Understanding the Differences Between a Formal Administration and a Summary Administration

The process of executing an estate should be as painless as possible. At the end of the day, the days, weeks, and months following the death of a loved one would ideally be spent remembering and mourning them. However, when a loved one passes away with assets that need to be distributed through the courts, the process can add more stress to the situation.

We want to help take some stress off your shoulders and help you understand the process for distributing assets that don’t have a Payable on Death (POD) designation. The nature of those assets without a POD is one of several factors that determine whether a Formal Administration or Summary Administration will be more appropriate for your situation.

Payable on Death

Before we get to the parameters that guide a Formal or Summary Administration, it’s important to understand what assets are actually subject to probate. Assets with a Payable on Death designation don’t need to go through the probate process as they already contain a built-in designation for where ownership of this asset goes after death. POD assets supersede any estate plan documents such as a will or a trust.

The best examples of assets that may be Payable on Death are checking accounts, savings accounts, security deposits, and other accounts held by financial institutions. You will often designate a beneficiary to those accounts voluntarily and that named beneficiary will take ownership of the account at the time of your death.

Real property may also be Payable on Death in Florida under the “survivorship provision.” Florida state law assumes a spouse (or, in some cases, a joint tenant defined in the survivorship provision) will take ownership of the real property if alive and able at the time of the joint owner’s death.

We do want to note that if the owner of a POD asset passes away with debts owed on the asset, the beneficiary will likely become the responsible owner of those debts unless otherwise denoted. Another drawback to POD is that if the beneficiary predeceases the owner, the asset will then pass into the estate and be subject to probate just like any other assets.

Asset valuation

The first and most obvious determining factor will be the value of assets not subject to POD provisions, homestead exemptions, and other property exempt from the valuation. Those exemptions are defined in Statute 732.402.

In a Summary Administration, there is a $75K cutoff for asset value. This means the total assets that must go through probate and aren’t value exempt must hold a total value under $75K.

In a Formal Administration, the values can exceed the $75,000 limit for non-exempt assets. This is to ensure a thorough review of assets with significant money and assets.

Timing

The timing an estate is opened will also play a major role in determining the administration. If you open the estate within the first two years, the previous factors will come into play. However, if the estate is opened when the decedent has been dead for more than two years, the estate will automatically enter Summary Administration.

A Summary Administration will also generally take less time. A Summary Administration may take a few months to complete while a Formal Administration could take a year and a half. This timeframe and the simple nature of a Summary Administration means costs will be lower for a Summary vs. a Formal Administration.

Letters of Administration

While there are many benefits to a Summary Administration, it’s important to know the limitations. In a Summary Administration, a personal representative isn’t appointed and you won’t be able to request Letters of Administration.

These are important because you will need them if you intend to sell assets prior to their distribution, speak with financial institutions about estate issues, or handle a creditor claim. In the event of a creditor claim against the estate, you’re going to need a Formal Administration to get the Letters of Administration.

Having the right attorney could make all the difference in handling your estate. At Zamora, Hillman & Villavicencio, we lead with experience and knowledge to make sure our clients get the most out of our case. Contact our offices today and receive the utmost care from our team of attorneys.

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Zamora, Hillman & Villavicencio

Our firm deals with legal matters involving your loved ones, and our familial operation is prepared to give you caring and effective counsel during what might be a difficult or emotional time.

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