On February 29, 2012 the Second District Court of Appeals issued an opinion involving the appointment of a Personal Representative (sometimes referred to as an executor or administrator) for the estate of a decedent who died without a Will.  When a decedent has made a valid Will, this document will normally nominate a person or bank to be Personal Representative.  What happens when there is no Will?

The Florida Probate Code specifies that there is a priority of preference that is to be followed in determining who will be Personal Representative.  A surviving spouse comes first, followed by a person who is selected by a majority in interest of the heirs.  A “majority in interest” means a person or combination of people who get at least 51% of the value of the assets of the estate.  The third preference is an heir nearest in degree (meaning essentially the closest relative or someone from a group of people who all have the same relationship to the decedent).

In the February ruling the court was confronted with a situation where a surviving spouse requested that he be appointed Personal Representative of his late wife’s estate.  The request of the surviving spouse was challenged by the decedent’s mother (the spouse’s mother-in-law).  The mother asked to be appointed Personal Representative and made allegations against the spouse of a “serious nature” in her petition to the court.  The published opinion does not specify what those allegations were, but the appellate court confirmed that person’s preference in appointment is subject to their being fit to serve.  A person is not fit to serve if the individual “lacks the necessary qualities and characteristics”.

The important point in the appellate ruling is that because the trial court appointed the mother of the decedent simply on her allegations and without her presenting any actual evidence of the spouse‘s lack of fitness, the case was sent back for a hearing where such evidence must be presented.

There are some valuable lessons to learn from this case.  First, in contested estates, suspicions and allegations are not enough to win.  You have to prove wrongdoing or lack of fitness with facts.  Second, a person is not a Personal Representative simply because they were nominated in a Will.  The Will has to be admitted to probate (ruled valid) and the nomination approved by the Court.  Third, the approval of a nomination is subject to that person being fit, an adult, mentally competent, not being a convicted felon, and either being a resident of Florida or being related to the decedent within a definition in the Florida Probate Code.

One of the purposes of the probate process is to manage debts owed to creditors of the deceased andto see that creditors are paid – to the extent that is legally and financially possible. The legal procedurefor probate provides a process to manage and cut off claims against the deceased that are filed morethan three months after the publication of a Notice To Creditors in the newspaper, or more than thirtydays after service of the Notice on a creditor, if that is later. Most debts of the deceased are barred andunenforceable after two years from the date of death. Recently the Second District Court of Appeals inFlorida issued a ruling that emphasizes the need to properly follow the claim procedure if you are owedmoney by the deceased. Watch the dates as you read the following paragraph.
Edward Caulfield died on December 18, 2006. A probate administration was started and on November16, 2007, a Notice To Creditors was published. The court opinion dos not explain why so much timewent by before publication. Under Florida law the end of the creditor claim filing period was February16, 2008. A creditor, Mr. Lubee, filed a late claim on December 18, 2008, ten (10) months after theclose of the claim filing period. Note, this is the point after which the two year bar on collection of adecedent’s debts also takes effect. Then Mr. Lubee sued the estate on February 5, 2009, no doubtbecause payment had not been forthcoming. Judgment was entered in favor of the estate at the CircuitCourt level and affirmed on appeal. Why? Because Mr. Lubee didn’t file a claim within the three monthsand never asked the probate court for permission to file a late claim within two years of the death ofMr. Caulfield.
What can we learn from this case? First, if a deceased person owes you money, get legal advice about how to enforce that claim. Second, as a creditor, time is your enemy. You can even file a caveatwith the court to get notice when a probate administration is started, before a Notice To Creditors ispublished. If you are filing late, you must first ask for the Court’s permission. Third, if Mr. Caulfield hada revocable trust based estate plan and the trustee saw no need to file a probate and if Mr. Lubee fileda suit within two years of Mr. Caulfield’s death, he might have been able to collect. Trusts do not bnefitfrom the two year cutoff in probate law.

Estate Administration is the process by which a decedent’s total estate, which includes both probate and non-probate assets, is settled. Probate assets are properties that were owned by the decedent that were not owned “jointly” with survivorship rights by another. Non-probate assets are property held in a revocable trust, joint assets, life insurance policies, retirement accounts, annuities, homestead property, automobiles, boats, etc. Some assets do not go through probate but are considered part of the estate for federal estate tax purposes, therefore if an estate is taxable, a Form 706 must be filed.

Real estate, on the other hand, almost always requires some sort of probate or other legal steps to be taken after the owner dies. This is because title to real estate is based upon a “chain of title” in the county records, and title insurers want to be sure exactly who inherited the property without requiring an order of probate court.

In Florida the types of Probate procedures are:

Summary Administration
Summary Administration can be utilized if the value of the estate is $75,000.00 or if the decedent is dead for more than two years. The persons who receive the estate assets remain liable to creditors of the decedent for two years after date of death unless a Notice to Creditors is published.

Formal Administration
Formal Administration is required for estates involving more than $75,000.00. It is a court supervised proceeding where a will is admitted, a personal representative is appointed, Notice of Administration is sent to interested persons (surviving spouse, beneficiaries, etc.) and a Notice to Creditors is published to identify unknown creditors and sent to all known creditors. After the expiration of ninety days, creditors who fail to file a Statement of Claim lose their right to collect on the decedent’s debt. Assets are collected, debts and taxes are paid and after the distribution of Estate assets is made the Estate is closed and the personal representative is relieved of all duties and liabilities to the Estate.

All of a decedent’s assets together make up the decedent’s estate. For estate tax reporting purposes the IRS defines estate as the total collection of a decedent’s assets whether or not they pass through probate. After an estate’s assets have been valued, if the decedent’s gross estate exceeds the federal estate tax credit exemption amount, (for 2008, Two Million dollars ), then a Form 706 (Estate Tax Return) must be filed with the IRS and a copy forwarded to the Florida Department of Revenue.