1. It was found that Arthur had intentionally and without good cause delayed the estate’s distribution until Ethel died. The trial court judge ruled that Arthur had “delayed matters for almost two years in the hopes that his step-mother, Ethel Newman, who was 91 years of age when her husband, the decedent, died would not survive the will contest and the petitioner then could claim one-half of the estate under the terms of the 1962 will if Ethel Newman died prior to the distribution of said estate.”

2. The court also found that Arthur lacked standing to come before the probate court in the first place because he was not an interested person as that is defined in Florida law. Arthur never challenged his father’s first will, and he acknowledged it as being genuine as he was discrediting the second will as a forgery. While “any interested person” may bring a will contest in Florida, Arthur didn’t meet this definition.

Why not? His father had disinherited him in that first will. AM left his son a single dollar in that first will. This is considered a means of disinheritance in Florida law, to leave someone only a “de minimis interest.”

Since Arthur failed to meet his burden to show that his father’s first will, which disinherited him, was invalid he wasn’t an interested person in the subsequent will. (If he had won a will contest and had the subsequent will thrown out, that first will would have gone into effect and under its terms, he would only get one dollar.)

The Case of the Contesting Son Who Was an Interested Party

Just because one son in one probate controversy would not be considered an interested party to that probate proceeding because he wasn’t a direct beneficiary named in the will doesn’t mean that this will be true in a similar situation. Each case must be considered based upon its own circumstances in order to determine if the “interested person” definition applies.

For instance, if a father sets up his will so that two testamentary trusts are created, then places his wife in the position of personal representative and the person who holds a life estate interest in his property, then his son is not named as a direct beneficiary. The estate has been designed so the property isn’t broken apart and distributed at the father’s death. The widow is protected.

This son isn’t named in the will just like Arthur wasn’t named in the will. That doesn’t mean that Arthur’s case controls.

The Watkins Will Contest

In the case of In re Estate of Watkins, 572 So. 2d 1014 (Fla. Dist. Ct. App. 1991), there was another nasty and acrimonious family fight in the probate courts. Here, a son challenged his mother who was acting as the personal representative of her dead husband’s estate, in accordance with the directive in his Last Will and Testament.

The son claimed his mother committed fraud and stole money out of the trust principal (of the trust set up by the will). According to the son, his mother had unduly influenced his father in order to get the Last Will and Testament that favored her. Under this will, she got income for life and when she died the trust principal and income would be distributed to her descendants, of which this son and contestant was one.

After his father’s death, the son argued that she had spent so much money that she had exceed the income payments and dipped into the trust principal. Oh, and the son also argued that she had breached her fiduciary duty as personal representative of the estate, too.

The mother fought back.

Her first argument was that her son was not an “interested person” with standing to get the will revoked. Why? The will had a lapse provision in it, and her son’s interest was merely a contingent interest in the property since she owned the life estate.

The appellate court did not agree with her. It agreed with the son.

According to the reviewing court, the son is an “interested party” to the probate and can challenge the actions of the personal representative. Even though the son did have a contingent interest in the trusts, and his interest might never “vest in possession or enjoyment,” as the mother had argued, the son’s contingent interest was “vested” legally.

The son did have a legal interest in the property which was reasonably expected to be impacted by improper administration of the estate by the personal representative. The legal definition of “interested person” as provided in the Florida Probate Code had been met by the son.

Questions or Concerns About Inheritance in a Florida Estate?

If you or a loved one are concerned that you may have rights to property being administered in a Florida probate proceeding, then you need to investigate whether or not you have a legal right to challenge the estate’s administration as well as to inherit from the estate. Every fact pattern is different requiring independent consideration of the issues.

You may or may not be considered an interested party by the personal representative and may or may not receive a Notice of Administration. That fact alone is not determinative of your status.  You may need to seek the help of the Florida Probate Court to answer that question.

A good piece of advice if you are faced with these issues, is to at least talk with a Florida probate lawyer to learn about your rights. Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

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Can Florida Personal Representative Directly Transfer Securities (Stocks, Bonds) to the Beneficiaries?

Posted By on April 20, 2016

A Personal Representative of a Florida Estate has legal possession and control of all the property owned by the person who has passed away (the “decedent”). This power is usually given to the P.R. both under the terms of the Last Will and Testament as well as the Florida Probate code. The P.R.’s duties will include things like making sure all the assets are safeguarded and everything has been collected and inventoried so the estate’s debts can be paid and the inheritance distributed to the beneficiaries.

Some of these assets will be tangible things like cars and clothing and jewelry; however, most Florida estates also hold financial assets like stocks and bonds. It’s one thing to hand over the keys to a vehicle, but how does the Personal Representative handle the transfer of securities to the beneficiaries? That’s not always an easy question to answer.

What are Securities?

Florida estate can hold all sorts of assets that can be categorized as “securities.” A security is defined as a financial instrument that represents one of the following:

1. Ownership in a publicly-traded corporation (stock);
2. Creditor to a government or corporation (bond);
3. Rights to Ownership (option).

Any of these types of securities are real assets recognized by state and federal law. They can be negotiated, i.e., bought and sold. They can be given a specific value in dollars and cents. And, they are issued either by governmental entities or corporate entities to individuals: the company or governmental entity that gives them out is called their “issuer.”

There are different classes of securities. First are the “certificated securities.” These are held in actual paper documents. Second are the “direct registration” securities, where they are recorded by a transfer agent on behalf of the issuer without the need for printing out a physical certificate. The rights of the issuer and of the owner are the same in either class.

Third, there are “bearer securities,” which are transferred directly between investors by endorsing them and handing them over. These are rare.

Finally, there are “registered securities,” which have the name of the holder on them, but the issuer maintains a register of necessary details pertaining to the securities. Transfers are made through “amendments” to this register. There can be registered debt securities and secondary market shares.

 

Allied Paper Corporation Stock Certificate 1964

Stock Certificate for Allied Paper Corporation

 

Step One: Securities Placed Into the Estate

As part of the Personal Representative’s duties to the estate, all stocks and financial securities that are held in the name of the decedent must be placed into the name of the decedent’s estate in preparation for legal transfer of ownership. This must be done no matter how the securities are held (paper, electronically).

As a general rule, their ownership will be referenced as “ [name of Personal Representative], Personal Representative FBO Estate of [name of decedent].” The tax identification number for the estate will be noted on each security along with this new owner name.

A good practice is for a new brokerage account to be opened in this ownership name, as well, so any dividends and interest that are generated before the ultimate transfer of ownership to the beneficiaries can be collected by the estate. This is something that brokerages are accustomed to doing, so they can be helpful and instructive. Often, they will require (1) certified copy of the letters of administration; (2) affidavit of decedent’s domicile as Florida domiciliary; and (3) certified copy of the death certificate.

Does this have to be done? Yes. This is a temporary and necessary leap-frog in ownership. The stocks must be moved into the estate’s ownership in order for there to be a proper legal change in ownership. The decedent can no longer transfer legal title. That is now the duty of his Personal Representative.

Accordingly, in order for there to be a transfer of any financial asset, stock or bond, to a beneficiary, the legal ownership must be changed to reflect the decedent’s estate. Then, the Personal Representative will have the legal ability to transfer them.

Step Two: Transfer of Securities to Beneficiaries by Personal Representative

 

1. Florida Probate Code

First of all, before any change in ownership to the beneficiaries can be undertaken, the Florida Probate Code must be reviewed and followed. Under Florida Statute 733.612, the legal authority of the Personal Representative is outlined and must be followed unless there is a specific court order and will provision that provides an alternative. Florida Statute 733.805 is another law that must be checked, because it gives the Personal Representative guidance in how she is to prioritize her work for the estate.

Florida Statute 733.603 provides: “A personal representative shall proceed expeditiously with the settlement and distribution of a decedent’s estate and, except as otherwise specified by this code or ordered by the court, shall do so without adjudication, order, or direction of the court.”

Thus, Florida probate law, as a general rule will allow a Personal Representative, without court order, to take possession and control of the stocks and bonds held by the decedent. The probate statutes will also allow the Personal Representative to transfer these assets to the beneficiaries if otherwise allowed in an “expeditious” manner.

