If someone dies owning assets titled solely in his or her name, these assets will likely go through probate. One of the most efficient ways to avoid probate is relying on different types of title ownership.
Which type of ownership would best avoid probate in Florida? Read on to discover.
Which Type of Ownership Would Best Avoid Probate in Florida? – The Essentials
Transferring Title of Property to Trust
A trust is a legal arrangement in which the trust maker (referred to as “trustor” or “settlor”) transfers the title of assets to a trustee (fiduciary). The trustee holds nominal ownership of the trust assets for the benefit of specific persons listed as beneficiaries.
Once an asset is titled in the name of a trust, it is no longer considered part of the trustor’s estate. Hence, no assets owned through a trust are subject to probate.
It is possible to design different trusts to attain specific goals, but the existing variants fall into two types – revocable trusts and irrevocable trusts. A revocable trust permits you to amend, modify, or revoke the trust instrument while you are still alive.
This type of trust is a valuable tool if you want to retain control of assets during your lifetime while avoiding probate upon death.
Irrevocable trusts cannot be modified, amended, or revoked without a court order. This trust variant is generally used to reduce the impact of taxes on wealthier estates and to protect your beneficiaries against creditors’ claims.
Joint Tenancy with Rights of Survivorship
Under joint tenancy with rights of survivorship, two or more persons have equal ownership rights to a property. When one of the joint tenants dies, the deceased’s ownership interest transfers to the surviving owners.
As the rights of survivorship ensure an automatic “inheritance” process without court intervention, property owned through joint tenancy with rights of survivorship does not need to go through probate.
Once all the joint tenants die, the property may go through probate. To avoid it, you can design an estate planning strategy with the help of a legal advisor.
Please note that naming adult children as joint tenants to a property is not a good idea, as it may expose the property to creditors’ claims. Consult with an expert attorney to identify whether it is the best option for your case.
Tenancy by the Entirety
Tenancy by the entirety is a form of ownership exclusive to married couples in Florida. State law treats the spouses as a single legal entity, as each spouse has an indivisible interest in the property.
Unlike other forms of joint ownership, each spouse owns 100% of the property. If one of the spouses dies, the surviving spouse automatically receives full ownership of the property.
Assets designated to specific beneficiaries upon death are not inherited through a will. Beneficiary designations are available in:
- Life insurance policies
- Retirement accounts (e.g., 401(k)s, IRAs, etc.)
- Transfer-on-death (TOD) accounts
- Payable-on-death (POD) accounts
When the account holder dies, the funds held in the account automatically pass to the individuals named as beneficiaries – all outside of probate court.