Common Probate Problems

Common Probate Problems

In the ideal world, when a loved one passes away, you’d deposit his or her valid will with the court and sail through probate—which would end with all assets quickly distributed according to the person’s wishes.

But problems sometimes creep into the process, adding unexpected issues and delays.

Here are some common monkey wrenches that can turn up during the probate process:

  • Someone challenges the will. Whether they’re cut out entirely or simply feel they’re not getting a fair deal, anyone can sue in court to invalidate the will, alleging that the person wasn’t competent when he or she signed it, or even that a newer will exists and must be found. (Fortunately, getting a judge to go along with this is a longshot.) Although this doesn’t happen, when it does, it can add a great deal of time and money to the process. Sometimes, it pays to negotiate with the person challenging the will to try to avoid a drawn-out court battle.
  • The person named as personal representative either doesn’t want to or is ineligible to serve.  Shepherding an estate through the probate process is time-consuming. Occasionally, the person named as PR decides they don’t want to do it (even though they are compensated from the proceeds of the estate). Even more frequently, especially in South Florida where people have good friends in the state where they used to live, the person named in the will as PR doesn’t fit within Florida guidelines, which says a PR can live outside of Florida only if he or she is a relative. (Read more about the responsibilities of a PR here.) In these cases, the attorney has to go to court to get someone else appointed.
  • The PR has trouble finding all the assets. Whether it’s a safety deposit box no one can locate or questions about whether all bank and stock accounts have been identified, questions can arise about whether the PR has found all of the assets. This is even more likely now that people get statements from banks and brokers emailed to them; previously, the PR could watch the mail to see what comes to the decedent.
  • Not everyone wants to sell the home. The parents leave their home to their three children equally; but only two of them want to sell. This scenario has played out in my practice more times than I can count. While the PR can sign a listing agreement and, with the judge’s okay, sell the home, this is often a tricky emotional situation. (Homestead property in Florida falls outside the probate.) In one recent case, one of the grown children was living in the home and threatened not to move out even if it were sold. These situations require careful negotiations between all parties.
  • The PR doesn’t do his or her job properly. The court calls the PR a “fiduciary,” which means the law requires him or her to carefully manage the financial assets. If other beneficiaries don’t believe the person is doing so, they may challenge the PR and make a damage claim against him or her. It is incumbent on the PR to take this responsibility seriously, and to keep other beneficiaries informed as the process goes on.

If you would like to speak with an experienced probate attorney in South Florida, contact the Law Office of Gary Landau for a FREE legal consultation at 954-979-6566 or by email. Attorney Gary Landau personally returns all calls and emails to him.

What Happens If You Were Planning to Close on a New Home When Hurricane Irma Struck?

Hurricane Irma is gone, but the effects of her wrath are still being felt all over South Florida. One group impacted are people who have an active contract to buy or sell their home.

Even if your closing date was initially a few days before Irma hit, you no doubt found that it was impossible to get homeowner’s insurance. So if you were taking a mortgage, you couldn’t close. That’s because insurance companies freeze new policies once a storm takes aim.

Now that the storm has passed, you’ll need to take certain steps to move forward with the deal.

1) Get a written extension of the contract closing date, if necessary. The standard real estate contract provides for a short delay for after things return to normal, a clause known as “force majeure.” If the delay will last for more than 30 days, either the buyer or seller can cancel the contract without incurring any financial penalties. If you’re still interested in preserving the deal but think the delay in your closing date may be significant, you’ll want your Realtor or attorney to get all sides to agree in writing to extend the date.

2) Have a new, professional inspection. You’ll need to wait for power and water to come back on before you can have the home re-inspected. It’s something that every buyer should absolutely do. Even if the original inspection took place the week before the storm, you’ll want to have it repeated, because the home is obviously at risk for being in a different condition now. (If you’re taking a mortgage, your lender will require that one is done.)

3) Determine who pays for repairs. In many contracts, the seller must return the house to the condition it in when the buyer signed the contract. But sometimes, it’s the buyer who has to pay. You’ll want your lawyer to check out the “risk of loss” section of your contract and let you know who is responsible.

4) Renegotiate if necessary. If the home has been changed by the storm, you may need to renegotiate the price of the sale. However, the house must be in habitable condition before any lender will agree to a mortgage.

5) Stay in touch with your lender. According to local media, many lenders seem to be honoring their interest-rate guarantees that technically expired when your closing date got moved. Still, you’ll want to contact your mortgage broker or lender to see specifically how the storm affected the terms of your loan.

If you would like to speak with an experienced real estate attorney, contact the Law Office of Gary Landau for a FREE legal consultation at 954-979-6566 or by email. Attorney Gary Landau personally returns all calls and emails to him.

What is a Pour-Over Will?

What is a Pour-Over Will?Wikipedia gives this definition of a pour-over will: “A pour-over will is a testamentary device wherein the writer of a will creates a trust, and decrees in the will that the property in his or her estate at the time of his or her death shall be distributed to the Trustee of the trust.”

Huh?

Put simply, a pour-over will is a type of will you need to create if you have a living trust. With a living trust, your assets are held by a trust, rather than by you, although as the named trustee you have complete control. Living trusts were all the rage some years back, and they’re still useful in some cases.

People often think that if they have a living trust they don’t need a will. But that is a big mistake you don’t want to make.