Which may mean that transferring the estate’s securities may be one of the first asset transfers that the Personal Representative undertakes. (For more, read our prior posts on interim distributions.)

2. Last Will and Testament

Secondly, the language of the decedent’s Last Will and Testament must be read. What provisions speak to these assets? The wishes expressed in the will must guide the Personal Representative here. For example, if the stocks owned by the decedent are to be sold in order to pay off the student loans of his grandchildren, then this must be done. The Personal Representative will have a legal duty to follow this directive even if the beneficiaries would prefer that the stocks be transferred to them.

3. Security Document Language

Third, each security must be examined. Not all security instruments are the same. The procedure for transferring ownership in securities will vary depending, for example, upon on whether the asset is a stock or bond and whether it is a publicly traded security or it is a private security.

A. Street Name

Stocks and other securities may be held in a “street name.” This is sometimes call being held as a “book entry.” Here, there are no actual stock certificates that can be held in one’s hand, they are held electronically by the broker. The Personal Representative completes a form provided by the broker that allows him to transfer ownership via the broker.

The form identifies the name, address, and Social Security Number of the beneficiary as new owner. There must be a Medallion-guaranteed signature (more on that below) by the Personal Representative. The beneficiary will also be required to complete a Federal Income Tax W-9 Form so future revenue generated by the securities for its new owner can be reported to the U.S. Treasury Department.

B. Paper Certificates or Electronic Form with Depositor Trust Company

When there are actual paper certificates involved, they can be transferred once again with the help of a brokerage house like Charles Schwab, Edward Jones, or MerrillLynch. Here, the Personal Representative must send her official letter of authorization provided by the probate court to the brokerage, notifying them of the decedent’s passing and the Personal Representative’s legal authority over the estate’s assets.

Upon receipt of the Personal Representative’s notification, the brokerage sends both the stock certificates held in their care and their preferred transfer of ownership form to the Personal Representative.

The Personal Representative then takes all these documents to a bank, or to a member firm of the New York Stock Exchange, where a “Medallion Signature Guarantee” is placed on the certificates for the Personal Representative to sign as required by the Securities and Exchange Commission. This is a federal mandate to protect against fraud and theft and maintain the integrity of the securities markets.

For more on the requirements of a Medallion Signature Guarantee, read the SEC directive, “Signature Guarantees: Preventing the Unauthorized Transfer of Securities.”

Once the certificates have been given their official Medallion Guarantees, the stocks are returned to the brokerage. At this point, the brokerage can re-issue the stocks in the names of the appropriate beneficiaries.

C. Guidelines and Procedures

The procedure for actually transferring each security will be covered by security guidelines. Personal Representatives, as well as beneficiaries, can determine how each security held by the estate should be transferred by checking first with the Securities Transfer Association (STA) Guidelines (latest revision 2015). (These can be downloaded in pdf form here.)

These guidelines cover any security, as defined by Section 8-102 of the Uniform Commercial Code (”UCC”), including certificated limited partnership interests, stock purchase warrants and options, notes, bonds, debentures and voting trust certificates, as well as “uncertificated securities.”

Additionally, each transfer agent will have its own forms and documents that will be needed to complete the transfer. Checking with their website may provide the necessary information here. And, there’s always the option of placing a phone call or writing a letter asking in advance for what documentation will be required for that particular security transfer.

D. Affidavits

There may also be a requirement that a sworn statement, or affidavit, be provided by the Personal Representative before the transfer can be made. These affidavits are required in order to evidence that the decedent’s taxes and debts have been paid, as well as the residence and domicile of the decedent at time of death.

Statements may also include that no transfer tax applies to the transaction, and that the transfer is being made to a beneficiary in accordance with the provision of the owner’s Last Will and Testament.

E. Joint Tenancy With Right of Survivorship

When a security is held in joint tenancy with right of survivorship, then the surviving tenant becomes sole owner of the security. It does not come into the ownership of the estate and the Personal Representative has no control over it. Here, the surviving tenant will be responsible for contacting the brokerage house and taking the necessary steps to complete the procedures required to remove the decedent’s name from the certificate.

F. Lost Securities

What about securities that are known to exist but cannot be located? The Personal Representative will have a legal duty to replace these certificates so they may be legally transferred to the beneficiaries. This will be governed by the provisions of UCC Section 8-405(a), which requires any claim that a security certificate has been lost, destroyed, or wrongfully taken, follow all “reasonable requirements” of the issuer of that security before a new stock is issued to the estate, including but not limited to a sufficient indemnity bond.

Questions or Concerns About a Stock or Bond Owned by a Florida Estate?

If you or a loved one are aware of security certificates owned by a decedent in an estate in which you are an heir or beneficiary, or maybe it’s part of an estate that you are owed money as a creditor, then you may need to learn more about those stocks or bonds and if they are available for transfer to you before the conclusion of the estate.

An experienced probate lawyer can help you here. And the cost of having a Florida probate attorney go over these things with you can be much less in time and money than many folk assume.

A good piece of advice if a loved one has passed away and there may be an issue with their securities, is to at least talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

If you found this information helpful, please share this article and bookmark it for your future reference.

How Does A Personal Representative Deal With Special Assets In A Florida Estate?

Posted By on March 16, 2016

While it is true that you can’t take your assets with you, you certainly can control how your affairs are handled after your death. The provisions of a Last Will and Testament can not only control the distribution of assets, but it can also direct how assets are to be cared for or disposed of to protect other assets of the estate. Rest assured, Florida probate judges want a decedent’s Will provisions followed.

Accordingly, a Personal Representative for a Florida Estate has a legal duty to follow the provisions of a Will as written;  a personal representative can not administrate an estate according to what is easiest for them to do. A Personal Representative must follow the directions in a Will, without consideration of their own self-interests.

This rule is true even if though not all assets are the same.  Some assets may need special attention, liked being stored in an air condition controlled facility. Meaning, a personal representative may have to make some decisions that can cause controversy between beneficiaries, creditors, and the Personal Representative (like selling some assets to preserve others). These decisions can even lead to allegations of breach fiduciary duty against the Personal Representative — fortunately, past case precedent as well as the Florida Probate Code and rules provides guidance for Personal Representatives on how estates should be administered no matter how strange or special estate assets may be.

 

Wine bottles in a rack

What about the wine collection?

Dealing With Special Assets

Once a Personal Representative accepts the task of overseeing an estate and making sure the decedent’s wishes are carried out, as written in the Last Will and Testament, that person will soon discover that the decedent owned all sorts of things. Most people do.

For instance, homestead property as well as investment properties, like rental houses or commercial property, are common assets here in Florida. Cars, trucks, and other motor vehicles as well as recreational vehicles (e.g., motor homes, travel trailers) and boats are also likely to be included on an inventory of a Florida estate.

However, many people own different and unique kinds of property that may need special care and treatment. By their very nature, these assets will need attention and care from the Personal Representative that other kinds of assets will not demand. And, because of their particular characteristics, there may be times when the Personal Representative’s duties may require a tough call in deciding how best to handle those assets.

Unique Assets May Mean Tough Calls for the Personal Representative

Sometimes, the Personal Representative will have a hard decision to make: follow the black letter of the Last Will and Testament regarding the special needs of some assets versus other assets, in order to protect the overall value of the estate and, ultimately, the inheritance of the beneficiaries and the debts owed to creditors.

When can this happen — what kinds of assets create these kinds of problems? These strange or special assets can come in several forms, such as Wasting Assets; Perishable Property; Under-productive Assets; and Non-productive assets.

1. Perishable Assets

Assets that can perish if left without attention of some sort are considered to be “perishable property” of the estate. Immediately upon discovering that the estate owns perishable property, the Personal Representative needs to take action.

First of all, perishable assets must be located and secured. Then, steps must be taken to keep the perishable assets safe from harm.

Perishable assets can include fine wines and other assets that are vulnerable to losing their usefulness or their value if left unattended. In Florida’s climate and weather conditions, the heat and humidity (particularly in the summer months) may harm or destroy assets, including fine fabrics, pieces of artwork, metalwork, and other valuables. Assets may be considered perishable property here that might not be perishable and vulnerable in other states or in other environments.

What if the cost of securing and storing these perishable assets is expensive relative to other assets of the estate?  What happens if there is little or no liquidity in the estate to pay for these costs? These type of issues are examples of problems a Personal Representative can face when dealing with special estate assets.

