Nov 252015

Mortgages, credit cards, and student loans. Although baby boomers would love to leave a nice inheritance to their children and grandchildren, they are often faced with a myriad of debts that sometimes leave them with less than zero when they pass. Sometimes they only leave debt!


Married couples: Generally, both spouses of a married couple are on a mortgage, and the remaining spouse will just continue to pay on the home in order to stay in the home. It is important to note that Florida has several laws concerning an individual’s homestead, the right to devise that homestead, and creditors of the decedent.

Heirs or Other Family Members: Under Florida law, an heir who inherits real property also takes the mortgage on the property. The estate will not pay off the mortgage unless the Will indicates it must be paid off and there are enough funds available in the estate to do so. If an heir or other family member would like to keep the home, they will either have to continue making the payments or refinance the loan. However, a loan modification can be difficult to obtain. Luckily for the heir or other family member, the Consumer Financial Protection Bureau has rules to prevent the loan balance from being “accelerated” due to the loan borrower’s death.

Credit Cards

Married couples: If the spouse was a joint account holder or if you live in a community property state and the debt was incurred during the marriage, the spouse will be responsible for the balance of the credit card.

Heirs or Other Family Members: Heirs and other family members will not be personally liable for a decedent’s credit card debt unless they have co-signed the loan.

The Estate: If there are available funds, credit card debts may have to be paid out of the decedent’s estate.

Student Loans

Federal Student Loans: Upon the death of the student borrower, federal student loans can generally be canceled. Because federal student loans do not require a co-signer, this in not usually an issue.

Private Loans: Private loans generally do require a co-signer. Upon the death of the student borrower, the individual who co-signed for the loan will still be responsible for the loan. However, Parent PLUS loans are typically canceled upon the borrower’s death.

Nov 052015
Homestead- Protection Against Creditors for Your Principal Residence

Florida has some of the best homestead protections in the nation. Article X, Section 4 of the Florida Constitution exempts homestead property from levy and execution by judgment creditors. Simply put, your homestead property is your principal place of residence and most creditors cannot foreclose on your homestead. In order to qualify for homestead protection, you must be a Florida resident, the home must be your principal residence, and it must be owned by a natural person. Although property owned by your revocable trust can still qualify as homestead property, a residence, even if it is your principal residence, owned by More…

Oct 262015
Probate:  Formal Administration or Summary Administration

When a loved one passes, starting the probate process can seem like a daunting task. You may hear the terms “formal administration” or “summary administration” and not know what they mean or what the difference is. In layman’s terms, a formal administration is a full administration of the estate. Generally, you need to do a formal administration when the estate’s assets are greater than $75,000 excluding homestead property (basically the descendant’s primary residence) or when required in the Last Will and Testament. A formal administration takes more time, around six months to more than a year to complete, and cost More…

Oct 202015

In this final segment of my three part overview of what assets do not go through probate, I will discuss Trust Assets. Trust Assets: Assets that have been placed in a Revocable Trust prior to death avoid probate. However, if your Will establishes a trust (called a testamentary trust), those assets will go through probate because the legal title of those assets was held in your name until death. During the probate process, the assets you assigned to go to your testamentary trust in your Will are retitled into the name of your trust. What are Trust Assets? Trust assets More…

Oct 132015

A trust is a crucial part of a well-crafted estate plan. Trusts allow a third party, known as the trustee, to hold and have control over assets in the trust for the benefit of the trust beneficiaries. Based on your needs, a trust can be a fairly straightforward document, holding a few pieces of real property or a bank account, or may be more complex, holding business interests, intellectual property, security accounts and real estate. An experienced attorney can draft a QTIP trust to provide income for a surviving spouse, a charitable lead or remainder trust to benefit a cause More…

Oct 072015

Asset protection, in essence, is organizing your property in a manner that protects it from a potential lawsuit. Business entities such as corporations and limited partnerships, as well as estate planning devices like trusts, all exist to safeguard assets against the reach of a possible plaintiff. A good asset protection plan will not protect property from legitimate claims of debts owed. Contrary to popular belief, one cannot incur debts and then place them in an asset protection mechanism, expecting them to be absolutely protected from creditor claims. However, when little or no assets are within reach of a judgment, that More…

Oct 062015

In this segment of my three part overview of what assets do not pass through probate, I will discuss the second broad category of assets that do not go through the probate process: assets that have a beneficiary designation. Beneficiary Designation: There are some assets that allow you to designate a beneficiary. Those assets commonly include IRAs, insurance policies, retirement plans, and some bank accounts. Generally, when a person dies the assets are paid out to the designated beneficiary without probate. The designated beneficiary simply contacts the institution, provides the required documents, and the institution distributes the assets to the More…

Sep 222015

It is important to understand that not all assets go through probate. Generally, jointly owned assets, assets that have a beneficiary designation, and assets placed in a trust do not go through probate. In the next three blogs, I will give a basic overview on each of the three assets that do not generally go through probate. Jointly Owned Assets: Assets titled solely in the decedents name will go through probate; those assets include, but are not limited to, bank accounts, real estate, vehicles, etc. Part of the probate process is taking the decedent’s name off the title and putting More…

Sep 082015

What happens if you own real estate in a state in which you do not live? If you own a second home, rental property, or any other real property out of state (even time shares), it is very likely that you will be involved in a probate proceeding in each such state.  This process is called ancillary probate. Ancillary probate costs your estate more money and impedes the probate process. Additionally, an ancillary probate administration may thwart some of your currently established estate planning goals. There are ways, however, to organize your estate, including your out of state properties, to More…

Aug 272015

Many people think they can avoid the probate of an estate if their deceased loved one had a Last Will and Testament. This is a common misconception. A will is a set of directions by the deceased on how they want their estate to be distributed. Probate is the legal processes where a deceased person’s affairs are managed in an organized manner to ensure that all legitimate debts are paid, burial expenses are taken care of, and the remaining assets are transferred to the beneficiaries according to the will or via intestacy.