Creditor claims in Florida estate administration? Which ones must be paid first…
The executor, or personal representative, of a Florida estate has a lot of responsibilities. One of those responsibilities is to pay the debt of the decedent. The personal representative has an obligation to pay the decedent’s administrative expenses and obligations to creditors that have filed creditor claims.
What is the order of the priority when adressing the payments of each claim? The answer is provided 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 on Class 2 and Class 4 items.
Palm Beach probate litigation attorneys urge their clients to pay very close attention to this process. 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. This is a harsh penalty, but can be avoided with proper due diligence.
See http://www.pankauskilawfirm.com/ for videos and information on Wills in Florida, Florida Trust Law, Estate Planning, and Estate Administration in Florida.