Florida Probate Statute 733.805: Order in Which Assets Abate
When someone passes away the decedent’s estate must go through a process referred to as estate administration. While there are many steps in the administration process, the two main activities are paying estate debt and distributing estate assets. In general, all valid debts must be paid before assets can be distributed. However, while paying debt can be a rather straightforward process, there is a process that must be followed. In some cases, when there are not sufficient assets in the estate to pay all estate debt, the process becomes more complicated. In such cases, the rules of abatement must be applied. To learn more about the process for paying estate debts during the estate administration process, including the requirements of Florida Statutes, section 733.805- Order in which assets abate, contact a skilled Fort Lauderdale probate attorney at the Law Offices of Stephen Bilkis & Associates. With over 20 years of experience representing clients in complex estate matters related to probate proceedings, we have the skill and knowledge to ensure that all of the requirements of the Florida Probate Code are followed and that your interests are protected.Steps in the Estate Debt Payment Process
The first step in the estate administration process is for the probate court to appoint an personal representative to take charge of the administration process. If the decedent left a will typically the decedent would have left instructions in his (or her) will as to his choice for the job of personal representative. However, the court will only appoint the nominated person if he is qualified. In Florida, the personal representative must be at least 18 years old, must be physically and mentally able to perform the required duties, must not be a convicted felon, and must be resident of Florida.
Once the probate court has approved the appointment of the personal representative and issued that person letters of administration, the personal representative has the authority to move forward with the steps required to settle the decedent’s estate, including paying estate debt.
As a skilled Fort Lauderdale probate attorney will explain, before the personal representative can pay debt, he must figure out the value of the estate so that the will know what there are sufficient assets to both make distributions of estate assets according to the terms of the will, as well as pay estate debts. In order to determine the value of the estate, the personal representative will indentify the assets that are part of the decedent’s probate estate and determine their value. Probate assets include real estate solely owned by the decedent, vehicles, furniture, appliances, bank accounts, collectibles, and jewelry. Non-probate assets include property that has a designated beneficiary such as retirement accounts and life insurance, real estate that the decedent owns as a joint tenant with survivorship rights, and financial accounts with a pay-on-death or transfer-on-death designation.
The next step is notifying creditors. While the personal representative must make a diligent effort to locate creditors, there is always a chance that the personal representative will not be able to do so. In addition to personally serving known creditors with a notice regarding the probate proceeding, the personal representative is also required to publish notice in a local newspaper. Creditors must file their claims within a statutory timeframe. If they fail to do so, then their claims will be time-barred.
The personal representative must decide which claims to pay. There are a number of factors which go into this decision. First, personal representative will pay only valid debts. The personal representative will only pay claims that were timely filed. And, the personal representative will only pay debts to the extent there are funds in the estate available to pay debt. If funds are limited the personal representative must look to the statute to see which category of debts have priority. For example, expenses related to the administration of an estate have top priority and expenses related to the funeral and burial of the decedent have second priority.Abatement
If there are not enough assets in an estate to pay all debts and also make all testamentary gifts as described in the will, then the personal representative must use abatement to determine what the beneficiaries will receive from the estate. Abatement is the process of determining the order in which testamentary gifts shall be applied to the payment of the testator’s debts and expenses when there are not sufficient assets in the estate to pay all debts as well as the distributions. The process of abatement may cause the reduction or elimination of the testamentary gifts.
Under FL. Stat, section 733.805- Order in which assets abate, the order of abatement in Florida is as follows:
- Property passing by intestacy. If there is property in the estate that is not mentioned I the will and there is not a residuary clause, such property would pass to the decedent’s statutory heirs according to the rules of intestate succession. Such property abates first meaning that it will be used to pay debts before any other property is used.
- Property devised to the residuary devisee or devisees . A residuary clause is a clause in a will that disposes of the remaining assets in an estate after all debts and testamentary gifts are satisfied.
- Property not specifically or demonstratively devised. Property in the estate that was not specifically devised by the decedent his will.
- Property specifically or demonstratively devised. The last in order of abatement is property that was specifically or demonstratively devised in the will. Such property will abate only after
If you have concerns related to the payment of estate debt and abatement, contact an experienced probate attorney in Fort Lauderdale.Related Statutory Provisions
- Delivery of devises and distributive shares: § 733.801, Fla. Stat.
- Proceedings for compulsory payment of devises or distributive interest: § 733.802, Fla. Stat.
- Encumbered property; liability for payment: § 733.803, Fla. Stat.
- Death benefits; disposition of proceeds: § 733.808, Fla. Stat.
- Funds or property designated by the will shall be used to pay debts, family allowance, exempt property, elective share charges, expenses of administration, and devises, to the extent the funds or property is sufficient. If no provision is made or the designated fund or property is insufficient, the funds and property of the estate shall be used for these purposes, and to raise the shares of a pretermitted spouse and children, except as otherwise provided in subsections (3) and (4), in the following order:
- Property passing by intestacy.
- Property devised to the residuary devisee or devisees.
- Property not specifically or demonstratively devised.
- Property specifically or demonstratively devised.
- Demonstrative devises shall be classed as general devises upon the failure or insufficiency of funds or property out of which payment should be made, to the extent of the insufficiency. Devises to the decedent’s surviving spouse, given in satisfaction of, or instead of, the surviving spouse’s statutory rights in the estate, shall not abate until other devises of the same class are exhausted. Devises given for a valuable consideration shall abate with other devises of the same class only to the extent of the excess over the amount of value of the consideration until all others of the same class are exhausted. Except as herein provided, devises shall abate equally and ratably and without preference or priority as between real and personal property. When property that has been specifically devised or charged with a devise is sold or used by the personal representative, other devisees shall contribute according to their respective interests to the devisee whose devise has been sold or used. The amounts of the respective contributions shall be determined by the court and shall be paid or withheld before distribution is made.
- Section 733.817 shall be applied before this section is applied.
- In determining the contribution required under s. 733.607(2), subsections (1)-(3) of this section and s. 736.05053(2) shall be applied as if the beneficiaries of the estate and the beneficiaries of a trust described in s. 733.707(3), other than the estate or trust itself, were taking under a common instrument.
Creditors who are owed money by an estate will be anxious to get paid. Similarly, beneficiaries expect to receive the gifts that the decedent wanted them to have as indicated in his (or her)w will. The personal representative is required to follow the rules of the Illinois Probate Code when making decisions related to paying debts and making distributions. 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. We can help ensure that the process is completed in a manner that is consistent with the law. If you have questions related to the duties and authority of personal representative, including the requirements of Florida Probate Code, section 733.805- Order in which assets abate. Contact us attorneys at 561-710-4000 to schedule a free, no obligation consultation regarding your case.