After the loss of a loved one, many people want to know if they are responsible for the debts incurred by a deceased family member. For example, it is a very common occurrence for one spouse to manage the financial affairs of the family unit and incur debts that the other spouse is not fully aware of, even where the individuals have been married for decades. Whatever the reason for incurring the obligation, the idea of leaving a grieving spouse with a mountain of debt is usually the last thing on anyone’s mind.
In order to answer this question we must look to whether the surviving family member was a co-guarantor on the debt. If the individual was a co-guarantor, then they are most likely responsible for settling the debt after the primary guarantor has passed. If the individual was not a co-guarantor, then they generally are not personally responsible for paying the debt. However, this does not mean that the debt will go unpaid. Florida law allows for creditors to file a claim against the estate of the decedent, and this claim will be paid if there are enough assets in the estate to settle the debt. Florida Statute 733.707 determines the order in which creditor claims will be paid. Generally speaking, creditors will be paid before any beneficiaries are allowed to take an inheritance. However, there are numerous exceptions to this rule, including: exempt property; family allowances; jointly held property; payable on death (“POD”) accounts; and retirement plans, life insurance and other beneficiary accounts.
It is important to note that if the surviving family member had privileges on the account (commonly referred to as an “authorized user”), this does not necessarily mean that they are responsible for settling the debt. It is important to ask the creditor explicitly whether the surviving family member is directly responsible for satisfying the debt, as they are generally not willing to volunteer this information unsolicited. Additionally, many times the personal representative (also known as an “executor”) is the same family member who may worry that they are accountable for the debt and they may be confused as to whether they are personally liable for payment by virtue of their legal responsibility to administer the estate. The personal representative is not personally liable for paying the debt unless they are also a co-guarantor; however the personal representative is responsible for ensuring that the debt is paid from the assets of the decedent, if available.
A personal representative who distributes assets from the estate in a manner that is not in accordance with Florida law may find themselves held accountable for the error in distribution. This is why the personal representative should politely decline to deal with debt collectors looking to settle outside of probate or pushy family members demanding their inheritance until they have contacted a Florida probate attorney. An attorney knowledgeable in matters of probate will be able to instruct the personal representative as to how to go about lawfully settling the debts of the estate without incurring liability.
If you find yourself facing a probate issue, contact an Attorney in Jacksonville who can assist you today.