When a loved one passes away, they may leave behind debt. Family members may wonder what claims the decedent’s creditors have on the estate.
In Florida, the probate process handles the payments of debt; however, not all debts are eligible. Here is what all beneficiaries need to know about creditors’ claims on a decedent’s assets.
How does probate administration handle creditor claims?
The probate process manages the estate’s obligations to creditors before distributing assets to the heirs.
There are two different kinds of probate administration, summary and formal, and each handles debt differently. With summary administration, the decedent’s estate must pay all eligible debts from non-exempt property. With formal administration, notice is publicly posted and sent to all creditors, and creditors then have 30 days to file a claim.
Not all debts are eligible for repayment, including any debt over two years old.
What assets are exempt from repayment?
Some property is exempt from probate if left to a surviving spouse or children, including:
- The decedent’s home
- Household furnishings up to $20,000 in value
- Two motor vehicles in the decedent’s name
- Some qualified death benefits for educators
There are a few exceptions and limitations to these exemptions. For example, if a will gives exempt property to someone who is not the spouse or children, the property is no longer excluded from creditors’ claims.
Beneficiaries will need to petition the court to ensure that they keep all exempt assets and to make sure the probate administration only pays valid creditors’ claims.