Settling Debts in Florida Probate

Legal strategies to ensure your assets benefit your loved ones

Settling debts through the Florida probate process involves identifying and notifying creditors of the deceased person's passing. This allows them an opportunity to make claims against the estate. Valid debts are paid using estate assets before the remainder is distributed to beneficiaries. There are a lot of rules and regulations about which assets creditors can access and how they must go about doing it. A breach of any of these laws could result in the creditor’s claim being denied.

The Levy Firm PLLC can help you protect your estate from creditors and transfer your assets to beneficiaries with reduced risk of taxes, claims, and fees. If you want to learn more, contact us for a free consultation.

Who pays for an individual’s debts when they die?

In Florida, beneficiaries and family members generally do not have personal liability for the debts that were solely in the decedent's name. However, the decedent's estate is responsible for paying off these debts using any available assets left behind. It is the role of the estate’s personal representative to manage the probate process properly to address and settle these debts in accordance with Florida law. The representative can also challenge unqualified claims.

How does probate settle debts?

Here are the steps in Florida’s probate estate settlement process:

Notification. Notify creditors of the deceased person's passing by publishing a notice to creditors in a local newspaper and providing direct notice to known creditors.
Claims Period. Allow creditors a specific period, usually 90 days from the date of publication or 30 days from the receipt of direct notice, to file claims against the estate.
Review and Verification. Review and verify the validity of creditor claims, ensuring they are properly documented and legally owed by the deceased.
Payment. Pay valid creditor claims using estate assets. If there are insufficient funds to pay all debts, Florida law establishes a priority order for payment.
Dispute Resolution. Resolve any disputes or disagreements with creditors regarding the validity or amount of their claims through negotiation or, if necessary, court proceedings.
Final Accounting. Prepare a final accounting of the estate's assets, debts, and distributions, detailing how creditor claims were addressed.
Distribution. After settling creditor claims, distribute the remaining estate assets to the beneficiaries according to the terms of the will or Florida intestacy laws if there is no will.
Closing. File the necessary paperwork with the probate court to formally close the probate administration process.

Certain legal declarations and financial structures can protect some assets from creditors and debt collectors. Proactive estate planning provides a safeguard against unforeseen legal challenges and ensures the preservation of personal and financial well-being.

Estate assets that can be shielded from creditors and debt collectors

In general, assets and property that do not go through the probate process are inaccessible to creditors. Exceptions are made when money is owed on taxes, mortgages, and a few other types of debt. With the proper legal documents and plans, it may be possible to protect the following assets from most creditors:

Household furnishings and appliances up to $20,000 in value
Two vehicles in the decedent’s name that were in regular use and weigh 15,000 lbs. or less
Qualified college and university savings accounts including Florida Prepaid College Trust Funds
Some retirement accounts such as 401(k)s with designated beneficiaries
Living trust assets
Irrevocable trusts
Transfer on death accounts
Medical savings accounts
Florida Homestead properties, Lady Bird and Enhance Life Estate deeds

Settle your debts your way with an estate plan

Having an estate plan saves loved ones from having to make difficult health and financial decisions at a stressful, vulnerable time. Geoff has a talent for helping people realize their legacy goals and establishing the legal structures necessary to make them happen. If you need estate planning legal services, contact The Levy Firm PLLC in Fort Lauderdale for a confidential and complimentary consultation.