On This Episode

Probate can feel overwhelming, especially when you’re trying to understand what happens after a loved one passes away. In this episode, John is joined by Nicole Bell Cleland of Legacy Protection Lawyers to break down the Florida probate process and explain what personal representatives and families should expect along the way. They cover the major stages of probate, including identifying assets and debts, handling creditors and taxes, opening estate accounts, making distributions, and understanding the responsibilities that come with administering an estate.

Legacy Protection Lawyers: https://www.legacyprotectionlawyers.com/

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Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

Speaker 1:

This week on Retirement Planning – Redefined, let’s talk about navigating Florida probate and all that comes with that with John, and Nicole is joining us from Legacy Protection Lawyers. Welcome into the podcast everybody. Thanks for tuning in to Retirement Planning – Redefined with John and Nick. Nick’s not here today. We’re swapping him out with Nicole, which is going to be fun because Nicole’s going to talk to us about navigating Florida probate and she’s just peppier than Nick, so we’re just going to have fun talking with her. How you doing, Nicole?

John Teixeira:

Just a little peppier.

Nicole Cleland:

I’m doing good. Thanks for having me. Excited to be here today.

Speaker 1:

Yeah, absolutely. Thanks for joining us. And of course, John, welcome in buddy. Thanks for being here.

John Teixeira:

Yeah, yeah. I’m excited to have Nicole back on. She’s a wealth of information, so it’s always good to have her.

Speaker 1:

Yeah. And we’ll have links in the descriptions if you guys want to reach out if you have some questions to legacyprotectionlawyers.com, we’ll have a link in there that you can follow up with, of course, along with the guys as well for the financial side of things. So let’s jump in and talk about navigating Florida probate. I know it sounds a little boring and a little worrisome, but it’s also important stuff, Nicole. So let’s get you rolling in there a little bit with some places to start. What’s a good place to start with this? Just the pre-filing diligence, determining what it is that you have and need?

Nicole Cleland:

Yeah, exactly. So when someone passes away and we’re looking at what type of administration might be needed, I usually suggest to clients to really take the time to look at the whole picture. Sometimes you find one asset where you feel like you might need to jump in and go ahead and handle that, but sometimes I think it behooves a lot of people to take a step back, make sure you have your arms around everything before really jumping into one of the options. And the reason why is some people may have gone through experience personally. You might go down one road and find the facts have changed a little bit and now you’re leading down a different road. And that can lead to delays and expenses, and it really helps to really take the time to assess everything. Read the estate plan, what are the assets, what are the debts, and then go from there.

Speaker 1:

Gotcha. And what are some of the administrative type things to think about as far as some bullet point items for folks?

Nicole Cleland:

Sure. So there’s really a handful of different types of administrations. And focusing on probate alone, there are three different types in Florida at least. The first one is very uncommon. It’s when the size of the estate costs less or the assets in the estate are less than a funeral bill. So not a very common one and a little bit more difficult to go through. But the big ones are what we call formal administration and a summary administration. And when people think of probate, usually it’s the formal administration that they think of, the process that can take a bit longer, be a little bit more expensive, but there’s also an abbreviated or an abridged probate process called a summary administration. And those are permitted in estates where a person has been deceased for over two years, or if the size of the estate is less than $150,000. And that’s actually a newer statute that just passed in July. So that’s a convenient one that we’ve upped the threshold for a summary administration from $75,000 to $150,000.

Speaker 1:

Gotcha. Okay. John, what do you think?

John Teixeira:

Yeah, Nicole, quick question on that. Now, is that the full estate or just what’s going through probate?

Nicole Cleland:

Yes, great question. So it’s only the assets that are subject to probate. So what assets are subject to probate? And my rule of thumb is any assets that should go through a probate proceeding are the assets that are in someone’s individual name with no joint owners. So assets that are not in a trust, not necessarily in a company, that don’t have any other spouses, family members, no joint owners on it, and no beneficiaries listed on those assets or accounts.

Speaker 1:

Okay. So what’s the process, I guess, for opening the estate? What steps are we looking at?

Nicole Cleland:

Sure. So step number one is really assessing what the estate plan is. And believe it or not, whether or not you’ve done planning, you have an estate plan. So it’s either an estate plan you’ve created or one that the state of Florida gives you if you’re a resident of Florida, and really understanding who our parties are, who are our beneficiaries, what is the estate plan? And then looking at who is the personal representative. That’s what we call the executor here in Florida. And that’s who typically would be my client, that personal representative, and going through the process of determining if they’re eligible, if they were named in a will to serve as that personal representative.

So in Florida, you have to be either a blood relative of the decedent or a resident of Florida if you’re not a blood relative. And you can’t have any felonies, you can’t have any allegations of elderly exploitation, and there’s a few other caveats in there, but really going through that eligibility process and then making sure that the potential personal representative understands what their fiduciary responsibility is, their responsibility to the estate and to the beneficiaries and walking them through that.

