Families need to address numerous financial and practical challenges when one of their own dies. Those who lose a loved one who crafted an estate plan before they passed will have some degree of guidance regarding what they should do with their assets. Even if someone dies without a will, Florida has intestate succession laws that explain how to distribute their assets among their surviving family members.
Certain people generally anticipate receiving property from someone’s estate when they die, including spouses and children. However, the probate process in Florida involves notifying creditors of the individuals passing and allowing them to make a claim against the estate before anyone gets to inherit. The following are examples of debts that will generally need to be repaid before family members inherit anything.
Medical and funerary debts
It is quite common for people to receive emergency transportation and medical services at hospitals prior to their passing. Any treatment-related expenses from someone’s last name of life will generally require repayment with assets from the estate. Any pre-existing medical debt could also come into play. In fact, any Medicaid benefits that someone received could lead to estate recovery efforts. The Medicaid estate recovery program will try to obtain repayment from the estate for the value of medical care provided for someone before their death, including long-term care costs.
Credit cards, personal lines of credit, judgements and even student loans can all significantly alter the value of someone’s estate. Occasionally, there will be a cosigner who may have some ongoing responsibility for the debt, but many times the estate itself will need to cover someone’s financial obligations.
Tax responsibilities and court costs
The estate administration process typically involves filing one final income tax return on behalf of the deceased. There may occasionally be other taxes owed as well, including income taxes for the estate if the sale of someone’s assets is part of the process. Very large estates may be subject to federal estate taxes, which the estate will have to pay before distributing assets to specific beneficiaries. Any probate court expenses, including attorney fees, will also be prioritized over the distribution of assets to the beneficiaries of the estate.
It is only after providing proper notice and giving interested parties an opportunity to make a claim in court that the personal representative of a Florida estate can move forward with distributing valuable assets to the family members and other selected beneficiaries. Understanding which financial claims have priority may help the personal representative of an estate avoid personal liability and can help family members understand what to expect as the probate process plays out.