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Can I Inherit Debt?

Published: February 15th, 2019

By: Dana M. Apfelbaum

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Beneficiary DebtWhen a loved one dies, there are two primary considerations:

  1. the transfer of the deceased’s property to the heirs; and
  2. the payment of the deceased’s debts.

In fact, one of the most common questions from potential probate clients is, “Do I inherit debt?”

The short answer is no, however, the assets of the deceased are subject to the claims of creditors before they can pass to the heirs. Creditors come in all shapes and sizes, including medical expenses, typical lenders, like banks, as well as routine service providers who might have been unpaid at the time of death, like the cable company or lawn service. Without undertaking probate, any creditor has two years to come forward and make claims against the assets of the deceased. Publishing the Notice to Creditors as part of a probate can limit that period to as little as three months if known creditors are properly sent notice.

While the time-limiting benefit is obvious, many still wish to avoid probate thinking that, since their loved one had a revocable trust or had bank accounts with designated beneficiaries, creditors cannot reach those assets. The assets of a revocable trust, however, are subject to the claims of creditors. The availability of creditor’s to reach beneficiary-designated accounts and other assets (like transfer on death accounts, etc.) is a less clear issue. The Uniform Probate Code specifically provides that such assets are subject to the claims of creditors. While Florida has not adopted the Uniform Act, there is case law which could be used by a creditor to support this position.

Accordingly, even when there are no assets that need to be probated due to non-probate transfers or the existence of a revocable trust, the conservative and sensible thing to do is to undertake an abbreviated form of probate known as the summary administration. Doing so will make sure the deceased’s assets are free from creditor claims before any beneficiary spends the inheritance, avoiding problems for the beneficiaries down the line and potential personal liability for any fiduciary who distributed the deceased’s assets. A summary administration is available when probate assets (which excludes beneficiary designated assets and trust assets) do not exceed $75,000, which is perfect where insuring against potential creditors is the primary goal.

While probate often gets a bad rap, it does serve a purpose and does not have to be unduly time consuming or expensive if it is uncomplicated. Following the death of a loved one, heirs would be well advised to consult with an attorney as to whether some form of probate is advisable for them to deal with any potential creditor issues before they become a problem.


For questions about beneficiaries and other probate and estate planning issues, please contact article author and estate planning and probate attorney Dana Apfelbaum.


To read the other articles in the 2019 Treasure Coast Newsletter Issue I, click the following links:
New Homeowner? Time to Get Your Homestead” written by Brad Gould
Five Phases of the Business Litigation Lifecycle” written by Daryl Krauza
Five Tips for Buying Commercial Property for Your Business” written by Lee Dobbins