The need to “probate” an estate is not necessarily a terrible circumstance. However, multiple probates should definitely be avoided.
It is often impossible to avoid having at least a small probate estate and it may even be advantageous to have a probate decree naming one or more persons or institutions as the estate’s officially recognized spokesperson, known as the “personal representative” in Florida and “executor” in many other states.
When the decedent has owned real estate in two or more states, then two or more probates are necessary. Firstly, there is the probate in the state of his or her domicile and then there is an ancillary probate required in the other state or states where he owned other real estate.
These multiple probates create an unnecessary burden and expense on the prompt and efficient settlement of an estate. The second probate, the “ancillary” probate, is the process that must be used to administer assets such as real estate which can only be disposed of according to the laws in force within the jurisdiction where the assets are located.
The ancillary probate will cause additional expense to the estate in the form of filing fees, legal advertising and possibly the hiring of second lawyer who is admitted to practice in the second state.
The Massachusetts summer home of a Florida resident owned in the Florida resident’s sole name must be probated in Massachusetts under Massachusetts ancillary probate procedures. Like wise, if a Massachusetts resident is the sole owner of a winter home in Florida, then the Florida ancillary probate laws would control.
One way to avoid the ancillary probate is to own the other home jointly with the right of survivorship. The two joint tenants will have a deed which describes them as “joint ten ants with rights of survivorship,” or if husband and wife, as “tenants by the entirety.” In either case, the surviving joint owner will automatically own the real estate upon the death of the first joint owner.
It is not necessary to file a petition for probate of jointly owned property. The surviving joint owner automatically, and as a matter of law, becomes the owner of the property when the first joint owner dies. However, when the survivor dies and is the sole owner of the property, then, ancillary probate will be required.
Another way to avoid ancillary probate is placing the other home in a living revocable trust. So long as the property is held in a trust and never held directly by an individual at the time of that individual’s death, the property will never have to be probated.
The trust used to pass the property outside of the probate system can be a simple trust designed just to hold the real estate, or the kind of revocable living trust used for the individual’s general estate plan and designed to eliminate or reduce estate taxes of a married couple.
As of Jan. 1, there is no federal estate tax, but very few estate planners expect this to last, and many are of the opinion that an estate tax will be passed, and that it will be retroactive. (My law school thesis was on the question of whether retroactive taxes are constitutional.) Currently, there is no federal estate tax, and in 2011 the estate tax comes back with an exemption of $1 million.
If the home of a Florida resident is being transferred into a trust, it is extremely important that it is done in such a way that the owner’s homestead exemption is preserved. Because of the complications which arise in the Florida homestead laws, it is more common practice to keep a married couple’s home in joint ownership of husband and wife, rather than in a trust. However, there are some circumstances when a trust is advisable. Competent legal advice should be obtained before transferring of any Florida homestead into a trust.
Once the trust has been executed, the title to the real estate must be deeded into it during the individual’s lifetime and the deed should be recorded in the local registry of deeds.
One probate may be slightly inconvenient; two or more will most likely be tedious, expensive and time-consuming. Multiple probates can and should be avoided through careful planning.
Alan Novick is a member of the Massachusetts Bar and the Florida Bar. His Florida practice is limited to probate, estate and tax planning. Contact him at firstname.lastname@example.org. The information provided in these columns is for general information only. Readers must consult your own attorney for specific legal advice.