Is It Necessary to Try to Avoid Probate?

Clients sometimes come to me hoping to set up their estate in a way that will avoid probate after their death. Occasionally, especially if they have limited assets, this can easily be done, such as by created a lady bird deed for a home that adds another person to the deed. Often, though, especially with more complex assets, this would typically involve creating  a revocable living trust. While there are some people who can benefit from doing this, usually people’s fears of probate are way overblown.

the pros and cons of avoiding probate

Here are the major concerns I typically hear and why you shouldn’t worry about them:

  1. Taxes. While there is a federal  estate tax on the books, it applies only to estates worth more than $5 million. If your assets don’t total that amount, your heirs will not pay taxes on what they inherit from you.
  2. Privacy. It is true that wills deposited with the court are public property while trusts don’t need to be filed. In theory, then, anyone can see who you have left your estate to. In reality, though, unless you are a famous person it’s unlikely anyone is going to bother trudging to the courthouse to peek at your file.
  3. Fees. There are costs involved with a probate–court costs, attorney fees, and the like. But setting up a revocable living trust also has fees attached to it, and they are much more than the cost of drafting a will.

Here are the biggest downsides to trying to avoid probate with a revocable living trust:

  1. Documentation. The original trust is not filed with the court, and so can easily be lost over the years. Without that document, proving a person is the successor trustee (and entitled to the deceased person’s assets) is impossible. I have had several clients over the years who swear they are the successor trustee, but since the original trust had been drafted decades earlier and no one could find it they were never able to locate it.
  2. Trust not properly “funded.” After creating the trust, and after each asset purchase thereafter, the trustee’s home, cars, bank accounts, stocks and other assets must be placed into the trust. So many times a trustee passes away and one or more assets is discovered to have remained in their own name. That asset can only be disposed of by–you guessed it–starting a probate.

This is not to say no one should create a revocable living trust. But in my experience most people should instead create a valid will (with an attorney, so there are no mistakes that can’t be corrected after you pass on) and not worry about their heirs needing to go through the process of probate.

For a FREE consultation about a probate or a will, contact the Law Office of Gary M. Landau by email or call 954-979-6566. Attorney Gary Landau personally returns all calls to him.

Understanding Special Assessments When Buying or Selling a Condo

Special AssessmentsIt’s one of the worst things that can happen in the middle of a real estate deal: the condo association issues a special assessment on the unit. Who is responsible for paying what may be a very hefty fee? The answer is, it depends.

Special assessments are levied in Florida under the authority of the Florida Condominium Act, which allows associations to add periodic assessments in addition to their standard monthly fees. These levies are usually done to pay for pricey things, such as damage from a major event like a hurricane or fire; the loss of a lawsuit by the association; or to buy or replace expensive items like landscaping, pools, or new roofing.

A special assessment may become the obligation of whoever owns the condo on the date the assessment is approved by the condo board. That would require the seller to pay off the entire assessment before closing. Or, the real estate contract may shift the burden to the buyer, stating that if an assessment comes down after the contract is signed but before the deal is closed, the seller is off the hook. Sometimes, the buyer and seller come to a middle-of-the-road  arrangement in the contract, where the seller agrees to pay a portion of the assessment in a lump sum at closing and the buyer assumes the rest of the charge, which, depending on the terms set by the board, may be stretched out over months or even years. It is crucial that the contract specify this in a way that both parties can live with–one of several reasons I believe it is imperative for a lawyer to review your real estate contract at the outset.

Of course, if the seller doesn’t disclose an assessment he knows about before the contract is signed, that may shift the entire payment to the seller.

Special assessments are serious business; if they are not paid according to the board’s decree, the association can put a lien against the property. That is why they should never be ignored.

Before you sign a real estate contract, or if you have questions about a special assessment levied in your condo, contact the Law Office of Gary M. Landau by email or call 954-979-6566 for a free phone consultation. Real estate attorney Gary Landau personally returns all calls to him.

Why a Lawyer Should Review Your Real Estate Contract

Real Estate ContractIn Florida it is often customary for a Realtor to make an offer without having a lawyer review the contract. I urge buyers and sellers to write “subject to my attorney’s review within 3 business days” into such a contract, and then get it to a lawyer pronto. Too often, clients come to me with a contract that can’t be renegotiated, yet it contains provisions they don’t like or understand. Many attorneys, myself included, will waive their fee for reviewing a contract when they are hired as the closing agent on the deal.

Here’s what I look for when reviewing this important agreement:

  • Does it become a cash deal if the buyer can’t get financing? In many deals, buyers have a limited window to get out of a deal. If their financing falls through after that timetable, they are obligated to buy the property for cash (or lose their deposit). If a buyer can’t get the seller to agree to a more generous financing contingency, he should at least try to extend the time period for when he can walk.
  • What happens if a special assessment is issued before the closing? Who pays it—the buyer, the seller or some sort of split? Contracts differ on this point and can be negotiated in your favor. Paying attention to this clause can minimize the prospect for a fight should the association slap on a special assessment, which can delay the closing and, in some cases, scuttle the deal and lead to lawsuits.
  • How long is the inspection period? This is the time buyers have to get the home inspected and to void the deal if they are unhappy with the results. I have seen these range in contracts from 5 business days to 15 days or more. Since it can be tough to get a certified inspector to a property on short notice, buyers should not agree to timetables that are too tight.

For a free consultation on how the Law Offices of Gary Landau can assist you with your real estate transaction, contact us by email or call 954-979-6566. Attorney Gary Landau personally returns all calls to him.

 

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