What Happens if My Loved One Dies With More Liabilities Than Assets?
A study by Debt.org found that almost three quarters of all Americans are likely to die with debt. Medium also states the average American can expect to die without ever paying off outstanding liabilities. After a death in the family, many relatives in Tampa are shocked to learn that their loved ones had more liabilities than assets when they passed. What happens in a situation like this? Do you stand to inherit anything? Can a probate lawyer in Tampa help with debt assessment?
The Personal Representative Must Resolve Debts Before Distributing Remaining Assets
The general rule in this situation is simple: If someone dies with outstanding debt in Florida, the personal representative must resolve these liabilities before distributing remaining assets to beneficiaries. This process is called “debt assessment,” and it occurs during a process called “probate.”
Debt assessment can be challenging for several reasons. First, it may be difficult to calculate the specific debt amounts left behind by the decedent. It may also be difficult to locate and notify the respective creditors. Both of these steps are mandatory during probate, and the personal representative must notify creditors before moving forward with probate. Creditors must then respond within a set time period to claim the outstanding debts.
The Beneficiaries Might Not Receive Any Inheritance
In this situation, the beneficiaries may not receive any inheritance. If the liabilities are greater than the assets in the estate, then there may be nothing left after the personal representative pays the debts. All assets may need to be liquidated in order to resolve these debts. While this may be disappointing to the beneficiaries, there are few ways to avoid this situation due to Florida law.
However, the family may still use the decedent’s assets to cover funeral costs before resolving outstanding debts. In addition, creditors can only claim the remaining assets in the estate – and the beneficiaries should not be personally responsible for covering any outstanding debts once these assets are liquidated. These laws should limit excessive costs for the beneficiaries of an indebted decedent.
It May Be Possible to Limit the Outstanding Debts of a Loved One
An experienced probate lawyer may be able to help you limit the impact of outstanding debts. These professionals may work out deals with creditors, allowing families to reduce liabilities. In addition, families should know that the Florida homestead exemption prevents creditors from forcing them to sell the home of the decedent to satisfy debts. If the decedent owned their own home prior to their passing, 100% of the equity in this home should be inherited by the beneficiaries. This may be true even if the decedent was heavily in debt at the time of their death.
Can a Probate Lawyer in Seminole Help With Debt Assessment?
If your loved one passed away with more debts than assets, consider speaking with an experienced probate lawyer in New Port Richey. These legal professionals may be able to help you receive some assets from the estate, even if your loved one died heavily in debt. This situation can be distressing, especially if you had no idea about your loved one’s financial struggles. However, it may be easier to address than you think – especially with help from Knudsen Law. Reach out today to schedule a consultation.
Sources:
floridabar.org/public/consumer/pamphlet026/#:~:text=In%20general%2C%20the%20decedent’s%20assets,distributed%20to%20the%20decedent’s%20beneficiaries.
myfloridalegal.com/print/pdf/node/1901
medium.com/eudaimonia-co/the-majority-of-americans-die-in-debt-what-the-2e20b5a08030
debt.org/family/people-are-dying-in-debt/