The problem with a living trust is that every single asset in your name has to be transferred into the trust when you create it. And every asset you acquire after you create the trust needs to be held in the trust’s name. But in the real world, things are often missed.

People forget to transfer every asset, so when they pass away, these assets don’t simply pass to the successor trustee the way they’re supposed to.  That’s where the pour-over will comes in.

The will provides direction to “pour over” (hence the name) into your trust any probatable asset that is in your name, outside of the trust, at the time of death. This is important because, without this will, those assets will pass to your heirs according to state law—so your long-estranged husband or child might get an asset you’d prefer goes to someone else.

Unfortunately, because it’s a will, if you do have these assets in your name, your estate will have to be probated—one of the main things people who create a living trust think they’re avoiding.

So it’s not only important to create a pour-over will, it’s important to sit down with your documents once each year and be sure you haven’t acquired any property or other assets that are not in the trust. If there are, move them now.

If you would like more information about estate planning in South Florida, contact the Law Office of Gary Landau for a FREE legal consultation at 954-979-6566 or by email. Attorney Gary Landau personally returns all calls and emails to him.

Estate Planning for Single Parents

No one with young children wants to think that something might happen to them. But for a single parent, that difficult thought brings on added worries. After all, what will happen to your child should the unthinkable happen.

Estate Planning for Single ParentsEveryone with children should prepare a will and other important documents. In my law practice in South Florida, I help single parents carefully think through what they would want to happen to their child if they unexpectedly passed away or became incapacitated. Here are a few guidelines to help.

Make a Will

Younger people often think a will is something older people need. But parents of young children, and especially single parents, need a will more than almost anyone else. That’s because in addition to money and property, you have the care of your child to consider. Whether your assets are vast or modest, a will carefully lays out your wishes. This keeps your children from experiencing a lengthy court battle among various relatives, which happens more often than you might think. You’ll want to revisit and update the will as your children grow.

Name a Guardian

One of the most important sections of your will is to name a guardian. This person, a very close relative or friend whom you trust deeply, will care for your child if you pass away and the child’s other parent is not alive or has no parental rights; a guardian can also manage the money that goes to your children from your will.

You can additionally name a guardian in a document outside of your will. Florida law allows you to designate a “preneed guardian,” a person who will be legally responsible for your children if you become incapacitated, a condition that does not trigger the will. This simple document can be drafted by an attorney when they make up your will.

You’ll want to revisit your choice of guardian over the years. Someone who might be appropriate for your children when they are young might not be best if they are teenagers, especially if that would mean uprooting them to another state.

Consider a Trustee

If you prefer to break up the roles of the person who would care for your children and the one who oversees their money, you can name a trustee in your will to manage your child’s assets.  The trustee’s role can terminate when your child reaches adulthood, or can continue for as long as desired.

Determine If You Need a Special Trust

If you have a lot of money or a child with special needs, you might want to create a trust for your children. This money is placed into the trust at a bank when you create it. Your child cannot access this money until they reach the age you specify, typically 21 or later.

Life Insurance

You can name your minor child as a beneficiary of your life insurance. But if you pass away before they become of age, their guardian or trustee will be in charge of the money.

If you are interested in drafting a will or other documents for your estate planning in South Florida, contact the Law Office of Gary Landau for a FREE legal consultation at 954-979-6566 or by email. Attorney Gary Landau personally returns all calls and emails to him.

What are the Responsibilities of a Personal Representative?

Responsibilities of a Personal RepresentativeOther states call them “executors” (or, ridiculously, for women, “executrix”), but in Florida they’re known as personal representatives (PR). That’s the person who, in a formal probate administration proceeding is charged by the court with satisfying the steps needed to distribute a deceased person’s assets.

The duties of a personal representative are carried out in accordance with Florida probate law. In Florida, the PR can be a person (as is most common), but it can also be a bank or private entity. Personal representatives are typically named in a person’s will, but if the named PR is unwilling or unable to serve (for example, a non-relative who does not live in Florida is not allowed to serve, even if the person’s will names them), one is appointed by the court. Florida law allows a PR to collect 3 percent of the estate’s probate assets as a fee for their work.

Here are some of the things a personal representative is charged with doing:

  • Identifying and securing all the assets of the estate. Bank accounts, stock mutual funds, property, cars, cash…. The PR’s job is to find and value of all assets that will become part of the probated estate.
  • Identifying creditors and paying valid claims while objecting to invalid ones. Working with a probate attorney, the PR sends a “Notice to Creditors” to everyone who may be owed money by the estate, then pays those claims from the estate’s bank account (specially opened for this purpose). If claims are made that are not valid, the PR can challenge them.
  • Filing tax returns and paying any taxes that may owed. While most estates fall under the roughly $5-million threshold for paying a federal estate tax, a final tax return still needs to be prepared and filed and regular income and other taxes paid for the final tax year of the person’s life.
  • Distributing assets to all beneficiaries. Once all the debts have been paid, the PR works with the attorney to distribute all assets according to the person’s will (or, if there is no valid will, Florida law).
  • Closing the probate estate. As their last task, the PR finalizes the legal “closing” of the estate and the estate’s bank account.

The personal representative is one piece of a complex process of a formal probate administration. Working with an experienced probate attorney can help guide you through the process. The Law Office of Gary Landau has been handling probates across the state of Florida for more than 20 years. Contact us by phone at 954-979-6566 or by email for a FREE consultation. Attorney Gary Landau personally returns all calls and emails to him.