Have you ever stayed up late wondering what happens to your debt after you die? Common types of debt that we worry about include unpaid credit cards, school loans, mortgages, and so many more. If you carry any of these debts, continue reading.
When someone passes away, creditors generally have two years to file claims against the estate or trust of a decedent under Florida law. If you passed away owning certain assets, a court-supervised probate procedure may be necessary. Once probate of an estate has begun, a Personal Representative (“PR”) can shorten the claim window by taking certain actions. First, the PR can reduce the claim period to 90 days by publishing a “Notice to Creditors”, in a local newspaper.
Second, the PR can serve all reasonably ascertainable creditors with formal notice, giving the creditor only 30 days to file a claim. Under Florida Statute 733.2121(3) (a), the PR shall promptly make a diligent search to determine the creditors of the decedent who are reasonably ascertainable and must serve a copy of the Notice to Creditors on those creditors. The “reasonably ascertainable” standard requires the PR to check all bank statements, mail, and check registers in order to locate the decedent’s creditors. If a creditor receives formal notice and fails to file a lawsuit within 30 days, that creditor is out of luck.
Once creditors have been served with formal notice or a Notice to Creditors has been published, creditors have to file a claim quickly so that their claim will not be barred by the statute of limitations. Florida Statute 7.33.702(1) requires a claimant to file a claim in the probate proceeding within the later of three months after the time of the first publication of the notice to creditors or, as to any creditor required to be served with a copy of the notice to creditors, 30 days after the date of service of the copy of the notice on the creditor.
Sometimes a decedent would have established a “living trust” or “revocable trust,” which requires the trustee to pay enforceable claims of the testator’s creditors from the trust assets. In such cases, the trustee has to file a “Notice of Trust” which will notify the decedent’s creditors that the trust exists and they can enforce their claims against the trust assets. Note that if a probate proceeding is not initiated, the assets in the trust are subject to a two year creditor’s claim period, as opposed to the three month claim period, discussed above, available in Florida Probate Formal Administration.
Time is of the essence in any probate matter. The sooner you notify creditors the less time they have to file a claim against the estate. Probate is a messy situation. OC Estate and Elder Law can help clean it up. Contact us today at (954) 251-0332 to see how we can help you minimize loss to creditors when a loved one has passed away.