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Should I Use Joint Ownership to Avoid Probate?

Few things are as unattractive as probate court. There are attorneys, fees, court costs, appearances, and the ever-present paternalism of having a judge preside over your family’s personal affairs. Nevertheless, in Florida, many families have to use the probate court to handle final affairs. This is not necessarily a bad thing, but the concerns are valid. Therefore, when consulting their Florida elder law attorney, some clients might ask whether they should simply set everything up in joint tenancy so as to avoid probate. This is a common estate planning technique, because it is simple and straightforward. Still, it has limitations and definite shortcomings. First, however, let’s take a look at the types of probate you can use in Florida.

Distribution without administration

This is also called a “small estate.” When a person has a very limited net worth upon death, this is generally the option a family will use. Every state has its own threshold. In Florida, the Probate Code outlines certain types of property that are exempt. If a person leaves nothing other than these exempt assets, then there is no need to go through a traditional probate action. Just a few examples are:

  • Up to two vehicles weighing no more than 15,000 pounds combined;
  • Up to $20,000 worth of household possessions, including appliances;
  • 529 college accounts and Florida prepaid college funds; an
  • Certain types of government benefits and payouts.

Summary administration

In a summary administration, Florida law allows a more streamlined probate action where there is no more than $75,000 in total assets, or where the decedent has been dead for at least two years. This number is reached by adding up all of the total assets of the estate, then subtracting all qualifying exemptions. So, as one might imagine, many Floridians will qualify for summary administration.

Formal administration

In a regular or “formal” administration, an estate is opened as a court case and someone is named the personal representative. This person has the authority to handle the estate’s affairs. With or without a will, if there are enough assets in the estate, this type of probate will be necessary.

How does joint ownership help?

Not everything a person owns is actually part of his estate. Any account with a beneficiary will pass directly to the beneficiary without becoming part of the probate estate. These can be life insurance policies, death benefits, and payable on death accounts, among others. Likewise, assets that are held in joint tenancy with right of survivorship are also not part of the probate estate, because they transfer to the surviving owner immediately upon death. In Florida, property is generally not held in joint tenancy. Instead, a deed or bank account must expressly be established with the right of survivorship stated. Married couples own property as tenants by the entirety, which also has the right of survivorship.

When joint ownership may be a problem

If you truly trust someone enough to make that person a joint account holder or joint tenant on a deed, adding that person can ease the cost and effort required to transfer ownership upon your death. However, remember the old warning, caveat emptor (buyer beware). If you add a joint owner on a bank account, the law generally assumes that you intended to give that person the whole amount, because he or she will now have an equal access and interest in the money. The same is true of your home. If you name an adult child as a joint tenant, other children will have no rights to the home upon your death. Joint accounts and joint tenancy deeds have been the subject of much litigation and painful family feuds.

A simple remedy for avoiding probate may seem attractive at first, but you should consult an experienced elder law attorney to determine whether this type of estate planning technique is wise in your situation. Call or stop by the Millhorn Elder Law Planning Group in The Villages to discuss your estate planning needs.

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