8 Classes of Creditors Under Florida Probate Law: Know the Priority of an Estate’s Creditors with this Quick Reference Guide
Florida Estate’s not only have inheritance to heirs it also has debt that is owed to creditors. One of the most important duties of the Personal Representative in a Florida estate is the proper payment of creditors based on their priority. The personal representative has a duty to pay the decedent’s administrative expenses and obligations to creditors that have filed creditor claims. One of the most common questions we get is how to determine the priority of creditors luckily the Florida Statutes make it clear what preferences are to be awarded.
Florida law awards creditors “notice” of a decedent’s estate being probated, this allows them to let the Personal Representative know what creditors are out there. If you are a creditor and were not awarded notice there are remedies at law for you as well but that will not be the focus of this article
What is the order of the priority when adressing the payments of each claim? The answer is found at Florida Probate Code Section 733.707:
Class 1. Administrative costs and fees, including compensation for the Personal Representative and the fees for the estate attorney.
Class 2. Reasonable funeral, internment, and grave expenses up to $6,000.
Class 3. Debts and Taxes with preference under federal law, including estate taxes and recovery of Medicaid and public assistance payments.
Class 4. Reasonable and necessary medical and hospital expenses of last 60 days of the decedent’s last illness.
Class 5. Family Allowance (currently maximum of $18,000 for payment of support of surviving spouse and dependents during the Florida estate administration).
Class 6. Court ordered child support arrearage.
Class 7. Debts acquired after death by continuing decedent’s business.
Class 8. All other claims, including any judgments against the decedent and any excess onClass 2 and Class 4 items.
Palm Beach probate litigation attorneys counsel their clients to pay very close attention to this process for obvious reasons. Obviously these classes do not give all the answers such as what to do about your rich uncle in Boca’s credit card bills but it does provide a start for Personal Representatives who are unsure how to proceed.
For example, if a personal representative pays creditors of a lower Class, such as Class 4, and then does not have sufficient assets to pay the creditors of a higher priority Class, such as Class 2, then the personal representative will be personally liable from his or her own funds to satisfy the Class 2 creditor in full.
Florida Courts may seem harsh but this issue can be avoided with proper due diligence most notably because the statute is so clear as to the classes of each style of debt. If you are unsure how a debt is classified, seek an experienced probate attorney’s advice.
See http://www.pankauskilawfirm.com/ for videos and information on Wills in Florida, Florida Trust Law, Estate Planning, and Estate Administration in Florida.