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No. A will is a formal legal document that contains instructions on which property or money goes to which person, but it doesn’t mean probate won’t be necessary.

Your will is a set of instructions to the probate judge, telling him or her about your intentions with your property. Any assets that only have your name on them—like a sole ownership bank account or real estate you own by yourself—will be subject to this process; your family will not be able to change the ownership of these assets without a court order.

The probate process involves “proving” the will—verifying that the document your family has submitted is an original, verifying that witnesses have signed in the way Florida law requires, and if not, going through some extra steps to verify that the will is truly your will.

Depending on the type of probate case, the next steps involve a Personal Representative being appointed to pay creditors and then distribute assets, or a court order being signed so assets can be transferred to their new owners.

All of this formality can be costly and time-consuming, but the process is in place to make sure your wishes are carried out and there are checks and balances in place to keep an ill-intentioned family member from taking what’s not theirs.

Probate can be avoided in a few different ways, which we’ll cover in a future blog post.


 

No. That’s a VERY common misunderstanding though!  The $14,000.00 rule is a tax rule issued by the IRS. The 5-year lookback period is a rule related to Medicaid, and applies even to gifts that would be ok tax-wise.

The IRS requires anyone who gifts more than $14,000.00* to any individual during any given year to file a gift tax return. It’s at this $14,000.00 mark that the IRS wants to start keeping track: just because a gift is given above this amount doesn’t necessarily mean gift tax will be due. So, you can give $14,000.00 to each of your children, each year, without the added paperwork of a gift tax return. Gifting is a good strategy for some, but I recommend discussing it with an attorney, as well as a CPA, who are familiar with your individual circumstances.  

For Medicaid purposes: all gifts given within the past 60 months (five years) are viewed as being a gift for the purpose of qualifying for Medicaid—even gifts of $14,000.00 or less. The person reviewing your Medicaid application will assume that the purpose of your gifting was to spend down your assets in order to qualify more quickly. As a result, a penalty is applied— and you cannot qualify for benefits for a certain number of months, based on the amount that was given away.

Gifting mistakes are fixable, but it’s always better to proceed with caution in the first place.

Maybe—but do so carefully.

One of the biggest benefits of adding a child (or children) to your deed is avoiding probate. If done correctly, at your death, your children would automatically own your home, saving them the expense and time of a probate case. Avoiding probate can also help eliminate problems with creditors after your death.

However, adding a name to your deed can have negative implications if it’s not done correctly. If you give your home away, or even add a child as a co-owner, there’s a possibility of triggering gifting problems if you ever need to apply for Medicaid benefits. Or, if you ever need to sell your home and you’ve made your child a co-owner, he or she would have to agree to the sale—so you’re giving up some of your independence.

A good compromise is an “enhanced life estate deed.” This works much like a “pay on death” beneficiary on a bank account or life insurance policy: the asset is yours, to do with as you like during your lifetime. It only passes to your child or children upon your death.

No—that’s almost never the case. If you don’t have a will, your estate is what’s known as an intestate estate. That means you don’t have a last will and testament, but it doesn’t mean your family won’t inherit from you.

The Florida Statutes on intestate estates assume that what most people will want is for all assets to go to their spouse, if living, or to their children. It can get a little more complicated where there are children from a previous relationship, but the statutes cover that, too. If there is no spouse and no children, the statutes then direct that assets to go parents, siblings, then nieces and nephews.

Assets only go to the state if there’s no family or the next of kin can’t be found, and that doesn’t happen for a long time. Without a will, though, assets do go intestate, which just means they pass to your family under the assumptions made by our legislators over the years. Many times, that’s exactly what you would want—but if it’s not, your will becomes much more important.