Avoid Probate

How Can I avoid Probate?

Joint Ownership. Revocable Living Trusts. ITF (aka Totten Trusts) and POD accounts.

Joint Ownership
Joint Ownership in the forms of either Joint Tenancy with Rights of Survivorship or Tenancy by the Entireties are forms that will avoid probate upon the death of all but the final owner. They are forms of ownership involving at least two owners, and may be used to hold in many types of assets, including vehicles, real estate, bank accounts, stocks, etc.

Assets held jointly with full rights of survivorship pass automatically by operation of law to the surviving joint owners and do not require probate. Probate however is not bypassed automatically upon the death of the final owner, probate might still be necessary if no other probate avoiding strategies are implemented.

Joint assets held as tenants in common do not avoid probate. Assets held as a tenants in common must be probated.

Assets held by a husband and wife as tenants by the entirety pass automatically by operation of law to the surviving spouse and do not require probate. As a matter of Asset Protection, Florida considers any marital property held as tenants by the entirety to be held as both spouses and by neither spouse individually. Therefore creditors of just one spouse cannot seize tenancy by the entirety property in Florida.

Please make sure with an attorney the status of your assets if they are not clearly labeled as “Joint Tenants with Rights of Survivorship” or as “Tenants by the Entirety”.

One disadvantage of jointly-held property is that probate is not avoided when the last joint owner dies. Probate will be required upon the death of the last surviving joint owner.

Another disadvantage of joint tenancy with rights of survivorship is that any joint owner can withdraw, sell or convey his or her interest in the asset without approval of the original owner. Creditors are able to seize interests in jointly held assets. Also, liability on certain assets (like vehicles) can be attributed to both owners even when one owner “creates” the liability. In Florida, the owner(s) and the driver of a vehicle are both liable. Be sure to speak with an attorney as to how your assets should be titled to avoid liability where it is not due.

A tenancy by the entirety might also be a bad idea for guardianship purposes. For example, a guardianship may be required where one owner of Tenancy by the Entirety property becomes incapacitated and in need of funds (medical bills for example). Remember that one owner of tenancy by the entirety property cannot convey either their interest or an entire interest in the tenancy by the entirety property by themselves.

Because of these disadvantages of joint ownership, many Florida residents have resorted to having an attorney create living trusts to avoid probate and to avoid the disadvantages of joint ownership.

Living Trusts
In Florida, you can make a living trust to avoid probate for virtually any asset you own and all of the assets you own — real estate, bank accounts, vehicles, collectibles like artwork or sports memorabilia and so on. Unlike a Testamentary Trusts (which only becomes effective upon death) you can still retain complete control over all of your assets while living as the trustee. You need to create a trust document (it’s similar to a will), naming a successor trustee to take over as trustee after your death. Then you must transfer ownership of your property to the trustee of the trust-which is still you. Once all that’s done, the property will be controlled by the terms of the trust. At your death, your successor trustee will be able to transfer it to the trust beneficiaries without probate court proceedings, but according to your trust document where, hopefully, you have outlined how the trustee should distribute and care for your assets.

Payable on Death (POD) and In Trust For (ITF or aka Totten Trusts) Accounts
In Florida, you can add a POD or ITF account designation to bank accounts such as savings accounts, mutual fund accounts, certificates of deposit. In both cases you are still the only one in control all the money in the account — your beneficiary has no current rights to the money, and you can spend it all if you want. At your death, the beneficiary can claim the money directly from the bank, without probate court proceedings.

Some institutions only allow POD designations while other banks only allow ITF accounts.