As a business owner, react or act – probate court expenses

What is Probate?

Probate is a process, which the court supervises, for settling a deceased person’s estate.  The process involves identifying assets belonging to the estate, paying the decedent’s debt, and distributing the remainder of the assets to the decedent’s beneficiaries.  Costs for the probate proceeding have first priority for payment from the estate’s assets.

If a decedent dies testate (with a valid will) and designates a personal representative, then the will’s provisions govern disposition of the decedent’s probate assets.  If a decedent dies intestate (without a valid will), then Florida law will govern selection of a personal representative and will govern who will receive the decedent’s probate assets.

Chapters 731 through 735 of the Florida Statutes comprise the Florida Probate Code.  Also, Florida probate proceedings are subject to the Florida Probate Rules, Part I and Part II (Rules 5.010-5.530).  Florida Probate Rule 5.030 requires that “every personal representative [unless the sole interested person] shall be represented by an attorney admitted to practice in Florida.”

What does Probate cost?

Statutory provisions address probate costs based upon the value of the probate estate.  Some assets are excluded from the probate estate.  Examples of excludable assets include homestead property, deposit accounts titled to transfer upon death, and life insurance payable to a designated beneficiary.  Outside of extraordinary services,[1] chapter 733.6171 of the Florida Probate Code deems the following costs for services of attorneys to be presumptively reasonable based upon the value of the probate estate:

  1. One thousand five hundred dollars for estates having a value of $40,000 or less.
  2. An additional $750 for estates having a value of more than $40,000 and not exceeding $70,000.
  3. An additional $750 for estates having a value of more than $70,000 and not exceeding $100,000.
  4. For estates having a value in excess of $100,000, at the rate of 3 percent on the next $900,000.
  5. At the rate of 2.5 percent for all above $1 million and not exceeding $3 million.
  6. At the rate of 2 percent for all above $3 million and not exceeding $5 million.
  7. At the rate of 1.5 percent for all above $5 million and not exceeding $10 million.
  8. At the rate of 1 percent for all above $ million.

Thus, a $25,500 fee for a probate estate valued at $1 million is presumed to be reasonable.

What if the decedent was running a business?

Problems involving continuity and/or liquidation of businesses when the principal dies without effective advance planning are numerous.  For example, in a 2015 case, a son claimed he had a constructive trust over his deceased father’s automotive repair and sales business, which he had operated with his father since 1977 and had solely operated following his father’s retirement.[2]  The personal representative in that case moved to compel the business activities to cease and to compel surrender of the real property.[3]  On appeal, the court held that the “trial court erred in ousting the appellant from possession and enjoining his business activities without first hearing any evidence [regarding the son’s alleged equitable rights].”[4]

Unanticipated problems may also occur if a parent allows a child to buy a business by taking back a note with a provision in the will to forgive the debt upon the parent’s death.  After prolonged estate litigation and great expense, a court determined in a 2011 case that, while the decedent’s will expressly forgave a son’s debt, the forgiveness was not effective because the estate was not solvent to pay its debts.[5]

The foregoing provides a brief overview of probate and issues in probate relating to businesses.  If you are interested in more information about probate and/or assistance to ensure advance planning is effective to transfer assets as intended, please do not hesitate to contact the lawyers at Chepenik Trushin LLP, who are experienced, ready, and willing to help.

Other Sources:

Consumer Pamphlet: Probate in Florida, The Florida Bar,

https://www.floridabar.org/public/consumer/pamphlet026/#1.%20WHAT%20IS%20PROBATE%3F (last visited Mar. 23, 2018).

Rohan Kelley, Homestead Made Easy, Part II, The Florida Bar (Apr. 1991), https://www.floridabar.org/news/tfb-journal/?durl=%2Fdivcom%2Fjn%2Fjnjournal01.nsf%2FAuthor%2F264627E5A0ADF57485256BDB0060C20A.

[1] Extraordinary services may include tax advice and advice relating to the contesting of a will among other legal advice and services relating to settlement of the probate estate.

[2] See Delbrouck v. Eberling, 177 So. 3d 66, 67-68 (Fla. 4th DCA 2015).

[3] Id. at 68.

[4] Id.

[5] See generally Lauritsen v. Wallace, 67 So. 3d 285 (Fla. 5th DCA 2011) (distinguishing a case where “the language of forgiveness was set forth in the note itself.”)