If an individual dies with unpaid debts in Florida, the creditors must be repaid from the decedent’s estate to probate. What happens if there are no sufficient funds to pay the existing claims against an estate? In this article, you will find out how to close an insolvent estate in Florida.
Insolvent Estate in Florida – Understanding the Concept
When someone dies in Florida and the total value of the decedent’s outstanding debts and liabilities exceeds the value of the remaining assets in the estate, that estate is classified as “insolvent.”
In Florida’s formal administration, the court will appoint a personal representative to execute the decedent’s estate. He or she must notify the decedent’s creditors, responding or objecting to the claims placed within the preset statute of limitations.
No estate may be closed with a probate court until it is fully executed, which includes the payment of the decedent’s outstanding debts.
When someone dies an insolvent estate while leaving no assets exempt from probate, his or her loved ones may be exposed to a stressful situation. Depending on the provisions written in the will, they might not be fulfilled, considering the decedent’s assets might have to be executed to fulfill creditors’ claims.
How to Close Insolvent Estate in Florida – A Realistic Approach
In most situations involving insolvent estates, there is no best approach than immediately proceeding with the necessary steps to close the estate as soon as possible.
Upon issuance of Letters of Administration, the personal representative must identify, collect, and value the decedent’s assets. With the full list in hand, the next step is to separate probate assets and non-probate assets.
After notifying creditors, the personal representative must list the creditors of the estate and the amount of the debts. Depending on the situation, some creditors might have priority over others, which is crucial to determine the order of preference for payment.
It is vital to pay attention to the statutory deadlines imposed by Florida Statutes §733.705. Creditors who fail to place a claim against the estate within the statute of limitations are barred forever.
Under Florida Statutes §733.805 (1), “funds or property designated by the will shall be used to pay debts, family allowance, exempt property, elective share charges, expenses of administration, and devises, to the extent the funds or property is sufficient.”
However, “if no provision is made or the designated fund or property is insufficient, the funds and property of the estate shall be used for these purposes, and to raise the shares of a pretermitted spouse and children, except as otherwise provided by law (…), in the following order:
- Property passing by intestacy
- Property devised to the residuary devisee or devisees
- Property not specifically or demonstratively devised
- Property specifically or demonstratively devised”
If the decedent died owing different amounts to multiple creditors, they must be paid based on whether the debt is secured or unsecured, and the order in which they filed the claim. All taxes and debts owed at the state and federal levels must be satisfied before any other claims.
Once all the claims have been either settled or objected to, the personal representative must prepare the final accounting and the report required to close the estate.
Closing an Insolvent Estate Requires Professional Guidance – Immediately Contact Jurado & Associates, P.A.
Closing an insolvent estate without expert legal counseling may result in stressful and overwhelming situations. Waste no time – contact an expert attorney from Jurado and Associates, P.A. by calling (305) 921-0976 or emailing Romy@juradolawfirm.com for a cost-effective solution.