The personal representative will have to decide whether to spend money to store and protect the perishable assets, or to sell the perishable property quickly in order to cut storage costs for the Estate. If the Personal Representative decides the best course is to sell the perishable property, then he or she can do so without seeking a court order approving the sale (if the Letters of Administration are not restricted – meaning, the Court hasn’t stamped the Letters with language stating that all asset sales must be approved by the Court). See, Florida Statute 733.603. However, many Personal Representatives may find it the more prudent course to go ahead and bring the matter up before the Florida probate court, and have the protection of the judge’s approval before they sell the perishable asset.

2. Wasting Assets

Wasting assets are property that lose value over time, or will lose their value as they are used. Examples include cars and trucks owned by the decedent.

Wasting assets are drains on the estate’s bottom line; therefore, the prudent thing for a Personal Representative to do is sell the wasting assets or otherwise dispose of them as soon as possible to minimize the loss to the estate that holding onto them would incur.

However, what happens if these are specifically mentioned in the Last Will and Testament? Or, what if these wasting assets produce income, or they have other financial consequences?  There may also be tax considerations of holding onto assets versus disposing of them.

If an asset produces enough income to cover its upkeep, then maybe it shouldn’t be sold right away. What kind of asset might that be? A patent owned by the decedent might be an example here. Other wasting assets include any rights in natural resources like oil and gas, or other mineral rights (e.g., natural gas or timber), that diminish in value because of removal or depletion; others include securities-related assets like call options (or puts) that will expire on a certain date and time.

3. Non-Productive or Under-Productive Assets Owned by a Florida Estate

When a Florida Personal Representative is evaluating all of the estate’s assets, he or she should be evaluating the assets with an eye towards what is in the best interests of the estate (and its interested parties, the beneficiaries and creditors). This is the essence of the Personal Representative’s fiduciary duty to the estate (the breach of which makes her personally liable to the beneficiaries and interested parties; for more on these duties, see our earlier post).

Which means that when the Personal Representative discovers an asset that is not productive or that is under-productive, then he or she needs to make some decisions regarding that piece of property. These kinds of assets include stocks and bonds, and other financial instruments, as well as property that may have an expense accompanying it (such as a piece of artwork that is being insured).

Under Florida Statute 733.612 (l), a personal representative may “… [r]etain assets owned by the decedent, pending distribution or liquidation, including those in which the personal representative is personally interested or that are otherwise improper for fiduciary investments.” So, if the Personal Representative decides that keeping the asset for distribution is the best decision in the circumstances, then by law, he or she need not sell it even if it is non-productive or it is under-productive.

There are times when sentimental value must be considered, even if it does not impact the bottom line. The landscape painting that the decedent displayed over the mantle may no longer be in vogue, but the decedent’s granddaughter has fond memories of it and considers it to be priceless.

Additionally, under Florida Statute 518.11 (”the prudent investor rule”), there are times when the Personal Representative can legally hold onto under-productive assets when doing so makes good financial sense. Acting as a prudent investor on behalf of the estate, the Personal Representative must exercise reasonable care to oversee the estate’s entire investment portfolio as a whole. If there are some stocks or bonds or other financial instruments within that portfolio that are under-productive, taken by themselves, then they may be considered “under-productive assets” of the estate.

Still, if the Personal Representative has a reasonable basis for considering the asset to be valuable to the investment portfolio as a whole, given the facts and circumstances prevailing at the time, then the Personal Representative may keep that asset within the estate despite its questionable performance. The key here is considering the entire portfolio and its performance, not each asset independently of the other.

Another situation: securities in closely held business entity. Here, the problem may be solved because they may be tied to a redemption agreement between the decedent and the company; often, there will be life insurance policies on the decedent with the company as beneficiary to pay for the liquidation of the interest. However, if the decedent was actively managing or operating this business at the time of his death, then the Personal Representative may have more to do than just seeking to liquidate the interest.

Here, these securities have to be evaluated for their productivity. If they are non-productive or under-productive to the estate, then the Personal Representative must evaluate what is best for the interested parties. It may be that the heirs want to continue with the business, operating it themselves. If so, then the securities should be retained. Otherwise, it may be best to sell the securities for the benefit of the estate, or to dissolve the entity itself and then sell off its assets.

Questions Or Concerns About A Special Asset Owned By A Florida Estate?

If you or a loved one are aware of an unusual or special asset owned by a decedent in an estate in which you are an heir or beneficiary, or maybe it’s part of an estate that you are owed money as a creditor, then you may need to learn more about that asset and whether or not the Personal Representative is taking the proper action regarding that asset. It is possible that you may need to seek the help of the Florida Probate Judge in objecting to what is being done by the Personal Representative and stopping the asset from being sold or disposed of in other ways.

An experienced probate lawyer can help you here. And the cost of having a Florida probate attorney go over these things with you can be much less in time and money than many people assume to be the case.

A good piece of advice if a loved one has passed away and there may be an issue with their assets, is to at least talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

_______________

Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

If you found this information helpful, please share this article and bookmark it for your future reference.

Florida Personal Representatives And Marshaling The Estate Assets

Posted By on February 17, 2016

In Florida there are well-established probate laws that place a high burden upon the person who undertakes the job of administering the estate of someone who has passed away. The estate administrator, or “personal representative” (which you may recognize as the “executor” or “executrix”) acts as a “fiduciary” to the decedent’s beneficiaries and creditors. Under Florida law, there is no higher level of responsibility than to act as a fiduciary for someone else or their estate.

What does this mean? All personal representatives, must act with the utmost integrity. They are in a position of trust and must act accordingly. Meaning, they must act in the best interest of the person or estate they are representing.  Undertaking the job of a personal representative comes with knowing that their work will be reviewed and questioned, and that’s the best case scenario.

The worst case? Personal representatives can be sued and held liable for financial damages they may cause to the estate and its interested parties, if they are held to have breached their fiduciary duty.

What is Marshaling the Assets?

In Florida, and within 60 days of the issuance of the Letters of Administration, each personal representative is required to prepare and file with the probate court an inventory of all the assets, and their date of death value, owned by the decedent at the time of their death. If a Personal Representative fails to locate a piece of personal property, or track down all the real estate owned by the person who has died, then they can be held personally responsible for that failure. Consequently, most Personal Representatives are careful to make sure that they’ve made every effort to find and collect (and, in some cases, had appraised) all of the decedent’s assets.

It’s in the best interests of the beneficiaries and creditors that they do so. It’s also in the best interests of the Personal Representative, personally.

The process of collecting all of the assets, and preparing the estate’s inventory, is called “marshaling the assets.” And it can be confusing, complicated, and messy.

 

General Picture

Marshaling the assets of an Estate is much more than collecting and organizing it for a garage sale.


 

Finding The Paperwork

Once the Personal Representative has been appointed by the probate judge and is issued the “letters of administration”(the official document that acknowledges the right for the personal representative to administer the estate), one of the first steps is to gather all of the documentation that he or she can find regarding the decedent’s property holdings (real and personal), as well as documentation about any debts (credit card, medical, or otherwise) and other business matters. The Personal Representative has the legal right to search not only the decedent’s residence but also their boat, office, storage room, gym locker, and place of business. The Personal Representative may have a duty to talk with the decedent’s lawyer, accountant and stock broker, as well, in order to track down asset information.

All sorts of documentation may be collected in this process, including things like:

Pension plans
IRAs
Income tax returns for the past few years
Marriage certificates
Trust agreements
Life insurance policies
Divorce documents
Car titles
Bank statements
Insurance policies (health, life, car, long-term care, funeral plan, etc.)
Partnership agreements
Stocks and bonds
Corporate documents
Deeds of trust
Real estate titles
Leases
Certificates of Deposit.

The Safety Deposit Box

As part of gathering all this paperwork, the Personal Representative will often find documents referencing a safety deposit box at a local bank or credit union. Often, there will be more than one name listed with the bank has having the legal right to access that safe deposit box: both the decedent and another person (or several people). Husbands and wives are both listed as having joint access, for example, in many situations. Parents and their children, likewise, may all have legal access to the same safe deposit box.

