In Florida, when a person passes away the law leaving property or other assets, an estate is commonly opened to distribute the assets according to the decedent’s wishes or by the laws of intestacy.
However, before any distribution of estate assets can be done there will be debts to be paid. Who gets paid, and how much they get paid, however, isn’t always that easy to decide for the personal representative of the estate.
Does An Estate Have to Pay Off Creditors Before Beneficiaries Get Their Inheritance?
In Florida, creditors must be notified of their debtor’s death by the personal representative. This includes the publication of a written notice in the local newspaper, called the “Notice to Creditors.” In certain situations, the personal representative is required to go one step further and actually send the Notice directly to those creditors that are reasonably ascertainable, such as credit card companies.
What Are The Deadlines That Creditors Have to Meet for Claims Against Estates?
The “creditor period,” as it is sometimes called, remains open for three months after the first publication, and 30 days after direct service on reasonably ascertainable creditors, during which time the creditors must file a Statement of Claim in the estate case. Absent a showing of good cause, any claims filed after these deadlines will be forever barred.
The creditor has to attach their invoice or other documentation in writing to the Statement of Claim. It doesn’t matter if the debt is contested or if the debt is “… unmatured, contingent or unliquidated.” Florida Statute 733.702(1).
The difficulty in many debt controversies is the timing of the presentation of that invoice or documentation to the personal representative. In what many consider to be a legal “trap,” creditors who do not promptly present their demands for payment with the personal representative may find their claims objected to.
What Happens if a Creditor Misses the Deadline to File a Claim?
If there is a concern that the creditor has missed that limitations deadline, then the personal representative has a fiduciary duty to the estate beneficiaries to challenge the claim as being time-barred. This can mean that adversary proceeding lawsuits can be instituted in order to dispute a claim that was not filed timely under Florida law.
The Time Barred Personal Injury Claim
Consider the the case of Grainger v. Wald, 29 So.3d 1155 (Fla. 3d DCA 2010). This case began with a car accident where a man named Samuel Gus Felos and another man named Howard Wald collided in a serious crash. (The accident involved an automobile and a motorcycle.)
Settlement negotiations of the claim made by Mr. Wald for injuries sustained in the accident were not successful. So, a personal injury lawsuit was filed based upon the accident in a Florida civil district court by Mr. Wald against Mr. Felos.
Sometime after this lawsuit was filed, Mr. Felos died. Athena Grainger was appointed the personal representative of Mr. Felos’ estate by the Florida probate judge. As personal representative, she filed the necessary papers to substitute into the personal injury case on behalf of Sam Felos as the new defendant, the Felos Estate. Now, the case had a “substituted party defendant,” with Ms. Grainger at the defense table instead of Mr. Felos.
The personal injury lawsuit was won by Mr. Wald at the trial court level, and $1 Million was awarded to him. The Felos Estate, through its personal representative, appealed the case; that decision was reversed and a new trial ordered. That decision was appealed by Mr. Wald to the Florida Supreme Court.
Meanwhile, while the claim was pending before the High Court, there came an independent legal proceeding in the probate court regarding the case. Ms. Grainger, as personal representative, filed a petition to strike a claim filed against the estate by Mr. Wald as untimely under Florida Statute 733.702(1). She argued that the statute of limitations under Florida Statute 733.702 had not been met, so the Estate didn’t have to honor any claim for payment presented by Mr. Wald.
The probate judge denied her petition but the appeals court reversed that judge.
The appellate court found that the Notice to Creditors had been properly served on Mr. Wald, for one thing. Under the statute, the requirement is that all claims against the estate that arise before the date of death have to be filed (1) within 3 months of the Notice to Creditors’ publication date or (2) 30 days after personal service of the Notice to Creditors upon the creditor.
Ms. Grainger served notice upon Mr. Wald’s attorney of record in the injury lawsuit on May 23, 2007. This, the appeals court found, started the time clock and created a deadline of June 22, 2007, for Wald to file his creditor’s claim.
It did not matter that Mr. Wald’s lawyer was in the personal injury case and not on the records of the probate court. The Wald claim against the estate was not timely filed.
Creditors Claims and The Calendar
There can be complications when creditors’ claims are presented to the Estate for payment. Getting proper notice is one thing. Another is making sure what is the limitations period deadline for filing of the claim. As the Grainger case demonstrates, calendar counts can mean not only lots of money at stake in the debt itself, but also in the expenses of time and money in fighting the probate argument over the time bar. If you think you might be a creditor of a Florida estate, time is of the essence… Contact the experienced probate attorneys at Sackrin & Tolchinsky, P.A. today for help.
Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.
If you found this information helpful, please share this article and bookmark it for your future reference.