Does the probate judge have to approve creditor claims?

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To understand the impact of creditor claims on probate, we first need to define what probate is. Probate, or the probate process, is the court proceeding for establishing an estate of the decedent, and for transferring a decedentís assets to identified beneficiaries, either via a last will and testament, or via intestate statutes. This formal proceeding ensures that all interested parties are served notice of what assets fall into the estate, as well as what portion of the estate each beneficiary is entitled to receive. In Florida, during a formal probate administration all estates are required to publish a notice to creditors in the local newspaper which signifies the beginning of a 90 day creditor period. During this three month period any potential creditors of the decedent can file claims for reimbursement. Each claim will be filed on the docket and a copy will be provided to the personal representative either by a clerk, or by the attorney on record for the estate. It is the personal representativeís responsibility to review each claim in order to substantiate if it is valid and/or if sufficient documentation has been provided. The personal representative will then have an opportunity to pay the claim, object to the claim or negotiate directly with the claimant for a reduced settlement amount. Any objections will be served on the claimant, providing them notice that they have 30 days to initiate a civil lawsuit against the estate to enforce their claim, otherwise the claim will be barred or stricken. The personal representative and the claimant also have the option of entering into a joint stipulation to freeze the 30 day timetable for filing an independent lawsuit until more information is gathered. Often these stipulations are utilized in order to provide the personal representative with additional time to collect assets, as well as to ensure there are no additional creditors waiting to file claims before the expiration of the creditor period. These stipulations are also helpful in estates where liquidity or insolvency are potential concerns. Florida Statute 733.707, provided below, outlines the categories that creditors must be organized into, as well as outlines the order or priority in which each type of claim must be paid. All highest level claims must be paid first, before moving on to pay lower category claims. Upon the expiration of the 90 day creditor period, the personal representative should have a complete picture of which claimants are potentially owed money, as well as what assets are available to satisfy those claims. The judge does not review any claim or make a determination as to the validity of the claim unless the claimant brings an adversarial proceeding against the estate. An experienced probate attorney can provide guidance during the probate process, including how best to address any claims that may be file. 733.707 Order of payment of expenses and obligations.ó (1) The personal representative shall pay the expenses of the administration and obligations of the decedentís estate in the following order: (a) Class 1.óCosts, expenses of administration, and compensation of personal representatives and their attorneys fees and attorneyís fees awarded under s. 733.106(3). (b) Class 2.óReasonable funeral, interment, and grave marker expenses, whether paid by a guardian, the personal representative, or any other person, not to exceed the aggregate of $6,000. (c) Class 3.óDebts and taxes with preference under federal law, claims pursuant to ss.409.9101 and 414.28, and claims in favor of the state for unpaid court costs, fees, or fines. (d) Class 4.óReasonable and necessary medical and hospital expenses of the last 60 days of the last illness of the decedent, including compensation of persons attending the decedent. (e) Class 5.óFamily allowance. (f) Class 6.óArrearage from court-ordered child support. (g) Class 7.óDebts acquired after death by the continuation of the decedentís business, in accordance with s. 733.612(22), but only to the extent of the assets of that business. (h) Class 8.óAll other claims, including those founded on judgments or decrees rendered against the decedent during the decedentís lifetime, and any excess over the sums allowed in paragraphs (b) and (d).

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