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What happens to debt after you die? PART 2

When a person dies their debt passes, NOT to their heirs, but to the ESTATE created at the person’s death. An estate is comprised of all of that person’s money and assets.

There is a limitation on claims against estates if the person has passed away over 2 years before (Florida Statute 733.710). In that scenario, no one is liable for the debt anymore.  But in all other probates, creditors are provided with a period of time to file claims against the estate. Florida Statute 733.702(1) states in part that a claim must be filed no later than 3 months after the first publication of the notice to creditors, or if a creditor received a copy of the notice by mail, within 30 days of its receipt.

When a claim is not timely filed, it is barred as per Florida Statute 733.702(3). Timely filed claims then have to wait their turns in different classes. The Personal Representative of the estate has a legal obligation to pay claims in the order indicated in Florida Statute 733.707:

(1) (a) Class 1.—Costs, expenses of administration, and compensation of personal  representatives and their attorneys fees and attorneys fees awarded under s. 733.106(3).

(b) 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.

(c) Class 3.—Debts and taxes with preference under federal law, claims pursuant to ss. 409.9101 (Recovery for payments made on behalf of Medicaid eligible person) and 414.28, and claims in favor of the state for unpaid court costs, fees, or fines.

(d) 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.

(e) Class 5.—Family allowance.

(f) Class 6.—Arrearage from court-ordered child support.

(g) 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.

(h) 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).

(2) 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.

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