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What Happens to My Debt if I Die?
When you create a last will and testament, you instruct how a personal representative should distribute your property when you pass away. However, what happens to your debt when you die?
When you pass away, your property and assets become part of your estate, and your debts pass to your estate, as well. The probate court will oversee how your estate is distributed, and generally, creditors get the first claim on your assets before your beneficiaries during the probate process.
The following is an overview of different scenarios and how your debt might be handled during probate. If you are going through probate and administering a loved one’s estate, reach out to an experienced Florida probate lawyer at Mickey Keenan P.A. immediately.
If You Have a Surviving Spouse
Usually, most debts are paid from your estate after you die. However, there are some situations in which your spouse might remain responsible for debts. This happens if your spouse is a cosigner or joint account holder on the debt.
Fortunately, Florida is not a community property state and no longer follows the doctrine of necessaries. This means that a spouse will not be responsible for paying your individual debts if they are not also on the account. However, if you die in a different state, the laws might be very different, and your spouse might have some responsibility.
Paying Debts from Your Estate
The person you designated as the personal representative of your estate will be responsible for distributing your assets and property. If creditors have claims against your estate for debts, those generally get paid first, and the remaining assets go to your family and other beneficiaries. However, it is not always that simple.
In some situations, a surviving spouse or other lineal dependents can request a family allowance from the Florida probate court. They can receive up to $18,000 (at the judge’s discretion) to support themselves during probate. While the family allowance can be distributed before many debts like credit cards and loans, it cannot be prioritized over:
- Estate administration costs
- Funeral and burial costs
- Medical expenses for the final illness
Once those are covered, the family might receive an allowance before other debts get paid.
What happens if your estate does not have enough money to cover your debts? In this situation, the debts will go unpaid. No one else (who is not a cosigner) is responsible for paying your debts if the estate is insufficient to cover them.
Further, not every creditor claim on an estate is valid. Some creditors make illegitimate claims, while others claim debts after the two-year deadline is over (the deadline does not apply to taxes or other priority debts). A personal representative is responsible for challenging wrongful creditor claims and should always do this with representation from an experienced probate attorney.
Consult with our Florida Estate Planning Attorneys Today
The answer to what happens to your debts after you die is not a simple one. Any personal representative or family member with concerns about probate should seek help from the team at Mickey Keenan P.A. We have offices conveniently located in Tampa, The Villages, Largo, and Riverview, Florida. Contact us about our probate services.