One of your duties as a personal representative is paying the debts of the decedent. Understanding the priority of claims in Pinecrest probate is essential.
Work with one of our probate attorneys if you are managing a decedent’s estate. Making a mistake when paying the decedent’s debts can cause delays and other issues, so get legal advice to ensure compliance.
How To Handle Estate Debt
An estate’s personal representative must collect and catalog the decedent’s property, notify creditors and pay the decedent’s debts, then distribute any remaining property to the decedent’s heirs or beneficiaries. There are strict rules regarding all these procedures.
The decedent’s creditors will make claims against the estate. The decedent may owe taxes for their final year of life, and the estate also may have to pay taxes. If the decedent was receiving Medicaid or other public assistance, this support must be paid back.
Personal representatives must pay these debts out of the estate’s probate assets and should never use their own funds or exempt property to resolve a decedent’s debt. When a decedent leaves a spouse or children, certain property like a homestead, two vehicles, and some personal property passes immediately to the family and is exempt from probate. An experienced attorney in Pinecrest can identify exempt property to a probate court to ensure it is protected from creditors’ claims.
Which Obligations Are Paid First?
If the property in the estate is insufficient to pay the decedent’s debts, the law prioritizes the obligations. Florida Statutes § 733.707 describes the order in which debts should be paid.
Estate administration expenses are paid first, including the personal representative’s commission and expenses and the estate’s attorney fees. The cost of the final disposition of the decedent’s remains is next, but only up to $6000. Next in priority are taxes and repayment of any funds the decedent received from Medicaid or other public support programs.
After these debts are paid, the personal representative addresses medical bills for the last 60 days of the decedent’s life. Next is the family allowance, then back child support, and then any debts the decedent’s business incurred after the decedent’s death. Working closely with an experienced Pinecrest attorney can ensure that a personal representative in a probate case adheres to the order of debt preference set forth in the statute.
Handling Lower-Priority Claims
Once all the priority claims have been paid, the personal representative must settle the other claims against the estate. They can pay any funeral or related expenses exceeding the statutory limit and any medical expenses for care rendered before the last two months of the decedent’s life.
Other claims might include personal loans, credit cards, and similar obligations. When an estate is close to insolvency, these creditors might agree to accept less than the amount owed. A Pinecrest attorney should oversee the process of negotiating a discounted settlement with these low-priority creditors.
Sometimes, the estate runs out of money before it pays all the prioritized claims. For example, if the decedent lived in a nursing home the last few years of their life, there might not be enough left in the estate to pay taxes and reimburse Medicaid after the personal representative pays estate administrative expenses and $6000 for the disposition of remains. The estate would pay those priority obligations on a pro rata basis with the remaining funds, and the lower priority creditors would receive nothing.
Work With a Pinecrest Attorney to Correctly Prioritize an Estate’s Debts
Honoring the priority of claims in Pinecrest probate is essential for every personal representative. Avoid mistakes by working with an attorney at The Florida Probate & Family Law Firm. Call our office today.