Probate can be a time-consuming and inconvenient way to pass property, assets, or a business to heirs or intended successors. It is also unattractive since probate could tie up the future of the business and its management for a period of several years and cost tens of thousands of dollars for the professionals involved, and makes the valuation and the financial state of the business public record for all to see.
To avoid probate, a Florida corporation shareholder can employ several strategies. Here are a few of the most common methods:
- Transfer-on-Death (TOD) Designation: Florida allows for the use of Transfer-on-Death (TOD) designations for corporate shares. By completing and filing a TOD designation form with the corporation, a shareholder can specify who should receive their shares upon their death. When the shareholder passes away, the designated beneficiary can claim ownership of the shares without the need for probate.
- Living Trust: Establishing a revocable living trust and transferring ownership of the corporate shares to the trust can help avoid probate. The shareholder can be the grantor and beneficiary of the trust during their lifetime, while also designating successor beneficiaries who will inherit the shares upon their death. Since the shares are held within the trust, they can pass to the designated beneficiaries outside of the probate process.
- Joint Ownership with Right of Survivorship: In some cases, a shareholder may choose to hold their shares jointly with another person, such as a spouse or business partner, with the right of survivorship. This means that upon the shareholder’s death, the ownership automatically passes to the surviving joint owner without going through probate.
- Lifetime Transfers: Shareholders can also consider gifting their shares to intended beneficiaries during their lifetime. By transferring ownership of the shares before death, probate can be avoided. However, it’s important to consider potential tax implications and consult with an attorney or tax advisor before making such transfers.
These strategies should be implemented with the guidance of an experienced attorney specializing in estate planning, a Certified Public Accountant, and a corporate attorney, such as Roberts Law, PLLC. This team can help ensure that the chosen method aligns with corporation shareholder’s goals and complies with the applicable laws and regulations. Additionally, individual circumstances may vary, so personalized legal advice is essential to make informed decisions regarding probate avoidance for a Florida corporation shareholder.
