No Estate Is Too Smallby Patricia R Voss on 03/05/18
In 2018, the amount a person can pass at death, without estate tax, is $11.2M. You would probably expect someone with this much wealth, or more, to have an estate planner. But, if you’re reading this, you are probably not one of them. Most likely, you think your estate is too small to require a trip to an estate planner and I would disagree.
If you live in Florida, are single, widowed or divorced and you own anything of value in your own name, your estate will need to be probated after your death; or if you live in another state and own real estate in Florida in your own name, your estate will need to be probated. For this example, let’s say a probate attorney charges $300 per hour; and it takes 20 hours to open, administer and close a probate estate (about $6,000). If that item of value that you own in your own name is a $15,000 bank account, then the $6,000 it might cost to have that asset probated is a large percentage of your $15,000 account. However, if the account balance is $150,000, then the $6,000 attorney fees might hurt as much. It is true that he Florida Statutes presumes certain percentage fees to be reasonable but for a smaller estate, the percentage isn’t a living wage for an attorney, so finding an attorney to accept that percentage will be hard or impossible.
In Florida, for a married person who owns the home they currently live in, in their own name and then they pass away, the surviving spouse will need a probate attorney to have a judge determine what the surviving spouse’s rights are in the home. I’m not saying that every probate administration costs $6,000, some cost less and some a lot more. In this example, there would be no money in the probate estate (because it’s only the home) so the surviving spouse would have to pay the attorney fees him or herself.
In the case where a single parent dies, leaving behind a minor child and only has a life insurance policy with the minor child is named as the beneficiary, in Florida, if the life insurance is more than $15,000, a Guardian of the Property will have to be named. This guardianship will stay open and under court supervision, filing annual reports until the minor child turns 18 at which time, the insurance money minus the attorney and accounting fees, will be turned over to the child. The primary problem is that the attorney and accounting fees may use up a large portion of the life insurance proceeds. The other important issue is turning over a lump sum to an 18 year old.
In all three of these examples, a relatively small amount of money paid for some estate planning advice could save thousands in the future. This is why I believe that no estate is too small to need estate planning.