Passing away with debt is common in the US, and numbers are growing. The credit reporting agency Experian found that 73% of Americans die with outstanding debt, leaving an average of $60,000. Debt doesn’t disappear after you pass away. During the probate process, creditors make claims against your estate to settle outstanding debts. This process can be complicated and confusing for family members who are also mourning your death, which is why it’s important to have a probate attorney in Seminole County help navigate the process. Below, we discuss how debts are handled during the probate process and how to avoid debts going through probate.
Types of Probate Debts
Outstanding debts, bills, and loans issued under your name and your share in real estate property go through probate. These debts include:
- Mortgages
- Credit card debt
- Car loans
- Funeral and burial expenses
- Medical bills in the last 60 days before you passed away
- Outstanding child support
- Outstanding taxes
The Creditor Claim Process—Explained
A significant part of probate involves your elected personal representative researching, finding, notifying, and paying creditors through the guidelines stated in Florida Statute 733.2121. Your personal representative must also publish an official notice in a local newspaper, notifying potential creditors of the estate’s status. Creditors then have up to 90 days to make a claim against the estate for funds owed. Creditors notified directly must submit a claim within 30 days. Creditor claims must include evidence of the outstanding debt, such as contracts, invoices, and payment history.
Your probate attorney in Seminole County will work with your personal representative to pay off creditor claims once they are validated. Claims are paid in a specific order according to Florida law, so it’s important your personal representative waits until the claim period ends before paying creditors. Your personal representative could be liable for failing to follow these rules.
Who Pays Debts in Probate?
Creditor claims are paid from the value of your estate. Funds for creditor claims can come from selling your possessions or liquidating assets during probate and eligible funds in certain bank accounts. Your estate’s personal representative is responsible for making the payments within 12 months.
What Happens If An Estate Doesn’t Have Enough Money To Pay Debts?
If there aren’t enough funds from the estate’s value to pay off all creditors, they’ll receive a portion of the payment owed.
Can Creditors Go After Beneficiaries?
Claims are paid from the estate’s total value before beneficiaries receive their share. Creditors cannot collect on your beneficiary’s inheritance after they’ve received it. Your family members are only responsible for paying off debts they were personally responsible for, like if they were a co-signer on your car loan.
Protect Your Estate From Creditors with Peppler Law, Probate Attorney in Seminole County
The best way to protect your estate from creditor claims is to work with a probate attorney in Seminole County to develop an estate plan that avoids probate and leaves a lasting legacy to your loved ones. Estate planning tools such as beneficiary designations, living trusts, and assets with rights of survivorship clauses allow you to pass possessions to your intended beneficiaries without probate. Florida probate attorney Thomas R. Peppler can help you determine which estate planning tools are right for your estate and administer your estate after you pass away. Call our office today or schedule an online consultation to create your estate plan.
