How are estate creditors handled?

Any creditors that file a formal claim against an estate are paid according to Florida statute in the order priority determined by the Florida legislature. Paying debts that the estate owes to creditors is one of the most important duties that a personal representative has under Florida law. If an estate has very little funds, and is potentially insolvent, it is pivotal that remaining assets be used to pay the correct creditors. It is always advisable to not pay any creditor claims until an inventory is submitted and the creditor period has expired, so that you have a clear picture of all the outstanding creditors, as well as the approximate amount available to satisfy the claims.

Florida Statue §733.707 lists 8 classes of creditors which should be paid in descending order as follows:

Class 1—Costs, expenses of administration, and compensation of personal representatives and attorneys’ fees.

Class 2—Reasonable funeral, interment, and grave marker expenses up to $6,000.

Class 3—Debts and taxes with preference under federal law and claims in favor of the state for unpaid court costs, fees, or fines.

Class 4—Reasonable 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.

Class 5—Family allowance (so that the surviving spouse and children can have financial support during the probate process)

Class 6—Past amounts owed for court-ordered child support.

Class 7—Debts acquired after death by the continuation of the decedent’s business.

Class 8—All other claims, including those founded on judgments or decrees rendered against the decedent during the decedent’s lifetime.

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