But typically, once we’ve gone through all of that with the client, then it’s preparing the paperwork where you essentially are requesting the court to admit that will and/or to appoint that personal representative and to therefore open the estate officially.

John Teixeira:

So Nicole, is that like doing the petition, assigning that PR once you figure out who it is?

Nicole Cleland:

Yes. Yes. So in that petition, it would state who’s asking to open it, who the beneficiaries are, potentially who creditors could be, and that this is the right venue to open up that probate. And there’s a handful of documents with the petition that are filed at the outset, but essentially all the documents that can vary by county, what would be needed to open the estate formally.

John Teixeira:

And then that’s, I know working with it through Jenny, my wife, there’s the, I don’t want to say the magic, but the letters of administration was what she happened to give to everybody.

Nicole Cleland:

Yeah. So that’s what I call your golden ticket. So once the estate is officially opened, the court will issue, and they vary amongst the states what they’re called, but in Florida, they’re called letters of administration. And that gives a personal representative the ability to act and do anything essentially that the decedent could do. So again, that golden ticket to step into the shoes of the decedent in terms of legal and financial matters.

John Teixeira:

I’m just going through, again, personal experience. What about finding all the assets? And that’s part of it where you submit, hey, here’s what the person had, and this is what’s going through probate?

Nicole Cleland:

Yeah. And that’s why I usually recommend going through that due diligence process before we open up a probate, because when it’s after you’ve opened up a probate, now you’ve got a fiduciary hat on. Your job is a little bit different. So when you do open up the estate, not everyone knows what all of the assets are. Sometimes we discover things six months down the road. But the goal is that whenever someone is serving as personal representative, one of their top jobs is going to be to marshal the assets, to really take the time to determine what is out there and locate all of those assets. They’ve got that fiduciary obligation. And that can be really hard if the decedent didn’t have a list of everything written down, and that personal representative’s really having to search and make phone calls and sit on hold and go into the banks and all that stuff.

John Teixeira:

Yeah, I’ll say, I think as people listen to some good tidbits are, getting that tax return will help figure out what investment or bank accounts were open with 1099s issued.

Nicole Cleland:

Absolutely. Absolutely. Tax returns help, looking through paperwork, requesting a credit report. There are little ways to help piece the puzzle together, but it can definitely be some legwork there.

John Teixeira:

And with the credit report, that’s actually a good segue. How’s the creditor period work? Or you have to notify some creditors, right?

Nicole Cleland:

Yeah. So one of the requirements and what is unique to probate administrations is what we call a creditor period. So it’s a court-required period where you have to publish a notification in a legal newsletter, essentially telling the world that this person has passed away, and if you believe you’re a creditor and you want to be paid, that you need to file a claim within the estate. Moreover, if the personal representative believes that a certain entity or person is owed money from the decedent, then in addition to publishing a notification, the personal representative has to personally notice each of those what we call ascertainable creditors. So who we think could potentially be a creditor of the decedent’s estate. And that can be a job locating in and of itself as well, trying to find all the potential debts or creditors of the decedent.

Speaker 1:

Nicole, what’s the difference between creditor period and post-creditor period? Is there a difference for people to understand?

Nicole Cleland:

Yeah, so during the creditor period is typically when I recommend my personal representatives really have a firm grasp on all of the assets and all the debts. They’ve got three months, that’s how long that creditor period lasts to really wrangle all of those items that hopefully by the end of the creditor period, that’s when we can have that assessment of what are the debts? How can we pay them and how can we pay them timely? Are there any debts we need to object to? And then after that, filing taxes. So where are we in the tax year? Can we file the decedent’s final tax return? Do we need to file an estate income tax return? Do we need to file an estate tax return? And during that post-creditor period is where we can hopefully soon thereafter make distributions. Maybe not the entirety of distributions, but at least a majority of the distributions if we have sufficient assets to pay any creditor claims or pay any final taxes.

Speaker 1:

Gotcha. Okay. Well, since you mentioned taxes, I mean, they’re so, so much fun to talk about. What forms do we need to be aware of or should people be having on their radar?

Nicole Cleland:

Right. So when it comes to probate administrations, I find that CPAs will quickly tell you if this is within their wheelhouse or not.

Speaker 1:

Okay.

Nicole Cleland:

And if not, you can usually tell right away if they are used to working with estate income tax returns or estate tax returns because of their recommendations. So there are going to be certain types of tax forms that a personal representative should file in order to notify the IRS of your fiduciary position, so to speak, within the estate administration to request transcripts if you can’t find any prior tax returns to make sure the decedent even filed within the last couple of years. And then the biggest one, and what I always tell our personal representatives is the IRS is considered a super creditor. So if you do not file a decedent’s tax return or if you’re not adequately managing those tax filings, then the IRS can actually go after that personal representative personally if there’s any outstanding tax liability.