The bank is legally required to allow anyone to access that safe deposit box at any time; if one of the people listed as having access dies, even the one paying for it, that won’t matter. Two things are important here for the Personal Representative.

  • First, it’s important for the Personal Representative to work with bank officials to gain fast access to the box in order to check for any burial plot deeds or funeral instructions — or even another will. This can be done by working with the financial institution officers, who can open the safe deposit box for the Personal Representative in order to remove a will as long as there is an agreement allowing the person to have access or an order from the court.
  • Second, the Personal Representative will need to check to make sure that everything in that safe deposit box is collected and inventoried for the estate. If someone has accessed the safe deposit box after the passing of the decedent, or in the months prior to their impeding death, then an investigation into the possibility that valuables belonging to the estate need to be retrieved from that person may be warranted.

Only Probate Assets Should be Marshaled for the Estate

Not everything that is owned by the decedent is part of their estate. There are certain kinds of property that legally are NOT “probate assets.” The Personal Representative cannot marshal these assets for the estate; they are not assets to be inventoried because they are excluded under the law from the probate process.

What are non-probate assets? As a general rule, they are based upon contracts that by the terms of the agreement keep the asset out of probate. Here are three common examples of assets that are NOT to be marshaled by the Probate Representative:

1. Life Insurance Policies

Life insurance policies, by definition, are contracts between the insurance company and its policy-holder to pay a certain amount of money to the selected recipient (beneficiary) upon the death of the policy-holder. The decedent’s passing creates a contractual duty upon the insurance carrier to pay money to the listed beneficiary. This money is never an asset of the estate, unless the estate is a named beneficiary or there is no beneficiary listed on the policy.

2. Jointly Owned Bank Accounts

Many checking accounts are held in the names of more than one person. A married couple may have a joint bank account. A parent and their college-age child may have a joint checking account, used primarily by the student for college expenses. Elderly parents and care-taking relations, likewise, may find a joint checking account to be a great convenience.

The contract between the bank and its account holders will define the rights that they have to the account. If all the signatories to a bank account are listed with the bank as joint owners, then the passing of one of them doesn’t impact the right of ownership held by the other(s) under that contract. They own what’s in the account both before and after the date of death, according to the contract with the bank. The amount held in that account never becomes a part of the estate. These are known as “Joint Tenancy with Right of Survivorship” accounts.

3. Retirement Accounts

Often a retirement account or pension plan is based upon a contract whose language clarifies that ownership passes to named beneficiaries if the retiree (or pensioner) passes away. This is similar to the legal provisions of a life insurance policy: by the contractual terms, the monies are to be paid to the person designated to receive them, and the estate is never involved.

However, just because these kinds of non-probate assets were owned by the decedent, doesn’t mean that the Personal Representative can quickly mark them off his or her list of tasks. It is important that the Personal Representative make sure that they really ARE non-probate assets. For instance, not every bank account with multiple signatures is a JTWROS account — and if it’s not, then that account may be an estate asset even if more than one name appears on the checking account.

Difficulty Finding the Estate Assets?

The Personal Representative’s job of finding and collecting estate assets can be complicated and overwhelming at times. Different kinds of assets mean different tasks to perform and some institutions don’t make it easy to gather assets.  Most financial institutions act as if they are in the business of just collecting assets and not in the business of giving them back.

A lot of times, the easy job for the Personal Representative will be to secure property (like storing the car in a garage or other safe location). Another relatively simply task: finding the decedent’s wallet and safeguarding it along with the decedent’s drivers license, passport, voter’s registration card and credit cards.

However, if the decedent ran a business or owned a partnership interest in a going concern, then the job of marshaling estate assets can become very complex. Sometimes, the Personal Representative may even have to take on the role of manager, running that business until things can be sorted out.

Why? The Personal Representative has the job of protecting the value of these estate assets. Part of that job means making sure that the business keeps turning a profit, or that the operations don’t go idle because the decedent isn’t there to run things.

It is in these more complex situations of marshaling the assets that an experienced probate lawyer can be of great help to the Personal Representative. Not only can a probate attorney assist the Personal Representative in protecting these complicated estate assets, the lawyer can work fast to block any attempts by others who may be interfering or attempting to influence the business operations during the administration process.

A good piece of advice if a loved one has passed away and there may be an issue with their assets, is to at least talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

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Collecting Debts Owed To The Decedent

Posted By on February 3, 2016

When someone passes away in Florida, our probate laws work to protect that person’s property on behalf of their heirs, beneficiaries, and creditors. An “estate” is created and overseen by an administrator approved by a Probate Judge.

This administrator, or the “Personal Representative” (which most people recognize as an ‘executor’), has the job of making sure that every single asset is collected, protected, and inventoried.  It doesn’t matter how big or how small: the decedent’s assets must all be located and protected for their distribution to the beneficiaries who are in line to inherit – or to creditors who are in line to be paid.

Some of these assets are easy to locate and transfer to the heirs. The cars, the furniture, the TVs, the real estate: these are easy to locate and list on the inventory.

 

 

However, for many probate estates, things can be tricky — they may have accounts receivable or debts owed to them. These are assets, too. And it’s the job of the Personal Representative to determine everything that is owed to the estate and make sure those debts are collected by the estate.

1. Variety of Debts Are Owed To A Decedent

Any debt owed to the decedent is an asset of his or her estate. If there is a handwritten I.O.U., then it’s an asset of the estate no matter how informal it might be. Written on a napkin, jotted down on a piece of notebook paper — if the Personal Representative determines it’s a valid debt, it’s included in the estate.

Other kinds of debts that may be owned by the estate include notes and accounts receivable. If the decedent ran an Etsy store, for instance, or worked for themselves refurbishing furniture or repairing cars, then they would have accounts receivable that the Personal Representative is required to inventory and collect. If there is a note for a car that the decedent sold to his nephew, then that counts as a debt to be collected by the Personal Representative, too.

2. Calculating The Exact Amount Owed to the Estate

The first step for the Personal Representative related to these debts is to determine the amount owed to the decedent at the time of the death (meaning, are there any outstanding payments due?). After reviewing the debt instrument, the Personal Representative calculates the amount due and owing and determines if there is a single amount due, or if there are periodic payments to be paid. If there is a payment schedule attached to the debt instrument, then the Personal Representative needs to keep track of that information.

Additionally, if there are any past due amounts, those have to be calculated along with any late charges that might apply. Some people may assume that if the person has passed away, then their debt has been canceled and they may stop making payments on their debt. However, a legally binding debt is not automatically “paid in full” when the debtor dies in most instances (meaning the debt survives the death of the note holder) which means the money still needs to be paid.

3. Notification to the Debtors

After the Personal Representative determines all of the outstanding debts owed to the decedent, then he or she must notify each of these debtors that the estate will be the new party responsible for collecting the payments. The name and current mailing address of each debtor will be collected and a formal written notice will be sent to each debtor informing them of the name of the new creditor to whom they should be making their payment.

Included with this notice should be confirmation of the decedent’s passing, and the date of death, as well as the formal demand by the estate that the debt be paid. The name and address of the Personal Representative should be included, as well as the Personal Representative’s itemization of the debt (amount owed, dates of payment, etc.).

4. Past Due Amounts at Time of Death

If there were debtors who were already behind in paying their debts to the decedent at the time of death, then the Personal Representative may have a duty to commence collection efforts. As a fiduciary to the beneficiaries as well as the estate’s creditors, the Personal Representative has the obligation to collect all monies due and owing the estate.

5. Accounting Principles Must Be Used for Debts Owed to the Estate

When the Personal Representative has completed all of his or her tasks in administering the estate, except for distributing the assets, then it’s time for the Final Accounting to be filed with the Probate Court. In the Final Accounting, the Personal Representative will list all the debts owed to the estate and how the payments made on those debts were tallied. The allocation of receivables may be either “principal” or “income.”

There are certain accounting principles that the Personal Representative must follow here. The failure of the Personal Representative to adhere to these accounting principles may be argued as a breach of her fiduciary duty; therefore, a prudent Personal Representative will work with an accountant or CPA (certified public accountant) to make sure that all their I’s are dotted and the T’s are crossed.

These allocation principles include:

1. If they were due, but not received or paid, before the death of the decedent they are to be considered as principal of the estate. Florida Statute 738.302(l).

