Who Is Responsible for Debt After Someone Dies in Florida?

When a loved one passes away, dealing with their debts can be a confusing and stressful part of the process. It’s natural to worry about whether you might be on the hook for paying back money they owed.

The good news is that, in most cases, heirs and beneficiaries are not directly responsible for a deceased person’s debts in Florida. However, those debts do impact what you might inherit from the estate.

In this post, we’ll explain how debts are typically handled after a death in Florida, including what happens to secured vs. unsecured debts, which assets are subject to creditor claims, and how to protect your inheritance.

How Are Debts Handled in a Florida Probate?

When someone dies with assets in their sole name, their estate usually has to go through a court-supervised probate process. During probate, the person in charge of the estate (called the personal representative or executor) must notify creditors of the death and give them a chance to file claims for unpaid debts.

Under Florida law, most creditors only have the later of 3 months after receiving notice or 30 days after the publication of the notice to creditors in a local newspaper to come forward. Creditors who miss this deadline generally lose the ability to collect on the debt.

The personal representative then has an obligation to pay all valid claims using available estate assets. This means the debt effectively reduces the size of the estate that gets passed on to the heirs or beneficiaries named in the will.

Importantly, if there is not enough money in the estate to pay all the debts, Florida law sets out a priority order for which debts to pay first. For example, the costs of administering the estate, funeral expenses, and federal taxes come before most other unsecured debts like credit cards.

What Assets Are Subject to Creditor Claims?

It’s important to understand that creditors can only seek payment from assets that go through probate. In Florida, this typically includes things like:

• Assets the deceased person owned in their sole name
• The deceased’s share of property owned as a “tenant in common”
• Assets with a beneficiary designation to the estate itself

Certain other assets pass outside of probate and therefore are not subject to creditor claims against the probate estate:

• Assets held in a revocable living trust
• Accounts with payable-on-death or transfer-on-death beneficiaries
• Life insurance policies or retirement accounts with named beneficiaries
• Real estate or bank accounts owned jointly with “right of survivorship.”
• Homestead property (with some exceptions)

So, if most of your loved one’s assets fall into these “non-probate” categories, there may be little to nothing left for creditors to go after.

What About Secured Debts Like Mortgages or Car Loans?

Some debts, like home mortgages and car loans, are considered “secured” because there is a specific piece of property serving as collateral. With a secured debt, the lender generally has the right to reclaim the property if the loan is not paid.

This means that if the deceased had an outstanding mortgage or car loan in just their name, the estate would need to keep making payments if the goal is to pass that property on to the heirs. Otherwise, the lender could foreclose on the real estate or repossess the vehicle.

Of course, sometimes the estate does not have enough assets to maintain the secured debt payments. In that case, the personal representative may need to sell the property, pay off the loan, and then distribute any remaining proceeds to the beneficiaries.

Do Heirs Ever Have to Pay a Deceased Person’s Debts?

In general, you do not “inherit” someone else’s debts when they die. However, there are a few key exceptions to be aware of.

First, if you co-signed or jointly owned a credit card or other account with the deceased, you would likely be responsible for any remaining balance on that specific debt. Similarly, a surviving spouse could be liable for certain debts incurred during the marriage.

Second, if you improperly took money or property from the estate without the authority to do so, creditors may be able to pursue you to recover those assets.

Finally, if you are the trustee of a revocable living trust the deceased set up, you could have an obligation to pay their debts using the trust assets. This only applies to the extent the probate estate is insufficient.

How Can You Protect Your Inheritance from Creditors?

The best way to ensure a smooth process after a loved one’s death is to consult with an experienced probate and estate planning attorney. They can help you understand which assets may be subject to creditor claims and explore strategies to protect your inheritance as much as possible.

In some cases, this may involve opening a formal probate administration to cut off creditor claims after a certain deadline. In other situations, tools like life insurance policies or certain types of trusts can be used proactively to shield assets from the reach of creditors.

An attorney can also help you understand the potential ramifications of any actions you take regarding the estate property or debts. With proper planning and legal guidance, you can honor the legacy of your loved one while minimizing the impact of their debts.

If you have recently lost a loved one and have questions about their debts and your rights as an heir or beneficiary, we invite you to contact Vollrath Law to schedule a consultation. Our Florida probate attorneys are here to provide the answers and advocacy you need during this challenging time.