How are your Debts Handled After you Pass Away?

Hopefully, you have at least given some thought as to how you want your estate divvied up when you pass away. A properly crafted Will gives direction on your beneficiaries’ inheritance, as well as who you want to execute your Will. A last Will and testament that does not name an executor or an estate that was never planned for in the first place causes the Florida circuit court in the decedent’s county of residence to appoint a personal representative. 

This personal representative is responsible for paying off debts tied to the estate and paying beneficiaries. The representative is required to advertise the estate in local media channels notifying creditors that they must file a claim within three months of the notice if they wish to collect debt on the estate. Claims will either be paid by the representative or objected to in court. 

Will my Loved Ones Be Responsible for my Debts?

The good news is that your family members’ personal finances will almost certainly not be subject to your debts, but there are some exceptions. The structure and nature of certain accounts will dictate whether or not your family members are personally liable for your debts after you pass away. For example, if your spouse is a joint holder of your house’s mortgage, then the burden will fall to them. Another common instance in which a decedent’s spouse is personally liable for debts is on a joint credit card account. 

Are Certain Debts Paid off First?

Yes. When paying off debts, claims that have been made in the six months prior to your death are considered priority. Among those claims, fees associated with the execution of your estate go first, followed by costs related to funeral and burial. Next is usually tax obligations, then medical expenses. Personal loans are often the lowest priority. 

What if my Debts Outweigh the Value of my Estate?

Unfortunately, your beneficiaries are at risk of losing out on their inheritances if the total amount of your debt is greater than the total value of your estate. The estate is considered insolvent in this circumstance. Though they are prohibited by law, creditors will occasionally attempt to collect their debt by contacting family members of the deceased – adding to your loved ones’ heartache. 

Call Us

It is not uncommon for anyone to pass away with some amount of debt. The good news is that generally, survivors are not personally responsible for handling debts of the deceased. However, a significant amount of debt could mean that beneficiaries will not receive any inheritance – even if the last Will and testament addresses the decedent’s wishes for them. To make sure your estate is enough to take care of your loved ones after you pass, please reach out to us soon to schedule a free consultation.

Written by Luis E. Barreto

Luis E. Barreto

Luis is a probate and guardianship litigator with over 23 years of experience in the field. Determination of heirs, will contests, breaches of fiduciary duty, removal of personal representatives, guardians and trustees are just some of the types of litigation he addresses. In addition, he administers non-contested estates and guardianships.