2. If they didn’t have a due date, then they accrue from day to day before and after death. The amount accruing before the date of death is principal; after the date of death is income. Florida Statute 738.302(2).

3. If they were due after the date of death and they were paid, they are not prorated and are determined under normal principal and income accounting rules.

4. Any payments made on income-producing assets of the estate are considered income.

5. Net profit of any business that the decedent operated (sole proprietor or partnership) is considered income to the estate.

6. Corporate dividends payable before the date of death are principal; those payable after the date of death are income.

Obviously, the task of overseeing, collecting, and properly distributing the debts owed to the decedent at the time of death can be complicated for the Personal Representative. Moreover, how those debts are valued and accounted for in the estate may make a difference in the amount of inheritance received by a beneficiary; the answer a lot of times depends upon the language of the Last Will and Testament, the Trust Agreement or other governing documents, as well as the applicable probate laws.

Questions Regarding Debts Owed to Florida Estate

There can be many questions regarding what is owed and how it is collected and accounted for after someone passes away in Florida. A debtor should not assume that they get a windfall just because the person to whom they owe money has died. Who receives the payment stream and where the payments are to be sent can be confusing.

Debtors may need help in determining their legal rights in these situations, including confirming how much they owe, or don’t owe, and who they should pay when dealing with a creditor who has died.

Beneficiaries may also have concerns over debts owed to the estate, particularly if the decedent is holding a mortgage on an income-producing property (are taxes and insurance being paid) or held a Note related to an income-producing business.  They may have concerns and questions, such as:

  • If there was a corporation, partnership or other legal entity, then what happens?
  • Is the Personal Representative doing what should be done regarding the debt?
  • Who inherits the debt?
  • Who shares in the income stream from that debt?

An experienced Florida probate lawyer can be very helpful in resolving disputes between beneficiaries, heirs, debtors, and the Personal Representative regarding money owed to the estate. Many may be surprised at how reasonable it may cost to get that attorney’s help — some of these questions may be answered in a single telephone conference. Others, however, may need more legal steps; some may require intervention in the form of a hearing before the probate judge.

A good piece of advice is to at least talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

If you found this information helpful, please share this article and bookmark it for your future reference.

What Is An Interim Accounting By The Personal Representative?

Posted By on January 27, 2016

When someone passes away in Florida, laws come immediately into play, creating an “estate” which then owns all that person’s property until it can be safely distributed to the heirs and beneficiaries. A Florida Probate Judge will approve an individual (or sometimes a bank or trust company) to act as “Personal Representative” of that estate. This person may be named as executor in the Last Will and Testament, or it may be someone appointed by the court; either way, they get official documents called “letters” and the probate process begins.

The Personal Representative has lots of power and lots of responsibility. In fact, they are held to the highest legal standard in how they administrate the estate on behalf of beneficiaries and creditors and their actions are often reviewed for impropriety.

Florida Personal Representatives Act Under the Highest Standard of Care: They Have A Fiduciary Duty

Under Florida Statute 733.602, Florida law makers have explained this heavy and strict legal standard of operation as follows:

(1) A personal representative is a fiduciary who shall observe the standards of care applicable to trustees. A personal representative is under a duty to settle and distribute the estate of the decedent in accordance with the terms of the decedent’s will and this code as expeditiously and efficiently as is consistent with the best interests of the estate. A personal representative shall use the authority conferred by this code, the authority in the will, if any, and the authority of any order of the court, for the best interests of interested persons, including creditors.
(2) A personal representative shall not be liable for any act of administration or distribution if the act was authorized at the time. Subject to other obligations of administration, a probated will is authority to administer and distribute the estate according to its terms. An order of appointment of a personal representative is authority to distribute apparently intestate assets to the heirs of the decedent if, at the time of distribution, the personal representative is not aware of a proceeding challenging intestacy or a proceeding questioning the appointment or fitness to continue. Nothing in this section affects the duty of the personal representative to administer and distribute the estate in accordance with the rights of interested persons.

What does this mean, really?

Fiduciaries are to act with the utmost honesty and trustworthiness. As the Florida Supreme Court has explained, quoting the SCOTUS case Meinhard v. Salmon, it is stricter than the morals of the marketplace, and the “punctilio of an honor the most sensitive.See, Donahue v. Davis, 68 So.2d 163, 169 (Fla.1953).

It doesn’t get higher that this. The “fiduciary duty” is the gold standard; it means acting to protect another party’s interest. And every single Personal Representative takes the job with the understanding that they have to meet this requirement.

For more on all the responsibilities that the Personal Representatives must undertake while abiding by this standard of care, read our blog post, “21 Duties of a Florida Personal Representative According to Florida Law.”

 

 

Interim Accountings and the Personal Representative

At the conclusion of the probate administration, the Personal Representative must present a “final accounting” (unless the beneficiaries waive their right to receive a final accounting). This document will detail all the assets, debts, and transactions that he or she has undertaken on behalf of the estate.

However, there’s no rule that says everything must wait until the end of the road for the Personal Representative to report what he or she is doing. The Personal Representative has the opportunity under Florida law to provide an “interim accounting,” too.

Given that high standard of care that all Personal Representatives must meet, there are times when the Personal Representative will think it prudent and reasonable to prepare and file an Interim Accounting of the Estate. This can be months or years before a Final Accounting is necessary.

What is an Interim Accounting?

An Interim Accounting is a voluntary accounting prepared by the Personal Representative. Sometimes, but not very often, the probate judge will ask that an Interim Accounting be performed. As an accounting of the estate, the interim accounting must comply with Florida Probate Rule 5.346 just like a Final Accounting.

10 Things That Must Be Included in an Interim Accounting

Florida Probate Rule 5.346 requires all accountings to be done in a specific way. This includes making sure that they comply with the following requirements:

1. They must be written in a way that someone who isn’t savvy on accounting terms or procedures can still understand it;
2. They have to include a summary of everything at the start, so everyone gets an overview;
3. They have to give an explanation at the top, telling why the accounting is a good idea according to the Personal Representative;
4. Details must be given so that every person interested in the estate (heirs, creditors, etc.) has an understanding of the big transactions that have taken place;
5. A list of all the estate assets must be included;
6. All the assets must have either their acquisition value (if they were bought by the estate) or carrying value (if they were owned by the decedent at the time of death);
7. All the assets must also have their current fair market value listed, no matter how small it might be;
8. All the gains made on the assets must be shown;
9. All the losses incurred by the estate must be shown; and
10. Any big transactions made by the Personal Representative that didn’t impact the value of things or the bottom line also has to be included.

Why do an Interim Accounting?

There’s no probate law or statute that demands this accounting be performed. Only the Final Accounting has to be prepared under Florida law (unless the beneficiaries waive their right to receive the document). However, interim accountings are sometimes a good idea. And they can be done at any time that the Personal Representative decides it’s a good idea to stop and create the document.

This might be a pretty fast job, or it might be a complex task. The only real difference between an Interim Accounting and a Final Accounting is that the Interim Accounting does not have to explain how specific assets are to be distributed, including the real estate owned by the decedent, and all the documentation that supports it (the “substantiating papers”) doesn’t have to be filed with the court.

Because this can be a cumbersome and costly thing to do, the Personal Representative has to notify all interested persons that he or she intends to do an Interim Accounting, and give the reasons why it’s a good thing. The persons receiving the document have 30 days to file their objections, and if there are parties objecting to have an Interim Accounting done, then the probate judge will decide on it at a hearing.

Normally, Interim Accountings are prepared when the estate is complex. Usually, that means the estate has lots of assets. However, a complex estate can also have a few assets but the assets are volatile in value or otherwise unique. An estate may own a few pieces of artwork, for instance, or sets of foreign currency, that need special care and attention because their market values fluctuate.

Interim Accountings can also help when it’s time to prepare tax returns. Sometimes, they can help in maintaining income records of estate assets when the estate owns lots of income-producing property.

Are Interim Accountings Prepared For The Protection Of The Personal Representative?

Insofar as challenging the actions of the Personal Representative in how he or she is handling the estate, filing an Interim Accounting doesn’t serve as a shield for the Personal Representative down the road. He or she won’t be able to argue that an interested party can’t sue for breach of fiduciary duty because they failed to object to the Interim Accounting, for instance. See, Sheffield v. Dallas, 417 So. 2d 796 (Fla. Dist. Ct. App. 1982).

