Dying with Debt
By: Aimee K. Arce, Esq.
When you pass away, your assets will be distributed in accordance with your estate plan or the laws of intestacy. But what happens to your debt? Unfortunately, it does not die with you. Your estate is responsible for satisfying your unpaid credit cards, medical expenses, and the like. Your estate is born the moment you pass away, and it is comprised of your assets and liabilities.
In Florida, creditors have two years to file a claim against your estate; however, the creditor claim period can be substantially shortened by the actions of your personal representative in the context of a probate proceeding.
If a probate proceeding is necessary in the administration of your estate, your personal representative will need to settle your debts before distributing your assets. It is your personal representative’s responsibility to diligently search for and identify your creditors. Your personal representative must publish a notice to creditors in the local newspaper once a week for two consecutive weeks. The notice to creditors allows creditors, if any, an opportunity to file a claim against your estate in the probate court. In addition, your personal representative must formally serve notice of the probate proceedings on all of your “known and ascertainable” creditors.
Creditors then have the later of ninety days after the first publication, or for known and ascertainable creditor, thirty days after the date of service, to file a claim against your estate. It is crucial that your personal representative serve all known and ascertainable creditors with formal notice; otherwise, such creditors will have the two year period to file a claim.
If a creditor files a claim against your estate, your personal representative must then determine if the claim is timely filed and legitimate. If the claim is filed outside of the creditor claim period, your personal representative can object to such untimely claim. Unless the probate court grants the creditor an extension, such claim will be barred. This means the creditor will be out of luck and your estate will not be obligated to satisfy such claim.
If the claim is invalid or disputable, your personal representative can again object to such claim. If an objection is filed on the basis that the claim is not legitimate, the creditor must file a separate independent action within thirty days of the objection to pursue the claim. If the creditor fails to timely file an independent action, such claim will again be barred.
Your personal representative must pay all timely and valid claims within one year from the date of first publication of notice to creditors; however, the probate court may extend the time for payment of any claim upon a showing of good cause. Your personal representative must then file a satisfaction of claim with the probate court as proof that any such claims were paid. The probate court will not allow your estate to be closed unless all valid claims have been paid or otherwise disposed of.
Your debt does not pass away with you; however, creditors can be addressed with the advice and representation of an experienced probate attorney. Please contact our office if you have any questions regarding the debts of an estate.