Florida Probate Statute 733.707: Order of Payment of Expenses and Obligations
In Florida, one of the many jobs of a personal representative of an estate during the estate administration process is to pay debts and obligations owed by the estate. This task involves a great deal more than simply the creditors submitting bills and the personal representative writing checks. As with most of the duties of the personal representative, there are statutory procedures that must be followed related to review claims and paying estate debt. To learn more about the process of paying claims against the estate, including the requirements of Florida Statutes, section 733.707- Order of payment of expenses and obligations, contact a skilled Fort Lauderdale probate attorney at the Law Offices of Stephen Bilkis & Associates who has the experience and skill to ensure that all of the requirements of the Florida Probate Code are followed.Duties of the Personal Representative
The personal representative is the person who is appointed by the Florida Probate Court to perform the tasks necessary to settle a decedent’s estate. The first major task is to collect the assets that are part of the probate estate, appraise those assets, and create an inventory. This step is important as the personal representative must now the value of the estate before he (or she) can pay estate debts, and distribute assets.
After inventorying the estate, the personal representative must pay estate debts and expenses. The personal representative must first notify the creditors. Depending on how the creditor was notified, the creditor has 30-90 days to file a claim against the estate. The personal representative is required to pay all valid, timely filed claims to the extent there are sufficient assets in the estate. The personal representative has a year to pay claims. He is not obligated to pay claims that are filed late.
The final major step in the administration process is to distribute the assets based on the decedent’s will, or based on intestate succession rules. As an experienced Fort Lauderdale probate attorney will explain, if the estate does not have sufficient assets to distribute, the process gets complicated. The personal representative will have to apply the rules of abatement to determine how to distribute the assets.Preference Order for Payment of Estate Debt
Under the Florida Probate Code there is an order of preference for how estate debt must be paid. This order is important when the estate does not have enough assets to pay all debts. In such cases the personal representative will look at all of the debt, categorize it, and pay it in accordance to the preference list and available funds.
Under FL. Stat, section 733.707- Order of payment of expenses and obligations, the preference list is as follows:
- Priority 1: Expenses related to estate administration. The personal representative must pay the fees associated with administering the estate before paying any other debt. This includes his (or her) own commission as well as attorneys fees and attorneys. The personal representative is entitled to a commission based on the size of the estate.
- Priority 2: Funeral expenses. Next, the personal representative must pay expenses related to the funeral of the decedent. Such fees must be reasonable and include the fees associated with the funeral as well as fees associated with the interment, and grave marker. The cap on such expenses is $6,000.
- Priority 3: Debts owed to government . Debts owed to the government by the estate must also be paid after funeral expenses. Examples of debts to the government include taxes, court costs, fees, or fines.
- Priority 4: Medical expenses . The next category of expenses are medical bills associated with the medical and hospital expenses of the last 60 days of the last illness of the decedent. This includes compensation owed to individuals attending the decedent.
- Priority 5: Family allowance. Under Florida estate law, a surviving spouse and surviving minor children are entitled to a reasonable family allowance for maintenance during the administration of the decedent's estate.
- Priority 6: Child support. If the decedent owed back child support, it must be paid from estate assets after the prior categories of debts are paid.
- Priority 7: Business debts. Personal representatives have the authority to continue a decedent’s business. Tasks associated with continuing a decedent’s business include retaining assets owned by the decedent, performing contracts, receiving assets, investing funds, acquiring or disposing of an asset, making ordinary or extraordinary repairs or alterations in buildings, entering into a lease, abandoning property when it is valueless, voting stocks, insuring assets, borrowing money, paying taxes, employing persons, prosecuting or defending claims, and selling personal property. The personal representative must pay debts acquired after death by the continuation of the decedent’s business after the prior categories of debts are paid.
- Priority 8: Other claims. The last category includes all other claims, including those founded on judgments or decrees rendered against the decedent during the decedent’s lifetime.
As a skilled probate attorney in Fort Lauderdale will explain, after paying any preceding class of claims, if the estate is insufficient to pay all of the next succeeding class, the creditors of the latter class shall be paid ratably in proportion to their respective claims.Related Statutory Provisions
- Notifying creditors: § 733.701, Fla. Stat.
- Limitations on presentation of claims: § 733.702, Fla. Stat.
- Compromise: § 733.708, Fla. Stat.
- Limitations on claims against estates: § 733.710, Fla. Stat.
- The personal representative shall pay the expenses of the administration and obligations of the decedent’s estate in the following order:
- Class 1.—Costs, expenses of administration, and compensation of personal representatives and their attorneys fees and attorneys fees awarded under s. 733.106(3).
- Class 2.—Reasonable 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.
- Class 3.—Debts 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.
- 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.
- Class 6.—Arrearage from court-ordered child support.
- Class 7.—Debts acquired after death by the continuation of the decedent’s business, in accordance with s. 733.612(22), but only to the extent of the assets of that business.
- Class 8.—All other claims, including those founded on judgments or decrees rendered against the decedent during the decedent’s lifetime, and any excess over the sums allowed in paragraphs (b) and (d).
- After paying any preceding class, if the estate is insufficient to pay all of the next succeeding class, the creditors of the latter class shall be paid ratably in proportion to their respective claims.
- Any portion of a trust with respect to which a decedent who is the grantor has at the decedent’s death a right of revocation, as defined in paragraph (e), either alone or in conjunction with any other person, is liable for the expenses of the administration and obligations of the decedent’s estate to the extent the decedent’s estate is insufficient to pay them as provided in ss. 733.607(2) and 736.05053.
- For purposes of this subsection, any trusts established as part of, and all payments from, either an employee annuity described in s. 403 of the Internal Revenue Code of 1986, as amended, an Individual Retirement Account, as described in s. 408 of the Internal Revenue Code of 1986, as amended, a Keogh (HR-10) Plan, or a retirement or other plan established by a corporation which is qualified under s. 401 of the Internal Revenue Code of 1986, as amended, shall not be considered a trust over which the decedent has a right of revocation.
- For purposes of this subsection, any trust described in s. 664 of the Internal Revenue Code of 1986, as amended, shall not be considered a trust over which the decedent has a right of revocation.
- This subsection shall not impair any rights an individual has under a qualified domestic relations order as that term is defined in s. 414(p) of the Internal Revenue Code of 1986, as amended.
- For purposes of this subsection, property held or received by a trust to the extent that the property would not have been subject to claims against the decedent’s estate if it had been paid directly to a trust created under the decedent’s will or other than to the decedent’s estate, or assets received from any trust other than a trust described in this subsection, shall not be deemed assets of the trust available to the decedent’s estate.
- For purposes of this subsection, a “right of revocation” is a power retained by the decedent, held in any capacity, to:
- Amend or revoke the trust and revest the principal of the trust in the decedent; or
- Withdraw or appoint the principal of the trust to or for the decedent’s benefit.
The attorneys at the Law Offices of Stephen Bilkis & Associates are committed to provide clients with superior representation in estate matters. We have over 20 years of experience representing clients in matters related to probate, estate administration, estate litigation, and fiduciary disputes. If you have questions related to the duties and authority of personal representative, including the requirements of Florida Probate Code, section 733.707- Order of payment of expenses and obligations, we can help. Contact us attorneys at 561-710-4000 to schedule a free, no obligation consultation regarding your case.