• 02
  • November
    2011

When a loved one passes, the last thing on the minds of most people is how debts owed by the deceased will be handled. However, debts owed by a deceased person do have to be resolved -- either paid off or recognized and forgiven through the probate process. It is important to have guidance during this difficult time in order to ensure the estate's assets are accounted for and debts paid in the most efficient way. So, how are debts handled in the Florida probate process?

In general, unless a second person has co-signed on a debt taken out by a now-deceased person, only the deceased person's estate is legally responsible for that debt. Practically, this means that any assets in the estate will be paid toward any remaining debt before being distributed to the beneficiaries. If there is more debt than there are assets, debts are paid off in a priority. Generally, unsecured debts such as credit card accounts, medical expenses and student loans are the lowest priority and will be extinguished.

Secured debts -- those guaranteed by collateral, such as home mortgages and car loans -- are typically paid by the personal representative/executor of the state through sale of the collateral property.

Often, however, Florida debt collectors are not sympathetic to the fact that a loved one has recently passed. They may even try to collect on debts that are not valid or attempt to secure payment outside of the mandatory probate process.

As an example, a man recently died of cancer at age 73. He died with some remaining credit card debt. Before his death, the man had told his son not to worry about the credit card debt because it was covered by credit card insurance.

Unfortunately, it turned out that the credit card insurance policy only paid out in cases of accidental death, not diseases like cancer. As a result, the man's debt remained unpaid -- and the credit card company tried to collect the debt from the son, although third-party relatives of debtors have no legal responsibility at all for their deceased family members' debts.

Thankfully, the son refused to pay and directed the credit card company to seek payment through the probate court, where it was extinguished. However, his story is a good example of why experienced counsel is advisable during this difficult time.

Source: wspa.com, "Know Your Rights When A Loved One Leaves Behind Debt," Diane Lee, Oct. 25, 2011