The death of a loved one is always a stressful time, full of emotional challenges and logistical obstacles. If the deceased individual passes without having established a trust, the Florida probate process becomes yet another hurdle that must be navigated in order to facilitate the transfer of assets to beneficiaries and the payment of final expenses.
Assessing outstanding debts
It is never a bad idea to begin the process of gathering information about the decedent’s outstanding debts even before probate is officially opened. This can help make things much easier and keep the process running as efficiently as possible. Common types of debt for which statements should be collected include:
- Mortgage loans
- Property taxes
- Recurring utility bills
- Income taxes
- Vehicle loans or leases
- Loans against retirement accounts, insurance policies
Knowing which of these debt obligations will continue and must remain current during the probate process and which can be paid in full once probate opens is critical, as it will permit the personal representative of the estate to make timely, necessary payments along the way so that assets are preserved and stay unencumbered for beneficiaries to ultimately receive.
Addressing mortgages in probate
While it is important to account for all outstanding debt during probate administration, the most substantial area of concern for many estates is that of the mortgage loan. In many cases, a beneficiary tapped to inherit real estate will be permitted to assume an outstanding mortgage, but to do so, that loan will need to be considered current at the time of transfer. If a decedent had a reverse mortgage in place, heirs will need to decide if they wish to pay the loan’s remaining balance or an amount equal to 95% of the property’s value, whichever amount is lower.
Ultimately, every probate estate brings with it unique circumstances and requirements, but when it comes to determining how to handle outstanding debt, it behooves executors, beneficiaries and everyone else with an interest in the estate to familiarize themselves with the law.