Questions or Concerns About an Interim Accounting?

If you or a loved one has been notified of an Interim Accounting being performed for an estate in which you are an heir or beneficiary, or maybe an estate that you are owed money as a creditor, then you need to take legal steps not only to review that notice but to decide if you need to object to it. If you have an Interim Accounting in hand, then it may give rise to legal issues that are best addressed now — while the estate is being probated — instead of down the road when the creditors are being paid and the assets are being distributed to the beneficiaries.

An experienced probate lawyer can help you here. And the cost of having a Florida probate attorney go over these things with you can be much less in time and money than many folk assume.

A good piece of advice is to at least talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

_______________

Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

If you found this information helpful, please share this article and bookmark it for your future reference.

What About the Car? 8 Things to Know About A Florida Personal Representative And The Decedent’s Automobile

Posted By on January 20, 2016

When someone passes away in Florida, laws immediately come into play to protect the decedent’s property. An “estate” is formed under Florida law as the official owner of the decedent’s real estate and personal property until those assets are sold or distributed to the heirs. The person that takes care of overseeing the sale or distribution  is called the “Personal Representative,” which many may recognize as an “executor” or “administrator.” The personal representative is appointed by a probate judge, and is usually a person named in the decedent’s Last Will and Testament.

Role Of The Florida Personal Representative

The Personal Representative is granted the power, through the issuance of Letters of Administration, to carry out the estate administration.  He or she searches for the decedent’s assets, gathers these assets (and safeguards them), file tax returns, and make sure valid debts are paid.  For details on the steps that the Personal Representative must undertake, consult our earlier post, “21 Duties of a Florida Personal Representative According to Florida Law.

Most Florida Estates Include One Common Asset

Florida estate assets can be as varied and unique, just as unique as the people who come to live and play here in our beautiful oceanfront communities. It’s not unusual for Florida estates to hold things like famous works of art, yachts or real estate holdings for property located in other parts of the world.

However, one asset common to most Florida estates is an automobile.  And, believe it or not, this asset has caused controversy in lots of Florida estates over the years.  Who can drive the car, does it need to be insured, where should it be stored, and when can it be sold or distributed to the beneficiaries? After all, it’s just sitting there ….
 
Automobile MG A 001
 

8 Common Issues Florida Personal Representatives Face With A Car Or Truck

 

1. Locating The Official Certificate Of Title For The Vehicle

Before anything can be done regarding any motor vehicle owned by an estate, the Personal Representative has the legal duty to confirm ownership of that car or truck. This is part of preparing the inventory of the estate, one of the first big tasks handled by the Personal Representative.

How is ownership verified? The personal representative should try and locate and review the official Certificate of Title issued by the Florida Department of Highway Safety and Motor Vehicles, which is the agency where all Florida motor vehicle records are maintained. If the title cannot be located, then the Personal Representative must request a duplicate Certificate of Title. Once the car is ready to be sold or distributed to the beneficiaries, the certificate of title is then signed by the Personal Representative transferring title to the new owner. See Florida Statute 319.28.

2. Fixing Problems With The Certificate Of Title For The Car Or Truck

For instance, the name on the Certificate of Title may not be the same as the name of the decedent on the Death Certificate. Maybe a name change wasn’t filed with the DMV after marriage or divorce.

If there is any problem with the Certificate of Title, the Personal Representative must fix it before the car can be transferred to a third party.

3. There’s More Than One Titleholder On The Title

Things are easier when the car or truck is held solely in the name of the person who has passed away. However, there are occasions when the Personal Representative is faced with two or more titleholders on the Certificate of Title. In this instance, the ownership interest in the vehicle must be investigated to see if the decedent’s interest survives his or her passing.  If so, the car or truck is an asset of the estate, subject to estate administration (including creditor claims).

4. Is There Adequate Insurance For The Car Or Truck?

The automobile policy issued to the deceased titleholder may extend past the date of death, but steps need to be taken to make sure the insurance company will continue coverage. The Personal Representative must protect the vehicle as soon as possible by notifying the insurance carrier that their insured has died and that a personal representative has been appointed for his or her estate. The insurance company may then issue an endorsement to the insurance policy naming the Personal Representative as the insured party.

It’s also part of the Personal Representative’s job to make sure that the insurance policy is sufficient to cover the vehicle in case of a loss. Did the decedent have the correct coverage for a vintage or rare car? If not, the estate may need to pay for additional coverage.

5. Protecting The Motor Vehicle

One of the immediate jobs of the Personal Representative is to find out where the car or truck is located and make sure that it is safe from harm. If it’s not in a safe location, then it must be moved and stored. Additionally, the motor vehicle needs to be safeguarded from being used, temporarily. The surviving spouse, and other family members, may need to be warned against using the motor vehicle while the Personal Representative is locating and gathering assets and determining insurance coverage issues. Some Personal Representatives may be forced to have someone disable the vehicle during this interim period.

6. Deciding The Value of the Motor Vehicle

The Personal Representative has the duty of confirming the fair market value of the motor vehicle.  This information is used for the preparation of the inventory and for the Federal Estate Tax Return, if one is filed.

7. Is The Car Exempt Property?

Under Florida Statute 732.402, the surviving spouse (and if there is no widow or widower, then the surviving children) has a legal right to “exempt property” as that is defined in the statute. This includes up to two automobiles used by the decedent or members of his or her immediate family. However, it must have been used as a personal vehicle — an everyday car — and it cannot weigh over 15,000 pounds as a general rule.

There is a four month deadline for the widow or widower (or surviving children) to notify the Personal Representative that they are claiming the car as exempt property.

If the car is specifically mentioned in the Last Will and Testament, then it’s not considered exempt property. In these instances, the Personal Representative handles an “early distribution” of the automobile to the widow or widower (there may be some limitations here on partial distributions that complicate things).

8. What About Sales Tax?

Florida law protects the transfer of title for the decedent’s motor vehicle from being required to pay sales tax. The Personal Representative has to file an Application for Certificate of Title With/Without Registration and complete its “certification of exemption from sales tax when the transfer results from inheritance”.

What Should You Do?

In some Florida probate matters, things can become unfriendly and tense. For instance, some family members may not understand why they can’t use the decedent’s car or truck. What’s taking so long? Or, the Personal Representative may not be moving as fast as others would like in clearing up problems with the vehicle that he or she has discovered. How can things get moving and the car released to the named beneficiary so it can be used and driven?

Having an experienced Florida probate lawyer in these situations can be helpful both to beneficiaries as well as the Personal Representative. And, the cost of enlisting the help of a probate attorney here may be surprisingly less than you assume. Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

If you found this information helpful, please share this article and bookmark it for your future reference.

Choosing The Correct Probate Court: Venue For Probate Proceedings

Posted By on January 6, 2016

In Florida, things can — and often do — get interesting in probate matters. Unlike other states where matters can be more routine, Florida is known to deliver on the drama.  That is because we have tourists, snowbirds, retirees, long-term vacationers, as well as non-citizens, spouses married to non-citizens, a disproportionate amount of fraudsters and illegals, and others who may pass away here and have a probate matter to resolve — in addition to residents of our state.

One of these interesting complications for Florida probate proceedings is something that is decided early on in any probate matter, which is the question of which probate court is proper under Florida law to handle things for the decedent’s estate.  Where does the Last Will and Testament get filed?

1. The Question of Venue

What location is proper for the filing of the Last Will and Testament and the administration of a decedent’s estate is defined as the proper “venue” for the case. Venue is dependent on different things, and it is not always easy to figure out which Florida probate court has venue, legally, over an estate here in Florida.

Venue can be a big deal, and something that folk who try and handle a probate matter without legal help may not understand. What if they make a mistake?

If you file in the wrong probate court, then your bad venue decision means your case can get challenged and moved. It will be re-filed in the proper county, with the proper probate court. Could be days, weeks, or months after the probate has been filed in the wrong place.

And don’t expect the clerk who takes your filing in the clerk’s office to make that decision for you. That’s not their job. If you make a mistake, that’s not for the clerk to say. It’s for the judge to rule upon when the matter is placed before the bench.

