When a parent passes away, it’s a major life event for the children of the deceased person, no matter their age. The grief they experience can be overwhelming. So much so that it can take time for a child’s life to return to normal.
Unfortunately, the parent’s creditors can be impatient. As the children are dealing with things like planning funerals and trying to sort out their parent’s affairs the creditors are simply wondering when they will get paid.
Which means, creditors will continue to act as they always do; sending bills and late notices.
Once a personal representative is appointed to administrate an estate, one of their responsibilities is to send a notice to all known or reasonably ascertainable creditors advising them to file a claim against the estate or their claim will be forever barred (see our creditor claim article explaining the process in more detail, including the statutory time periods within which creditors must act).
During the time the creditors are being notified of their right to file a claim, the Personal Representative will also be trying to locate and gather all of the assets of the estate. Once they have completed the task of locating assets, he or she will then file an inventory with the probate court detailing the nature and value of the estate assets. Thereafter, the personal representative files a statement regarding creditors, which includes, among other things, the names and address of all creditors ascertained to have a claim against the estate and who have not timely filed a claim.
One of the many issue that can arise during this time period, relates to what happens when there’s not enough money to pay all the estate’s debts. We’ve written about that problem here.
For some creditors, sitting back and waiting for the Personal Representative to do something about their outstanding balance isn’t enough. They may decide to get proactive. They may try to claim rights to assets, or to demand specific steps be taken by the personal representative to satisfy their claim.
Can creditors try and force the sale of assets in a probate case to get their bills paid?
Consider the situation where an elderly parent has passed away and leaves behind some significant debts. Like medical bills. There is no widow or widower; no one needs to worry about providing for minor children because everyone is grown up. For an unsophisticated creditor, they may see the decedent’s home as an asset that can be used to pay its debt. For the family, the home is where countless holiday memories were created. There’s no way that they want that home sold to pay off debts of any creditor.
So what happens? In Florida, even when there is no surviving spouse or minor children — and even even if the parent didn’t have a will — the family homestead is not available to pay creditors’ claims. Florida law protects the parent’s homestead from a creditor’s claim. See, Fla. Const. Article X, Section 4; Florida Statutes 732.4015; Public Health Tr. of Dade Cty. v. Lopez, 531 So. 2d 946 (Fla. 1988).
The Case of the Lopez Kids, Their Mother’s House, and Her Medical Bills
Several years ago, Florida widow Nerieda Lopez was living here in Miami with one of her three kids when she passed away. She left behind no grieving widower; she didn’t have any kids under the age of adulthood living with her.
Nerieda Lopez had significant medical debts with Public Health Trust, a creditor that really wanted to be paid. So, when Mrs. Lopez’s probate was opened, the creditor quickly wen to the probate court and filed a petition to get itself paid. The creditor asked that Ms. Lopez’s home be sold to pay off its debt.
The Personal Representative for Nerieda Lopez’s estate and her kids fought back. They argued against the creditor’s request — taking the case all the way to the Florida Supreme Court. And they won.
The court explained that it is longstanding Florida law that the decedent’s home is exempt from the claims of creditors. This protection, after all, is even written in the Florida Constitution.
Why? Florida law considers the best interests of the public, and public policy benefits from “… securing to the householder a home, so that the homeowner and his or her heirs may live beyond the reach of financial misfortune and the demands of creditors….”
The court confirmed that it is not required that the heirs be dependent upon their parent to have the homestead protected from a creditor’s claim. Meaning, the Lopez children would inherit the family home free and clear of this creditor’s claim.
What Do You Do Now?
If you or a loved one have recently lost a parent and fear that the assets of their estate are going to be dissipated by creditor claims, then you may want to seek the guidance of a Florida probate lawyer to determine your rights and remedies. This is especially true if the deceased had a home in another state or country besides Florida (the concern being whether or not the Florida property qualifies as the deceased person’s Florida homestead exempt from creditor claims under Florida’s Constitution). Most probate lawyers, like Larry Tolchinsky, will offer a free initial consultation to review your case and answer your questions.
Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.
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