Personal representatives have many roles during the probate process, including valuing the estate, notifying beneficiaries, and assisting in distributing assets. Another crucial responsibility personal representatives have during probate is to notify creditors that the estate has entered probate and to settle debts. There are specific requirements personal representatives and creditors must follow to ensure valid claims are paid. Below, we discuss what you need to know about handling creditor claims during Florida probate proceedings.
What is a Creditor Claim?
Creditor claims are formal notices against the decedent’s estate, indicating that a debt is owed. Valid claims are paid from the estate’s value before assets and funds are distributed to beneficiaries listed in the will.
Types of Creditors
Anyone the decedent borrowed money from and didn’t pay in full could have a valid creditor claim against the estate. Creditors can be individuals, companies, or organizations. Types of creditors may include:
- Mortgage lenders
- The IRS
- Plaintiffs in open lawsuits against the decedent
- Individuals who were promised payment from the estate upon death
- Funeral service providers
- Credit card companies
- Home-related service providers
- Medical facilities
- Ex-spouses who are owed back child support
- Business owners
How to Notify Potential Creditors
Personal representatives must follow specific guidelines to formally notify creditors that the decedent’s estate has entered probate, as stated in Florida Statute 733.2121. Personal representatives must publish a Notice to Creditors once a week for two consecutive weeks in a newspaper located in the county where the estate is administered. If there isn’t a local paper, the notice can be published in any newspaper in general circulation in the county. The notice must include the following:
- The decedent’s name
- Court address
- Estate file number
- The personal representative’s contact information
- Date of first publication
- Creditor claim period dates
The personal representative must provide proof of the public notice to the probate court within 45 days of publication.
In addition, personal representatives must locate potential creditors and send the notice directly to them. Personal representatives must conduct proper research to find and notify potential creditors. However, they aren’t liable for failing to inform creditors as long as a reasonable effort is made.
Creditor Claim Distribution
Creditor claims are paid from the value of the estate. Creditors must show proof of the money the decedent owed by referencing a contract, providing a promissory note, or supplying a transaction history of other payments. According to Florida Statute 733.705, creditors have three months after the notice publication to make claims against the estate. If the creditor was contacted directly, they have 30 days to file a claim. In most cases, claims are paid out five months after the first notice was published.
Florida laws dictate the hierarchy used to determine how creditor claims are paid off. Claims related to probate administration and attorney’s fees are paid off first. Next are funeral service providers. Then, any federal claims to the estate, such as back taxes, are paid.
Objecting a Claim
Personal representatives or any beneficiary with a vested interest in the estate can object to a potential creditor claim. They must file a formal written objection within four months after the notice was published or 30 days after the creditor filed the claim — whichever was later.
Navigating the Complexities of Probate with the Boutty Law Firm
Probate is a time-consuming process with many formal parts. To ensure probate proceedings are handled effectively and efficiently, it’s important to work with an experienced Florida probate attorney, like our team at the Boutty Law Firm. We’ll help guide you through the probate process and help assess issues, such as handling creditor claims. Call us at 407-710-0461 to schedule a consultation.