Additionally, whenever a proceeding is filed in the wrong venue that probate judge may transfer the case on his or her order, and anything that occurred before the transfer will not be voided because of the improper venue.

In Florida, Counties are Grouped into Circuits; Each County Has a Probate Court

 

2. Florida Probate Court System

Each county in the State of Florida has its own probate court. Some of the bigger counties, like Miami-Dade County, have more than one. These counties are organized within the Florida justice system into “judicial circuits.”

If there is an appeal from a probate court, it will move forward to the reviewing court for its particular judicial circuit. That reviewing court’s (the appeals court) decision is subject to review by the Florida Supreme Court.

Here are the probate courts for our part of South Florida as an example:

Broward County (Seventeenth Circuit)

Probate Judges: Hon. Marc Gold, Hon. Charles Greene, Hon. Mark Speiser

Miami-Dade County (Eleventh Circuit)

Probate Judges: Hon. Michael Genden, Hon. Maria Korvick, Hon. Celeste Muir, and Hon. Bernard Shapiro

Palm Beach County (Fifteenth Circuit)

Probate Judges: Hon. Howard Coates, Hon. Martin Colin, Hon. David French, Hon. Janis Brustares Keyser, Hon. Krista Marx, Hon. John Phillips, Hon. Jessica Ticktin

3. Factors in Probate Court Venue

There are different situations that will decide venue under Florida law.  Four factors come into play to decide proper venue of a probate proceeding.

  1. Domicile.

Under Florida Statute 733.101, venue of probate matters is determined primarily according to the decedent’s domicile. “Domicile” is a legal term. It means “a person’s usual place of dwelling and shall be synonymous with residence.” Florida Statute 732.201 (13).

In other words, the key factor for venue is where the person who has passed away was living at the time of their death. That’s easy enough.

2.  Real Estate Holdings.  

However, there are lots of people who invest here in Florida, but don’t live in our state (or even in our country) but they own property here. Florida is a mecca for lots of people who come and enjoy our sunny beaches but don’t establish a formal residence or domicile here.  What happens then, if there’s no legal Florida residence for the decedent?

Then venue will be decided based upon land ownership. The proper probate court will be in the county where the person owned real estate here in Florida. If there were several real estate properties owned by the decedent, then the probate matter can be filed in any county where the decedent owned property. None of these counties get preferential treatment; the person filing the probate matter must choose one.

3. Debts.

Next scenario. What if they died here in Florida but they did not live here, and didn’t own any real estate here, then what happens?

Then the law looks to debts. Probate can be filed in any Florida county where a debtor of the decedent resides.

4. Married Women.

Finally, married women get a special provision for purposes of probate venue here. Under Florida Statute 733.101, “[a] married woman may establish a separate domicile in this state for this purpose [venue], even though her husband is an alien or nonresident of Florida.”

What Should You Do?

Here in Florida, it’s encouraged by the Florida Bar and the Florida Courts for people to file their own probate matters when things are simple and fit easily into a standardized probate process.  The Miami-Dade County Clerk’s Office, for instance, provides help and forms for you to do this.  And it makes sense for lots of people — it saves time and lessens stress in a difficult time.

However, all too often those simple probate matters may hide a complexity or a conundrum where an experienced Florida probate lawyer can be of great help.  It’s not as expensive or complicated as many think: often, a simple telephone conference can resolve things.  Like a venue question.  So, if you have a concern about filing a probate matter, don’t hesitate to reach out and get legal help: it may be much less painless than you assume and very helpful to you in the long run.

A good piece of advice is to talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

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Who Makes the Funeral Decisions and What if There’s a Disagreement Over Them?

Posted By on January 1, 2016

When a loved one passes away, it is a very emotional time for family and friends. Grief and sadness are fresh. It’s a horrible time. If the death was unexpected, there is also the shock and angst that comes with an untimely passing.

These are difficult days and weeks in anyone’s life – but it’s especially hard when there are questions and issues about the funeral arrangements and the manner in which the loved one’s remains should be handled. It is not unexpected that sometimes controversies between family members and close friends result in an emergency trip to the courthouse for a legal fight over what should be done.
 

Angelo Dall'Oca Bianca - Dor

Image: “Pain” After the Funeral by Angelo Dall’Oca Bianca (1876)

 

Florida Law and Funeral Arrangements and Disposition of Decedent’s Remains

For many years, there was little guidance given in Florida statutes in these matters. You couldn’t look to a provision of the Florida Probate Code and find the answer. Judges had to make these decisions as best they could with what was presented to them by parties on both sides of the conflict.

There were, and are, some places for families (and judges) to look for the last wishes of the decedent. This includes guidance provided by:

  • provisions found in the language of the Last Will and Testament;
  • an informal document like a letter or note;
  • insurance policies and funeral plans that gave instructions on what to do insofar as the funeral service and disposition of the body itself;
  • religious tenets may guide everyone on what to do; and
  • other documents, like donor cards for organ donation and transplant can help here.

However, what if the family members cannot agree on what to do, even if there is some guidance provided? Family members can find themselves at loggerheads over these decisions.

When the decedent has failed to make funeral arrangements in advance as part of their estate planning, families are left to make these decisions — that often means that probate lawyers are asked to get involved. Which means the application of Florida law and going before the Florida probate court to make the determination.

Florida Law and Funeral Arrangements / Disposition of Decedent’s Remains

There are some laws passed by the Florida Legislature that can help in these conflicts. Among them are the following:

1. Florida Statute 497.002(2) which provides that “[s]ubject to certain interests of society, the Legislature finds that every competent adult has the right to control the decisions relating to her or his own funeral arrangements.”

2. Florida Statute 497.005 which provides that if there is more than one legally authorized person who can claim a body for interment, then requests shall be prioritized by the medical examiner in accordance with the Florida intestacy statute that gives the order of family members who inherit if the person dies without a will.

However, there is little case law from the Florida courts to give precedent and guidance in how these laws are to be applied here. The court cases that are on the books have judges disagreeing on how these statutes are to be applied and when they are to be used.

One of the biggest legal controversies remains deciding how much the decedent has the right to decide how his or her remains will be handled upon her death. Another big open issue, decided differently depending upon which Florida judicial region you reference, is who gets to make these kinds of decisions when the decedent has died without leaving any written instructions.

The Anna Nicole Smith Case As An Example

In the case of Arthur v. Milstein, 949 So. 2d 1163 (Fla. Dist. Ct. App. 2007), Vergie Arthur as natural mother and next of kin of the decedent, Vickie Lynn Marshall a/k/a Anna Nicole Smith, and Howard K. Stern as the person named Personal Representative in her Last Will and Testament, could not agree on where Anna Nicole should be buried.

Another player in this controversy was Richard Milstein, who had been appointed by the court as the guardian ad litem of Dannielynn Hope Marshall Stern, the daughter and minor child of the decedent. He spoke on behalf of Anna Nicole’s daughter.

As her mother, Vergie argued that she had the decision-making power because of Florida Statute 497.005(37). Mr. Milstein, on behalf of Anna Nicole’s only living child, argued that he had the right to make the decision based upon Florida Statute 406.50 because the body had been kept at the Medical Examiner’s Office and the Medical Examiner’s Act therefore controlled.

The Florida trial court judge ruled in Dannielynn’s favor. So Vergie filed an emergency request with the First District Court of Appeals, asking that the lower court’s decision be reviewed and reversed in her favor.

The appeals court came at the problem from another direction. It ruled that neither mother nor daughter had a winning argument insofar as who was the “legally authorized person” to make the decision about where to bury Anna Nicole Smith.  Legally, the court held that “… neither section 497.005(37), nor section 406.50, control the outcome of this case.”

Instead, the court found the case to be where private parties were in a dispute as to the decedent’s remains; there was no funeral home nor medical examiner as a party asking for the court’s help. The statutes referenced by Vergie and Dannielynn dealt with funeral homes and medical examiners, so they didn’t apply.

The Florida appeals court made its decision based upon past court decisions, not looking at any statutes. Specifically, three cases: Kirksey v. Jernigan, 45 So.2d 188, 189 (Fla.1950); Cohen v. Guardianship of Cohen, 896 So.2d 950 (Fla. 4th DCA 2005); and Leadingham v. Wallace, 691 So.2d 1162 (Fla. 5th DCA 1997).

