Navigating Contested Creditor’s Claims of a Revocable Trust

Revocable trust document

The primary responsibilities of the personal representative of an estate are:

  • to identify and gather the decedent’s assets for the Estate,
  • to navigate and satisfy all valid creditor claims against the Estate, and
  • to distribute the Estate to beneficiaries according to the Decedent’s Last Will and Testament, and according to the Florida Probate Code.

Florida law provides that the assets in a revocable trust are subject to the claims of creditors.

A creditor claim in Florida probate is a claim filed by a person or entity (a “creditor”) that the decedent owed money to at the time decedent died.  A creditor’s statement of claim in the probate estate must be filed timely in order to pursue satisfaction of their creditor claim.

Under Florida law, the personal representative is required to provide notice to any known creditors that the deceased debtor has passed and that their estate is open, unless the creditors’ claims are barred. This can be done either directly, or indirectly, depending on if you are a known or reasonably ascertainable creditor.

Known or reasonably ascertainable creditors are entitled to direct notice of a Florida probate proceeding and do not need to rely on publication for notice of the administration of the estate.

  • If the creditor is served directly with a copy of the notice to creditors—30 days after the date of service of notice on the creditor.
  • If the creditor was a known or reasonably ascertainable creditor and did not receive notice — 2 years.

If you are not a known or reasonably ascertainable creditor, then you get notice by publication in a local newspaper. Publication must happen at least once a week for two consecutive weeks. This publication must be published local to where the deceased resided and must notify creditors that the estate is open, so they can file their claims.

  • If the creditor was not a known or reasonably ascertainable creditor— 3 months from the date of first publication.

These time frames set forth above for a creditor to file a claim is assuming notice is given in conjunction with a probate process. Without the court supervision of probate, there is no way to enforce a 3-month deadline for creditors to file their claim. In these circumstances, creditors have two years to file a claim with the administration of a trust. A trustee who distributes trust assets before the second year after the decedent’s death, does so without protection from the claims of creditors. A trustee could possibly be held personally responsible for creditor claims that might have been paid from the trust assets distributed too early. You can see how probate actually shortens the claim period and protects the person in charge of administering the estate.

Once the time period for creditors to file their claims has passed, the personal representative will begin paying all valid claims. Any claims received after the respective time frames are considered invalid and can be effectively disputed. Debts must be paid by using the cash available in the deceased’s estate account. If there is no cash, the personal representative must sell other estate property to generate more cash to satisfy creditors’ claims.

EPGD Business Law is located in beautiful Coral Gables, West Palm Beach and historic Washington D.C. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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