When someone passes away in Florida, their estate will go through probate to settle their debts and distribute assets to their beneficiaries. As part of this process, creditors may file claims for payment from the estate. But how are these creditors prioritized and paid? And what options do beneficiaries have for objecting to these claims?
Secured v. Unsecured Creditors
First in line to be paid are secured creditors, such as mortgage lenders or car loan providers. They have a lien on the property that was used to secure their debt, meaning they have the right to take possession of that property if the debt is not paid. In case of the borrower’s death, secured creditors may file a claim against the estate to recover the remaining balance of the debt after the property is sold.
Next are unsecured creditors, such as credit card companies or medical providers. They do not have a lien on any particular property, so their claims are paid from the general assets of the estate. If there are not enough assets to pay all the claims in full, these creditors will receive a pro-rata share of the available funds. If the estate is insolvent, then these creditors do not get paid.
Section 733.707 of Florida Statutes governs the payment of creditors during probate. It breaks down creditors into eight classes. The further down the classification, the less priority the creditor has and the less likely they will get paid if the estate does not have enough assets. For a more detailed description of the classes, please see Section 733.707 of Florida Statutes.
Objecting to Claims
If a creditor files a claim that the personal representative of the estate believes is invalid, they may object to that claim. The probate court may hold a hearing to decide whether the claim should be allowed or disallowed. Reasons for objecting could include the claim being barred by the statute of limitations, or the creditor not providing sufficient evidence to prove the debt.
Please Note ❗️
One important thing to note is that beneficiaries should never pay creditors before the probate process is complete. Doing so could result in them being personally liable for the full amount of the debt, even if it exceeds the value of the assets in the estate. It is the personal representative’s responsibility to prioritize and pay creditors according to the law.
In conclusion, understanding the order in which creditors get paid in Florida probate, as well as the options for objecting to claims, can help beneficiaries protect their rights and avoid unnecessary liabilities. It is important to work with an experienced probate attorney who can guide you through this complex process and help you make informed decisions.
At Arvanitakis Law Group, we can help you navigate the complex process of probate. Call and schedule a consultation today to see how we can help you.