Losing a parent is an emotionally distressing situation. In such cases, the last thing surviving children want is to spend hours dealing with outstanding debts. Are surviving children responsible for a deceased parent’s debt in Florida? Must they pay the owed amount? Read on to find out.
Deceased Parent’s Debt vs. Surviving Children in Florida – The Basics
It is not rare to find cases in which surviving children discover their deceased parent left unpaid debts. In many cases, the owed amount is revealed while the decedent’s estate is subject to probate.
During probate, any creditors with an interest in the estate can file claims against it to collect the amount owed by the decedent. Florida law sets a statutory period during which creditors can lay their claims.
The person in charge of administering the decedent’s estate (executor) must respond or object to the claims laid by creditors.
Are Surviving Children Responsible for Deceased Parent’s Debt in Florida? – The Verdict
If a person dies with unpaid debts, the deceased’s estate is responsible for paying the owed amount. Within the period for creditors’ claims, the executor must use the deceased’s estate to fulfill pending obligations.
Florida Statutes §733.707 provides a statutory order of preference for payment of unsettled debts. In such cases, funeral expenses, federal tax debts, end-of-life medical expenses, unpaid child support, and business debts incurred after the decedent’s death have priority for settlement.
As with everything else in life, every rule has its exception. While the decedent’s estate is responsible for paying any owed amount at the time of his or her death, the surviving children may be liable in specific situations:
- If a surviving child signed a loan as a co-borrower
- If a surviving child is a joint account holder/joint credit card holder
- If a surviving child voluntarily signed an obligation to pay the parent’s debt
Please note that a joint account holder is not the same as an authorized user, which often results in confusion.
Deceased Parent’s Debt vs. Surviving Children – Taking a Closer Look
Many Florida residents have retirement accounts and long-term saving accounts, such as 401(k)s, IRAs, and other similar assets. This type of asset is complex, as the creditors’ ability to collect from them varies.
For example, if a surviving child is a designated beneficiary of a retirement plan, no creditor can file claims against it or collect an owed amount from it. As long as the deceased parent used beneficiary designations properly, the asset is out of any creditor’s reach.
Conversely, if the deceased named his or her estate as the beneficiary of a retirement plan, creditors may have the right to file claims against it.
Some types of debts are often canceled upon the debtor’s death, such as federal student loans or Parent Plus loans. However, if the surviving children were co-signers to the loan, lenders may try the owed amount from them or the deceased’s estate.
Mortgages in inherited family homes are often a matter of heated debate. If there is sufficient equity in the home, the surviving children can sell the property, pay the remaining amount owed on the loan, and share the remaining proceeds.
Given the particularity of each family, the best approach is to consult with an experienced attorney in Florida.