Here in Florida, the job of overseeing the distribution of someone’s property to their heirs after they have passed away is undertaken by a person appointed by the Probate Court to be the “Personal Representative” of the decedent’s estate (which many may recognize as the role of an “executor” or “administrator,” as they are referred to in other states).
How that property, both real and personal, is handled depends upon both the language of the Last Will and Testament as well as the requirements of Florida law.
Duties of Personal Representatives and Estate Property
A Florida Personal Representative has many duties to perform during the administration of an estate. For one, all property left in the decedent’s name and/or possession, real and personal, must be inventoried and valued. From the big assets, like the condo and the car, to the smallest pieces of personal property, like kitchen appliances and items of clothing, all must located and safeguarded by the Personal Representative in preparation for asset distribution and eventually closing of the estate.
When Does a Personal Representative Have to Sell Estate Assets?
There are several situations where the Personal Representative must oversee the sale of assets of the Estate. See Florida Statute 733.608. These include:
1. Circumstances Require the Sale of Physical Assets
While there is a general preference in Florida law that estate assets will be distributed in kind to the beneficiaries, there are situations where that is not practical, and sometimes even impossible to do so. See, In re Estate of Gamble, I83 S0.2d 849 (Fla. lst DCA 1966). In these circumstances, the Personal Representative may sell the assets and then distribute the proceeds from the sale to the beneficiaries.
2. Paying Debts and Obligations
Additionally, creditors must be notified and proper debts must be paid. Tax returns, if applicable, must be filed. Estate administration expenses have to be covered (attorneys don’t usually work for free!). The Personal Representative may face a situation where some of the property held by the estate must be sold in order to gather enough funds to meet the estate’s obligations. No heir or beneficiary is allowed to receive their inheritance until all the valid debts due and owing by the estate have been honored and paid.
3. Selling Assets Pursuant to the Will Provisions
Sometimes, the Last Will and Testament may direct the sale of property, too. There may be certain assets that the Personal Representative is specifically directed to sell under the terms of the will. Some testators may go so far as directing the Personal Representative to liquidate the estate and distribute the net sales proceeds to the beneficiaries in percentages he or she provides.
Regulating the Sale of Estate Assets by a Personal Representative
However, how and when the Personal Representative can sell estate assets is heavily regulated in Florida. Not only must the court approve of the action, but specific legal guidelines must be followed in facilitating the sale of the particular asset as well as confirming the tax consequences to the estate of the sale (as well as any exchange of property).
For instance, Florida Statute 733.608(l) requires the Personal Representative sell estate assets to pay state and federal estate taxes, but the law specifically forbids the homestead to be sold in order to meet this tax obligation.
The Case of The Widower’s $141,000 Condo and No Minor Children
Consider the case of McKean v. Warburton, 919 So. 2d 341 (Fla. 2005). Here, Mr. Henry Pratt McKean II passed away here in Florida. According to his will, $20,000 was devised to Russel Cappelen, Jr., and $150,000 to his nephew Peter Warburton. He left his car to Glenn Van Hest, and “all of the oil interest I own and royalties due me in Exxon Will, Webster Field,” to his half-brother, Robert McKean. Everything else in his estate (the “residuary”) was left to his half-brothers, Robert, Thomas, John, and David McKean, in equal shares per stirpes.
At the time that Mr. McKean died, he owned his home: a Florida condominium that was sold for $141,000.00. The entirety of his remaining property was valued at $10,000.00. The condo was considered his “homestead” under Florida law, and thus was exempt from the claims of creditors. As for liabilities, his estate had debts of $14,000 plus the fees for the estate attorney and the personal representative.
Because the only real asset to be distributed in the McKean Estate was the proceeds from his homestead condo, legal arguments broke out between the beneficiaries about who should get the proceeds from the sale of that asset.
- Nephew Peter Warburton argued that the assets from the homestead property should be used to fund the cash gift to him under the language of the Will as “pre-residuary property” which means that it would not be used to pay any creditors’ claims.
- The four half brothers argued that Nephew is wrong: that the homestead property sales proceeds passed through the Will’s residuary clause of the will to them.
Their fight was heavily litigated, and proceeded all the way to the Florida Supreme Court. The highest court of the state held that, in this situation, where homestead property is not specifically devised in a testator’s will, and that testator does not have a surviving spouse or minor children:
1. The devise of his homestead property to certain family members was protected from creditors and the sales proceeds from the condo could not be used by the Personal Representative to pay debts of the estate.
2. The homestead passed under the residuary clause to the four half brothers because the Will did not specifically devise the protected homestead property, the condo itself, to nephew Warburton.
Moreover, the Florida Supreme Court pointed out, the Florida probate statute was aligned with this result. Florida Statute 733.607, the Court explained, provides that the Personal Representative takes possession or control of the decedent’s property, except for protected homestead. Technically, the protected homestead passes as a matter of law at death to the decedent’s heirs, and is not truly an asset of the estate. The Personal Representative must protect the estate until distribution, though nothing in the Florida Probate Code provides for a legally-protected homestead to be distributed as part of the estate, as Warburton argued. The McKean Will did not direct the Personal Representative to sell the condo and make the sales proceeds part of the general estate; rather, it was silent on that issue, but left the residuary to the four half-brothers, who would have inherited it even had there not been a will under the laws of intestacy.
Sounds pretty simple, right? If you or a loved one find yourself in a complicated probate situation like the one above, the experienced attorneys at Sackrin & Tolchinsky, P.A., are ready and able to take on your case and bring clarity to an otherwise cloudy, confusing situation. Call us today for a free consult on your issue, or click around our blog to find answers to more difficult questions such as this.
For more information check out our probate litigation page.
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