The Best and Worst Ways to Handle a Probate Inheritance You Receive in Florida

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By Gary M. Landau, Esq.

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Best and Worst Ways to Handle Probate Inheritance You Receive in Florida | Call (954) 979-6566

Your loved one has sadly passed away, and the probate process with the court is finally completed. The attorney’s office that was handling the probate has received a final “order of discharge” and has sent you your inherited share of the estate.

Now you may start wondering: What should I do with the money?

Whether the amount is a small addition to your bank account or the most money you’ve ever had, it’s important to carefully think through your spending and investment decisions.

At the Law Office of Gary M. Landau, P.A., we have over 25 years of experience helping clients navigate the probate process. Our probate attorney has seen plenty of clients successfully handle their inheritances in a way that helps their life, but others have been less careful with the money and soon regretted their spending decisions.

Here are some tips investment professionals have told our clients about how to handle their inheritances. Read on for some of their helpful advice. And be sure to contact our office at (954) 979-6566 to schedule a free consultation if you are in need of a probate attorney.

Bad Idea #1: Splurging on Pricey Luxuries

Instead: Consider your long-term needs

One of the most common mistakes people make when they receive an inheritance is to consider it like Monopoly money. It may not feel real, so it’s easy to want to spend a big chunk of it splurging on fun, big-ticket items. All of a sudden you’re pondering pricey cars, elaborate vacations, or even a new home well beyond what you would have spent on these items before.

According to the Federal Reserve, nearly a third of inheritances involve significant money, ranging from $50,000 and $250,000. This may be more money than the beneficiary makes in an entire year. When that much money hits a bank account all at once, it can be easy to conjure the dreamy things the money could be spent on.

However, it’s important to remember that the person who left you the money may have worked their whole life to save this amount. They would not want you to go through it all in a matter or months or a few years. Similarly, this may be the largest amount of money you ever receive at one time. As a result, you need to consider how it can help you meet long-term goals rather than simply satisfying your short-term wants.

Experts say it’s generally okay to take a small amount—maybe a few hundred dollars—and buy yourself something fun. But the rest should be carefully spent and invested in a way that serves your future.

Bad Idea #2: Deciding on Major Investments Immediately

Instead: Consider creating a “decision-free zone”

It’s common for people who inherit money to start hearing from friends and relatives about “amazing investment opportunities.” Sometimes this is a business they own and want funding for; other times it may be an opportunity they genuinely think will be good for you, like buying a foreclosed apartment building they’ve seen and having you become a landlord.

But decisions about such spending and investments need to be made very carefully.

Depending on your current financial needs, your inheritance money might best go towards:

    • Paying off some or all of your debt
    • Building up your emergency fund of easy-to-access money in a crisis
    • Investing for your family’s future and/or your retirement
    • Spending a small amount on pleasurable items or activities

Because of the importance of these decisions, financial experts recommend creating a period of time when you don’t decide how and where you will invest your money. This period can last months or even a year.

During this “decision-free zone” it’s wise to:

    • Place the inheritance money in a federally insured bank account.
    • If the inheritance is significant, research (and carefully vet) wealth management professionals and hire one, preferably someone who charges by the hour rather than as a percentage of your managed money.
    • Either working with the professional or on your own, create a carefully crafted plan for how you will use the funds strategically so it lasts you long-term.

Of course, every individual situation is different, If you have urgent financial obligations, such as high-interest debt or a mortgage in arrears, for example, it might not make sense for you to wait to use at least some of the inheritance to deal with this.

However, it’s important that you avoid spending or investing money until you have taken adequate time to consider all options. Once the money is in your bank account for a while, it will stop seeming like play money, making it easier for you to make the best money management plan.

Bad Idea #3: Managing a Very Large Inheritance Yourself

Do: Meet with a financial advisor, accountant, and/or tax lawyer

Especially if you’ve inherited a significant sum of money, determining how best to invest it may be beyond your experience. Just as you would hire professionals to replace your home’s roof or fix that plumbing leak, you should consider hiring experts to help you manage your money.

This is especially important to protect the money against the ravages of inflation. Having someone who understands the tax ramifications of any investments you make is also key.

Experts suggest several professionals may be in order, depending on the scope of the inheritance and your experience managing money. This assumes you already have a probate lawyer who has guided you through the process of probating the estate and has finalized the probate.

These experts might include:

    • A financial advisor
    • An accountant
    • A tax lawyer

Most estates in the U.S. are not taxed because they fall under the taxable threshold, currently $12 million. But other items may have tax implications. For example, if a relative leaves you property that appreciates after their death, you may need to pay tax on the appreciation when you sell it.

Relying on professionals who have earned your trust makes it more likely that you are making the best decisions for managing your money and ensuring this gift from your loved one lasts a long time.

Law Office Of Gary M. Landau, P.A.: Experienced South Florida Probate Attorney

With more than 25 years of experience and countless satisfied clients, Gary M. Landau and his team are uniquely positioned to help you with your probate and real estate needs in South Florida. Whether you’re ready to probate a loved one’s estate or to write your own will, or if you are buying or selling a home and want an attorney to watch out for you or a closing agent to handle title insurance and all documents for your closing or refinancing, the Law Office of Gary M. Landau is ready to work with you.

Call our office at (954) 979-6566 or complete our online form today to schedule a free consultation. We work with our clients in person, over the phone, or on Zoom.

