July 19, 2024

Dealing with the death of a loved one is difficult enough without worrying about their unpaid debts. As the executor of an estate in Florida, it’s important to understand the time limits creditors have to make claims so you can properly administer the estate. This article will explain how long creditors can collect debts from a deceased person’s estate under Florida law.

What Happens When Someone Dies with Debt in Florida?

When someone passes away in Florida, their debt does not simply disappear. Instead, it becomes part of their estate, and the responsibility to pay these debts transfers to the estate’s executor or personal representative. In Florida, the probate process, which is the legal procedure of administering a deceased person’s estate, then begins.

The debts of the deceased, whether it’s credit card debt, mortgage, loans, or any other form of outstanding debt, must be paid from the estate assets. However, this process must follow specific rules and timelines as stipulated by Florida law. The personal representative, often named in the deceased’s will, has a legal obligation to pay the deceased’s creditors from the estate’s assets as part of the estate administration process.

How is a Notice to Creditors Issued, and Why is it Important?

One of the first steps is for the personal representative to publish a “Notice to Creditors” in a local newspaper. This gives potential creditors a chance to file claims against the estate. The notice must be published once a week for 2 consecutive weeks.

Known or reasonably ascertainable creditors must also be served directly with actual notice of the proceedings. This applies to creditors the personal representative is aware of or can identify upon diligent inquiry. Direct notice must be served within 3 months of the first published notice.

These notices alert creditors that they have a limited time frame to make claims against estate assets. Failing to notify creditors properly could make the personal representative liable for debts owed.

Time Limit for Creditor Claims in Florida Probate

Under Florida statute 733.702, creditors typically have 3 months from the date of first publication to file a written statement of their claim against the estate.

However, if notice wasn’t properly served on a known or reasonably ascertainable creditor, they may have up to 2 years from the decedent’s date of death to file a claim.

This is why it’s critical for personal representatives to conduct due diligence, identifying potential creditors and ensuring they receive actual notice.

What Happens if Creditors Miss the Deadline?

If a creditor fails to make a claim against the estate within the 3-month notice period, their right to payment is barred under Florida statute 733.702. They lose the legal right to sue the estate or make a claim against estate assets.

However, there are some exceptions:

  • Secured creditors, like mortgage lenders, don’t have to file a claim by the deadline. However, they do need to take action to enforce the lien within the timeframe stated by applicable laws outside of probate.
  • If a creditor doesn’t receive proper notice, they have up to 2 years from the decedent’s date of death to file a claim.
  • A creditor can petition the court for an extension of time to file their claim if they have a “due and payable” claim that wasn’t filed solely due to fraud or negligence by the personal representative.

So unless they qualify for one of these exceptions, creditors who fail to act within 3 months of first publication lose their right to collect from the estate under Florida statute 733.702.

Paying Claims Against the Estate

The personal representative reviews creditor claims to determine validity. They can choose to pay claims, negotiate lesser amounts, or contest claims they dispute.

Valid claims get paid based on the priority set by Florida statute 733.707:

  1. Attorney fees and personal representative commissions
  2. Funeral expenses up to $6,000
  3. Family allowance for surviving spouse and dependents
  4. Exempt property allowance for surviving spouse or children
  5. Medical and hospital expenses related to the decedent’s last illness
  6. Debts and taxes with preference under federal or Florida law
  7. Reasonable and necessary medical and hospital expenses for the decedent’s last 60 days (may be limited by Medicaid)
  8. Debts acquired after death by the personal representative
  9. All other claims

If the estate doesn’t have enough funds to pay all claims within a class, claims in that class get paid on a pro-rata basis.

Lower-priority claims may not get paid at all if funds run out. Unpaid creditors can’t go after beneficiaries or the personal representative personally. Their only recourse is against remaining estate assets.

How Can Beneficiaries Be Protected from Creditors?

The beneficiaries of an estate are generally not personally liable for the decedent’s debts. However, the value of the estate and, therefore, the inheritance may be reduced by the payment of these debts. Certain assets, such as those held in a trust, are usually protected from creditors and can be passed directly to the beneficiaries without being used to pay debts.

In some instances, the personal representative may choose to pay a debt that was not properly claimed during the probate process. In such a case, the personal representative could be held personally liable for that payment. Thus, it is crucial to carefully administer an estate to protect both the estate and its beneficiaries.

How Stivers Law Can Help

When a loved one dies in Florida, the probate process can feel overwhelming for family members suddenly tasked with serving as personal representatives. Paying debts and distributing assets must follow complex procedures under strict deadlines. An experienced Florida probate lawyer can provide invaluable assistance:

  • Guiding you through the required notices to creditors and time limitations for claims
  • Reviewing creditor claims to determine validity
  • Advising whether to pay, negotiate, or contest certain claims
  • Making sure debts get paid properly according to statutory priority
  • Protecting beneficiaries from liability for unpaid claims
  • Helping you avoid personal representative liability on debts
  • Assisting you in promptly completing probate so loved ones receive their rightful inheritances

The knowledgeable Florida probate attorneys at Stivers Law in Coral Gables have helped many families through this difficult process. When appropriate, they assist personal representatives with creditor notifications, claims review, and strategic payment or negotiations. Let them handle the complex legal aspects so you can focus on your family during this sensitive time. Whether it’s a simple or complex estate, they have the experience to make probate go as smoothly as possible.