Florida Probate Statute 733.803: Encumbered Property; Liability for Payment

In Florida, distribution of assets from the estate of a decedent is often complicated. It is the job of the personal representative to see to follows the requirements of the Florida Probate Code to ensure that he (or she) or fulfills he obligations not only to the estate, but also to beneficiaries, heirs, and creditors. Once such complication that is common is where there is property in the estate that is encumbered by a mortgage or some other type of obligation. To learn more about the process of estate administration, including asset distribution and the requirements of Florida Statutes, section 733.803- Encumbered property; liability for payment, contact a skilled Fort Lauderdale probate attorney at the Law Offices of Stephen Bilkis & Associates. With over 2 decades of experience representing beneficiaries, heirs, personal representatives, and others in complex estate matters, we have the knowledge and resources to ensure that all of the requirements of the Florida Probate Code are followed and that your interests are protected.

Distribution of estate property is the last major step in the administration process. Before that can happen, the personal representative must do a number of other things. First, he (or she) must collect, secure, appraise, and inventory the assets in the decedent’s probate estate. One of the reasons for this is to determine the value of the decedent’s estate. Once the personal representative understands the value, he knows what is available to pay debts and if here is a deficiency. He will also know whether or not any of the assets are encumbered.

Another important step is for the personal representative to notify creditors to give them the opportunity to file claim against the estate in order to get paid from estate assets. The personal representative is required to pay all valid claims that are timely filed to the extent the estate has sufficient funds to pay.

Once debts and expenses are paid, the personal representative can begin the process of distributing assets to the decedent’s beneficiaries or heirs. Only assets that are probate assets are distributed by the personal representative during a probate proceeding. Other assets are transferred to the appropriate people outside of estate administration process over which the Florida Probate Court. For example, while most personal property such as clothing, furniture, appliances, vehicles, jewelry, and bank accounts are probate property, IRAs, 401(k) plans, real estate that the decedent owned as a joint tenant, and property transferred to a living trust is not probate property.

The Florida Probate Code also has rules related to how encumbered property is to be treated during a probate proceeding. Under FL. Stat, section 733.803- Encumbered property; liability for payment, if a beneficiary receives property from a decedent that is encumbered, that beneficiary is entitled to have the encumbrance paid from the residue estate, but only if the will indicates that that is the intent of the testator. As an experienced Fort Lauderdale probate lawyer will explain, a general direction in the will to pay debts is not enough to show intent for encumbrances to be paid from the residue estate.

If property is encumbered, that means that someone besides the owner has a claim on the property. Examples of encumbered property include mortgages, contractor’s liens, tax liens, lawsuits. If real estate is subject to a mortgage, the owner of the property has pledged the property itself as collateral for the mortgage, and the lender has the right to foreclose on the property if mortgage payments are not made. A contract can place a lien on property if the property owner fails to pay a contractor for repairs or remodeling. This is referred to as a contractor’s lien. A tax lien, another type of encumbrance, occurs when a federal, state, county or city taxing agency places a lien on a property for back taxes. In addition, a court can place an encumbrance on a property to satisfy a lawsuit. For example, if the decedent lost a lawsuit and did not pay the plaintiff, the plaintiff could place a lien on property of the defendant to secure payment.

When encumbrances are often on real property such as land, a house, or an office building other types of property can be encumbered. For example, until a car note is paid off, the car is encumbered. Whenever a loan is taken out using property as collateral, that property is encumbered. To learn more about how encumbered property is treated during asset distribution, contact a skilled probate lawyer in Fort Lauderdale.

1. Delivery of devises and distributive shares : § 733.801, Fla. Stat.
2. Proceedings for compulsory payment of devises or distributive interest: § 733.802, Fla. Stat.
3. Death benefits; disposition of proceeds: § 733.808, Fla. Stat.

The specific devisee of any encumbered property shall be entitled to have the encumbrance on devised property paid at the expense of the residue of the estate only when the will shows that intent. A general direction in the will to pay debts does not show that intent.

Distribution of assets from the estate of a decedent is sometimes complicated. Florida probate law has a number of rules that the personal representative must follow to ensure that the rights of all those involved are protected. If you have concerns about asset distribution, including questions about the requirements of Florida Probate Code, section 733.803- Encumbered property; liability for payment, it is important that you discuss your concerns with an experienced probate attorney serving Fort Lauderdale. The attorneys at the Law Offices of Stephen Bilkis & Associates have years of experience working closely with personal representative and other interested parties in all aspects of estate administration including asset distribution. We can help. Contact us attorneys at 561-710-4000 to schedule a free, no obligation consultation regarding your case.