So what I always suggest to our clients is making sure they get that appropriate discharge of liability once they’ve filed all of the taxes for the decedent so that they’ve got that personal protection and the IRS can’t come back after them personally.

John Teixeira:

I think working with you quite a bit over the last few years, that’s something that I’d say talking to some CPAs and other attorneys, it seems it’s often missed. So that’s a pretty big deal because if I was the executor, I would definitely not want any personal liability from someone else’s estate or taxes.

Nicole Cleland:

Oh, absolutely. And that’s something where I call that a hidden landmine in an estate administration. So most people step into a role as personal representative wanting to do the right thing and really taking on that responsibility that they were asked to do.

John Teixeira:

Right.

Nicole Cleland:

And sometimes people unknowingly or unwittingly accept bombs, hidden bombs that could explode while they’re carrying this administration to the end. So I always tell our clients that my job is to teach them how to do their job, but also show them to not get in trouble. And those are the types of things that a good professional does make a world of difference.

Speaker 1:

All right, Nicole, as we’re winding this down, and again, really good points we wanted to highlight here on this episode, what are some final accounting steps? Because obviously people are like, “Well, how do I get my check or my piece or whatever?” Is that coming here in that final stages?

Nicole Cleland:

Yes, absolutely. And if there’s sufficient assets, it’s something that can be divvied out along the way, depending on the administration. But I find if everyone gets along, we don’t have a lot of creditors to worry about, then we’re able to waive a final accounting and people can rely just on statements or trusts amongst family members and receive their check. And that’s how I would say most administrations go. Now, if they’re adversarial to any extent or any tension between the personal representative and beneficiaries, then it is great to do a final accounting where there’s a formal accounting of all of the ins and outs of the estates, and then the beneficiaries get that majority or final distribution check. And that’s something where, again, a good professional’s going to make difference because when you’re working with beneficiaries, especially if there’s any tension between them, you really have to communicate with them when to expect things because they’re going to be in the dark a lot of the way.

And when you communicate with them when to expect certain things and have that open line of communication, it really prevents any potential litigation or adversarial issues arising that can make everyone’s lives a little bit more stressful when the goal is just to get us across the finish line.

John Teixeira:

And Nicole, at what point and when do they actually open up an estate account at a bank or somewhere to put any proceeds or anything that’s sold or any income that’s coming from someone’s estate? When do you open up that account and what’s the process for that?

Nicole Cleland:

Yeah, great question. So whenever you have an estate account, so that’s essentially a checking account or a money market account in the name of the estate of decedent. And all you would need typically are your letters of administration and a new tax ID number for the estate. So that’s like the estate’s social security number. At the end of the day, the IRS wants to make sure they’re aware of every entity that’s out there. And so if you liquidate an account, if you move funds or need to consolidate accounts, if you sell a home, sometimes an estate account might be needed just to accept funds and just sit there until we’re able to make final distributions.

John Teixeira:

Okay. So it’s basically, in essence, it’s an account for the decedent and any past due checks or checks on cash, anything like that can go into it in post-profit accounting.

Nicole Cleland:

Absolutely.

John Teixeira:

Okay.

Nicole Cleland:

Yeah. And it just depends. I mean, I’ve had administrations where the only probate asset is a house and the kids don’t want to sell it. So we don’t need an estate account. So it can vary. I would say most administrations require the opening of an estate account. But again, that’s where when we talk about probate, it’s very fact specific. Don’t listen to what your neighbor did. You really have to talk to your professionals on what you need for your case.

Speaker 1:

Great point. All right. Well, if that’s everything we’ve covered, guys, I think we’ve got it all on this episode. What we’d like to do is maybe do a follow-up on this with some questions and answers and things of that nature. So if you’ve got questions of your own, definitely reach out to Nicole and her team. Again, you can find her at legacyprotectionlawyers.com. That’s legacyprotectionlawyers.com, Nicole Cleland. And of course, you can also reach out to John and Nick at pfgprivatewealth.com for the financial side. And having a financial team, John, we’ll wrap it up with that, is more than just the finances. This is part of it as well.

Nicole Cleland:

Absolutely. From my perspective, absolutely.

Speaker 1:

Yeah. Yeah, you need a whole team. Yeah.

John Teixeira:

100%. Yeah, definitely. It takes a village nowadays to do almost anything.

Speaker 1:

Pretty much. Pretty much. Very, very true. Well, Nicole, thanks for being here and helping us out. Great stuff and very informative.

Nicole Cleland:

Thanks for having me.

Speaker 1:

We’ll see you next time here on the podcast. Don’t forget to subscribe to us on Apple, Spotify, whatever app you enjoy using. Find it online at pfgprivatewealth.com. That’s pfgprivatewealth.com.