Looking at these past case decisions for guidance, it was decided that there was evidence presented at trial that “… Anna Nicole Smith’s last ascertainable wish with respect to the disposition of her remains was that she be buried in the Bahamas next to her son Daniel Wayne Smith.

Neither Vergie nor Dannielynn ever disputed this evidence. Therefore, Anna Nicole Smith’s body would be buried in the Bahamas, as Dannielynn (through her guardian) had requested.

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For Reference:

Florida Statute 497.005 – Legally Authorized Person Priority List

Under the current version of Florida Statute 497.005 (39) “legally authorized person” is prioritized as follows:

(a) The decedent, when written inter vivos authorizations and directions are provided by the decedent;

(b) The person designated by the decedent as authorized to direct disposition pursuant to Pub. L. No. 109-163, s. 564, as listed on the decedent’s United States Department of Defense Record of Emergency Data, DD Form 93, or its successor form, if the decedent died while in military service as described in 10 U.S.C. s. 1481(a)(1)-(8) in any branch of the United States Armed Forces, United States Reserve Forces, or National Guard;

(c) The surviving spouse, unless the spouse has been arrested for committing against the deceased an act of domestic violence as defined in s. 741.28 that resulted in or contributed to the death of the deceased;

(d) A son or daughter who is 18 years of age or older;
(e) A parent;
(f) A brother or sister who is 18 years of age or older;
(g) A grandchild who is 18 years of age or older;
(h) A grandparent; or
(i) Any person in the next degree of kinship.

In addition, the term may include, if no family member exists or is available, the guardian of the dead person at the time of death; the personal representative of the deceased; the attorney in fact of the dead person at the time of death; the health surrogate of the dead person at the time of death; a public health officer; the medical examiner, county commission, or administrator acting under part II of chapter 406 or other public administrator; a representative of a nursing home or other health care institution in charge of final disposition; or a friend or other person not listed in this subsection who is willing to assume the responsibility as the legally authorized person. Where there is a person in any priority class listed in this subsection, the funeral establishment shall rely upon the authorization of any one legally authorized person of that class if that person represents that she or he is not aware of any objection to the cremation of the deceased’s human remains by others in the same class of the person making the representation or of any person in a higher priority class.

What Should You Do?

A good piece of advice is to talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

If you found this information helpful, please share this article and bookmark it for your future reference.

Surviving Spouse’s Rights In A Florida Probate

Posted By on December 24, 2015

When a husband or wife passes away in Florida, they have specific legal rights that are different from other loved ones who are grieving over the passing of the decedent. As the widow or widower, they are considered under Florida probate law to be the “surviving spouse” with special legal rights regarding property and the decedent’s estate.

 

Two golden wedding rings

 

1. Is Florida A “Community Property” State?

Generally speaking, Florida is not a community property state.  However, Florida does recognize the property rights of a married person when either the husband or wife passes away as a form of “community property” if, for example, the property, wherever located, was acquired as, or became and remained, community property under the laws of another jurisdiction. (see Florida Statute 732.217)

Community property has to be specifically defined as protected property under the law or it will not be included. Florida law must define it as “community” and if it’s not defined, then it is considered separate property of the decedent. Separate property of the decedent is overseen and distributed by the Personal Representative in accordance with the Will and the Florida Probate Code.

Community property isn’t part of the probate at all. It’s owned by the widow or widower.

For instance, under Florida law anything owned by the husband or wife before they got married is not part of the community property unless they take steps to make it so. That property (land, boats, jewelry, etc.) is their separate property and just because they got married, their spouse doesn’t get any ownership interest.

However, any property that either spouse acquires while they are married to each other is community property. It can be real property (land) or it can be any kind of personal property (furniture, pets, cars, etc.). An exception here: gifts or inheritances aren’t considered community property in Florida.

  • Life insurance and profit-sharing plans? They can be community property as long as the benefits are originally acquired while the individual resides in a community property state.
  • Property that has a land title in the deceased spouse’s name only? If the other requirements of community property are met, then the surviving spouse has an interest in it as community property. It won’t matter that their name isn’t on the title deed.
  • Moved to a state that doesn’t have community property laws? Florida law provides that just changing your domicile doesn’t change the nature of the Florida property interest from community property. See Florida Statutes 732.217, 732.218.

2. Florida Community Property Rights at Death Act

The Florida Legislature has passed the Florida Uniform Disposition of Community Property Rights at Death Act (Florida Statutes 732.216 – 732. 228) (CPRDA) to define certain property rights of a widow or widower in Florida after their spouse passes away. It was passed by the Florida Legislature several years ago.

It is not new policy or new law, but a series of laws that basically organized existing Florida law found both in the Florida Constitution and in court cases. Protecting widows and widowers after they have lost their spouse has been a concern of Florida law for a very long time.

Traditionally, Florida is a “community property state.” This means that the State of Florida has historically viewed the property rights of the surviving spouse as “community property” that are to be vigorously protected as vested property rights.

The Act was passed to protect widows and widowers. It helps by organizing the law in the statutes. Another way it does this is to provide clear guidance on what their rights are in the property held by their deceased husband or wife.

It does this not only by defining specifically what property is considered “community” and what is considered “separate,” but it also provides protection for the widow or widower when there is a question.

Under Florida Statute 732.217, the widow or widower is given an assumption that a questioned piece of property will be “community” in what is called a “rebuttable presumption.” In other words, the surviving spouse is assumed to have a community property interest in that piece of property unless and until that is legally rebutted with sufficient evidence to show otherwise.

3. Half of the Property

What property of the decedent’s estate is involved here?  In CPRDA, Florida law defines what the rights of the surviving spouse are for both real property located in Florida and the personal property of a person domiciled in Florida. It does not impact land or property outside of the State of Florida.

Under the CPRDA, when a married person passes away, one half (50%) of the property to which the Act applies becomes the property of the surviving spouse. It is not subject to probate. It is not part of the decedent’s estate. It does not pass by will or by intestacy statute because it is considered to be owned by the widow or widower — the surviving spouse.

4. Property Covered Under CPRDA

The following property that was acquired by a married person before their death comes under the provisions of CPRDA:

(1) all personal property no matter where it is located, which

A. was acquired as, or became and remained, community property under the laws of another jurisdiction;
B. was acquired with the rents, issues, or income of, or the proceeds from, or in exchange for community property; or
C. is traceable to that community property; and

(2) all real property (land) located in Florida that was

A. was acquired with the rents, issues, or income of, or the proceeds from, or in exchange for property acquired as, or that became and remained, community property under the laws of another jurisdiction; or
B. is traceable to that community property.
(Exception here: Florida land that is held as tenants in the entirety.)

5. Personal Representative Duty to Find Community Property

Under the CPRDA (Florida Statute 732.221), the widow or widower can get the help of their deceased spouse estate’s Personal Representative to clear the title to the community property. Here, the widow or widower has within 3 months from the Notice of Administration to ask that the Personal Representative investigate the community property status of any assets or property held just in the name of the decedent. The Personal Representative has a fiduciary duty to do this if asked by the surviving spouse. The decedent’s personal representative does not have to do this investigation into solely-titled assets otherwise.

Community Property Controversies

In some Florida probate matters, things are complicated. The surviving spouse may not get along with her step-children. The widower may get along fine with the kids, but the Personal Representative has a concern that the widower is keeping property that rightfully belongs to the estate’s beneficiaries.

Having the CPRDA is helpful in solving problems of what the widow or widower rightfully owns after their spouse passes away. The Act’s language as well as investigation into property issues like title conveyance and more can be tricky. An experienced Florida probate lawyer can be helpful both to the surviving spouse as well as the estate’s beneficiaries in determining who owns what as community property after a spouse has passed away.

What Should You Do?

If you believe you have an issue with the rights to property owned by your deceased spouse, a good piece of advice is to at least talk with a Florida probate lawyer to learn about your rights.  Most probate lawyers, like Larry Tolchinsky, offer a free initial consultation (either over phone or in person, whichever you prefer) to answer your questions.

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Picture of Larry TolchinskyDo you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

If you found this information helpful, please share this article and bookmark it for your future reference.