One of the most common questions we get asked by our clients is “what happens to someone’s debt when he or she dies?” More and more heirs of Florida inheritances are finding themselves overcome with debt from devalued properties, credit card bills, and other sources. Palm Beach probate litigation attorneys know that the proper method for dealing with debt after death is largely individualized and relies heavily on how Florida Probate law treats the specific type of debt, and estate asset the heirs are dealing with.
- Typically, any debt owed by the decedent will be payable by the decedent’s estate assets that pass through the probate process.
- However, sometimes transferring assets into a trust can protect them from creditors.
- If assets are transferred into a Florida trust, unsecured or uncollateralized debt will essentially disappear upon death.
- Unsecured debt includes credit card debt, medical bills, utility bills, and any other type of loan or credit that was extended without a collateral requirement.
- Complications may arise, however, when a co-signer or guarantor is involved in the unsecured debt borrowing process.
- Children or spouses who chose to co-sign for housing or medical bills for example will be held financially responsible for the remaining debt.
It is important to remember that creditors are deemed to have priority over heirs in Florida. Some funds may be exempt from creditors’ reach, however, regardless of the use of a trust. These include life insurance, retirement benefits, and certain land holdings.
See http://www.pankauskilawfirm.com/ for videos and information on Wills in Florida, Florida Probate Law, Estate Planning, and Estate Administration in Florida.