The Estate Planning Process For Resolving Debts
Many estate plans come with debt. And, in the state of Florida, there is a specific process that must be undertaken, in order to ensure that these debts are dealt with.
Going over the estate planning process for resolving debts in the event that you pass, and speaking with an estate planning lawyer, will allow you to protect your estate.
How Is Debt Dealt With After You Pass Away?
Right after you pass, your estate may pass through probate. And, when your estate passes through probate, all of the assets that comprise your estate will be assessed, cataloged, and distributed.
Prior to the distribution of these assets, though, the creditors who were owed money must be informed. By being informed, these creditors can make claims against your estate, so that they can obtain what they are owed.
A personal representative or executor must go over each and every one of the claims that is made. If these claims are legitimate, then they must be satisfied, using assets from your estate.
On the other hand, if the claims are invalid, then they can be dispensed with. There is no need to honor claims that have no legitimacy. And, this is true of claims that are true, but that violate the rules that underlie this process.
What If Your Estate Doesn’t Have Enough Assets To Deal With The Debt?
If your estate doesn’t have enough assets to deal with the debt, then the debts you do have will be paid out in this order, to these parties/entities:
- Attorney’s fees and probate fees.
- Funeral expenses and burial expenses.
- Federal tax debt and other, related, Federal debts.
- Medical bills that were incurred within the days before passing.
- A family allowance for the surviving spouse and children.
- Any unpaid child support obligations.
- Debt incurred by the deceased’s business after they passed.
- Unsecured debt and personal loans, among other, related, claims.
If your estate can only satisfy the probate fees and attorney’s fees that are owed, then that is all that will be paid. No other debts will be paid, though, due to your estate not having the ability to pay them.
Are Certain Assets Prohibited From Being Used To Pay Off Debt?
Certain assets prohibited from being used to pay off the debt that creditors bring to your estate plan. And, these assets are as follows:
- Your primary residence cannot be used to pay off debt.
- Your retirement accounts cannot be used to pay off debt.
- Your life insurance policies cannot be used to pay off debt.
Other assets can avoid being used to pay off debt, if they are placed in a trust. You can put your assets in an irrevocable trust, for example, and in doing so, the trust will own these assets. This protects them from creditors.
Speak With A Florida Estate Planning Lawyer Today
If you would like to develop an estate plan that satisfies every single one of your wishes, you are going to want to work with a lawyer. Speak with a Florida estate planning lawyer at Millhorn Elder Law Planning Group today and we will help you.
Sources:
law.cornell.edu/wex/probate
law.cornell.edu/wex/irrevocable_trust