I frequently get phone calls from out-of-state parties thatthey are having issues selling mom or dad’s property in Florida. These callscome mostly from New York owners but also many come from Canada. As I often haveto explain, that in order to sell mom or dad’s condominium they need to probatetheir parent’s Florida estate. Invariably they tell me that they have alreadyprobated their parent’s estate in New York or Canada or some other place wherethey reside and they do not understand why they need another probate to sell a secondhome in Florida.
The processstarts when a couple purchases a second home in Florida but resides in thestate outside of Florida. The state they reside in is known as theirdomiciliary estate. When a person dies,their estate generally has to be probated in the state where they resided atdeath. If the decedent only owns real property within the state and possessesonly personal property within the state (including intangibles like stock andbonds which are deemed to be possessed within the state wherein the holderresides even if the actual stock or bonds is in another jurisdiction or brokeroutside the state) then only one probate is necessary.
When a couplebuys a home in Florida they usually purchase the property in their capacity ashusband and wife. This creates a tenants by the entireties estate. This special estate is only used in abouthalf of the states in the United States. It does not exist in New York. Thetenants by the entireties estate is most similar to joint tenants with right ofsurvivorship estate common throughout the United States. This estate means that when one of the jointtenants dies, the interest in the property does not pass through the jointtenant’s estate but passes to the other survivor.
In addition, thetenants by the entireties estate in Florida acts as a creditor’s rightsprotection. In joint tenancy estates, ajudgment against one of the owners would attach to that owner’s interest in theproperty, converting the ownership from a joint tenancy to a tenant in commonrelationship. However, the creditors of one spouse cannot attach to anyproperty owned by both spouses as tenants by the entireties.
So whenout-of-state owners purchase as husband and wife and one of the spouses diesthe ownership interest in into the property transfers, by operation of law, tothe surviving spouse. In order to clear title the only two requirements are therecording of a death certificate for the deceased spouse, (with the cause ofdeath omitted if it is a Florida death certificate) and the recording of acontinuous marriage affidavit from the surviving spouse stating that themarriage remained continuous from prior to the date they acquired the propertythrough the date of the deceased spouse’s demise.
However, whenthe surviving spouse dies and that surviving spouse is not a Florida resident aprobate of their Florida estate is necessary. In order to probate this estate acopy of authenticated copies from the domiciliary probate must be obtained andfiled with the Florida probate court in the county where the property islocated. A Florida personal representative must be appointed, and notices tocreditors and all beneficiaries must be made.
Often thebeneficiaries are not aware of this issue until they find a buyer to purchasethe property. In that case, we have to delay the closing until we can open theestate, and then petition the court for an order authorizing the sale of theproperty. All net proceeds from this sale must be held in escrow until thecreditor’s rights period expires.
None of thiswould have happened if proper planning was made before the last survivingspouse died. One option would have been to create a trust to hold title to theproperty. A trust beneficial interest is an interest in personalty andtherefore would be probated as part of the domiciliary estate. The successortrustee would take over from the former owner and could sell the propertywithout a Florida probate.
Anotheroption would be for the surviving spouse to create a life estate conveying theremainder interest to his or her beneficiaries. Once the life tenant dies the property transfers to the remaindermen byoperation of law and the recording of a death certificate is all of that isneeded to clear title to the property. There are multiple types of life estatedeeds which can be used to create this interest. The traditional life estatedeed gives the property to the life tenant for the remainder of their liferegardless of whether they have physical possession of the property and theremainder interest only passes on death.
Some lifeestate deeds restrict ownership to the life tenant so long as the life tenantresides at the property and does not commit waste. Another type of life estatedeed is the Lady Bird Johnson deed. This life estate deed gives the life tenantthe right to mortgage or sell the property without the consent or joinder ofthe remaindermen, whose interests only arises on death. Named after the former FirstLady this deed keeps full control of the property with the current owner butalso solves the requirement for a Florida probate.
Properplanning can help avoid an unnecessary probate but I ask that you keep this asecret as it is a good source of legal work for office. However, if you insistwe will also help prepare the appropriate trust or life estate deed to avoidthis problem in the future.
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