Copyright © 2022. LAW OFFICE OF GARY M. LANDAU, P.A. All rights reserved.

The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction.

LAW OFFICE OF GARY M. LANDAU, P.A.
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Frequently Asked Questions

A will is the simplest way to ensure that your funds, property and personal things will be distributed after your death the way you want them to. Even if you have very few assets, you will benefit from having a will. About half of all Americans die without a will (known in legal terminology as dying intestate). Without a will to indicate your wishes, the court steps in and distributes your property according to state law. A will ensures that your assets will be given to family members or other beneficiaries you designate.

 

Having a will is doubly important if you have young children. One section of the will allows you to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian for your children, who may not be the person you desire.

Many Florida residents have out-of-state wills, drawn up while they were still living among the hills of North Carolina or the hubbub of New York. If the will was valid according to your old state’s laws at the time you made it, it is still legal in Florida. However, if you are a Florida resident, you may benefit greatly by having a new will drawn up in Florida, because it will likely be more easily admitted to probate.

 

It is important to know that each state has its own requirements for what makes a will a legally binding document. For example, Florida doesn’t recognize handwritten wills that haven’t been witnessed (known as “holographic wills”), or oral wills not put into writing, even if other states okay them. There’s also the matter of Florida estate law. In this state, for example, your surviving spouse is entitled to 30 percent of your net probate estate, regardless of what you say in your will. The spouse may also have a “Homestead” interest in property you share here, even if you want your house to go to someone else. In fact, all real property owned in Florida will be subject to this state’s laws, even if you’re a snowbird maintaining a residence in the state where your will was drawn up. Other peculiarities also exist, which is why a Florida will could make things much easier for your heirs.

 

If you would like to have me review your current out-of-state will, I am happy to do so without charge. If it turns out to be in accordance with Florida state laws and procedures, you can continue to rely on it. If not, however, your heirs would rather you discover that now.

It is a good idea to re-read your will every few years to be sure it reflects up-to-date realities (you may not want to leave your heirloom to a niece you are no longer speaking to, nor have someone be named your child’s guardian if they have taken seriously ill since you drafted your will). It is especially important to reexamine your will if:

 

  • You have gotten married since it was last drafted;
  • You have made bequests to people who have fallen out of your favor or are no longer living (I recently updated the will of a man who had left everything to his first wife, who was long deceased), or you have not included people who are now dear to you;
  • You would like to change the person named as the personal representative of the estate. (Note: Florida law does not allow a nonresident of the state to serve in this position, unless it is an immediate family member or certain other relatives);
  • You have acquired pricey or sentimental items that are not accounted for in your will. Do note, though, that Florida law allows you to attach a separate personal property memorandum to your will, detailing who will get which specific items. This list can be changed whenever you want.

Perhaps I should answer this question with where not to store it: in a bank’s safety deposit box. Although it may seem logical to put this with your other important papers, it is often difficult for your heirs to gain access to the box once you die, since the box is sealed then and must be opened in the presence of a bank employee.

 

One good option is to leave your original will with the attorney who drafted it, making copies for your personal representative and other important relatives and letting them know who has the original. For my clients who prefer that I store their original will, I keep it in a fireproof will vault in my office, or in the vault in my bank.

 

As an alternative, you could store the will in a fireproof box or vault in your own home.

 

Wherever you store it, be sure to let your personal representative and other close relatives know where you have put it!

Probate is when the court oversees your assets and liabilities after your death. During probate, the court makes sure that your will is valid and acceptable; that all debts, bills, creditor’s claims, and taxes are paid from your estate’s assets; and that your remaining assets are distributed to your beneficiaries according to your will (or, if no will exists, by Florida law).

 

Probate usually does take longer than most beneficiaries would like. But in order to ensure that everyone with a right to a claim is included in the process, the court requires several steps. If the size and complexity of your estate are minimal, however, the entire process of probate can take as little as a few months. Larger estates that are subject to IRS estate taxes or those involving litigation on the part of creditors or heirs generally take longer, often one or more years.

 

To speed the process along for simple and small estates, the courts allow a shortened form of probate, known as “summary administration,” which requires much less paperwork and time.

A personal representative (PR) is a friend or relative, or an attorney or bank, who is put in charge of the estate until all matters regarding the probate are resolved. (In other states, this person is sometimes called an executor or administrator.) The job of the PR includes identifying all assets, searching for creditors and paying valid claims, filing required estate tax returns if the estate is large enough (the figure escalates over time, according to Congressional laws), coordinating with the probate court and attorneys, and overseeing the distribution of assets–all done under the guidance and assistance of a qualified attorney.

 

Serving as a PR is an important role, and such a person should be selected with care as to who is most willing and best able to serve in this position. By Florida law, your personal representative must be over 18 years of age, and be a blood relative, your spouse, the parent or child of your spouse, or a Florida resident.

Generally, no. If you co-own all property via such legal structures as “tenancy by the entirety” or by “joint tenancy with right of survivorship” the property immediately passed to you upon your spouse’s death. Proof of death is usually all that is needed to pass such jointly owned title for cars, stocks, and other personal property to the surviving spouse.

 

But if even one asset was held solely in the deceased person’s name, or any property is owned in the form of a “tenancy in common,” that estate will be required to go through probate. If the assets are limited, the shorter, simpler form of probate is generally all that is required.
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