During probate, a decedent’s estate is subject to court-supervised administration and distribution. The process must be conducted by a personal representative appointed in court, which is responsible for dealing with outstanding creditors’ claims against the estate.
In this article, you will discover the priority for payment of creditors’ claims in Florida probate.
Creditors’ Claims vs. Probate in Florida – What’s the Role of a Personal Representative?
A personal representative is an individual appointed to administer a deceased person’s estate. Also referred to as the executor, the personal representative must deal with pending obligations left by the decedent, including outstanding debts.
Florida law has specific requirements involved in the identification and notification of creditors. Failing to follow these requirements within the legal deadlines will likely result in a costly and lengthy probate experience.
An important share of the executor’s role during probate includes:
- Identifying any creditors with an interest in the decedent’s estate
- Notifying each of them timely
- Allowing the period reserved for creditors’ claims to expire
- Disputing claims (if applicable)
- Pay legitimate claims
- File the accounting with the probate court
Once the executor has issued notice to creditors, they have a limited period to lay claims against the estate. Any claims must be filed either 30 days from the receipt of the notice or three months from the publication date, whichever date is later.
With few exceptions, most creditors’ claims not filed within two years of the death of the owner of the estate will be barred forever.
What is Florida’s Priority for Payment of Creditors’ Claims? – As Provided by Law
Once all the personal representative has disputed claims with no merit and there are only legitimate claims against the estate, the remaining claims must be paid using assets from the estate.
Florida Statutes §733.707 (1) provides that “the personal representative shall pay the expenses of the administration and obligations of the decedent’s estate in the following order:
- Class 1—Costs, expenses of administration, and compensation of personal representatives and their attorneys fees and attorney’s fees awarded under s. 733.106(3)
- Class 2—Reasonable funeral, interment, and grave marker expenses, whether paid by a guardian, the personal representative, or any other person, not to exceed the aggregate of $6,000
- Class 3—Debts and taxes with preference under federal law, claims pursuant to ss. 409.9101 and 414.28, and claims in favor of the state for unpaid court costs, fees, or fines
- Class 4—Reasonable and necessary medical and hospital expenses of the last 60 days of the last illness of the decedent, including compensation of persons attending the decedent
- Class 5—Family allowance
- Class 6—Arrearage from court-ordered child support
- Class 7—Debts acquired after death by the continuation of the decedent’s business, in accordance with s. 733.612(22), but only to the extent of the assets of that business
- Class 8—All other claims, including those founded on judgments or decrees rendered against the decedent during the decedent’s lifetime, and any excess over the sums allowed in paragraphs (b) and (d)”
Florida Statutes §733.707 (2) specifies that “after paying any preceding class, if the estate is insufficient to pay all of the next succeeding class, the creditors of the latter class shall be paid ratably in proportion to their respective claims.”