When a Florida resident passes away, their estate must be administered, involving the collection of assets, payment of debts, and distribution of property to beneficiaries. The process varies based on the estate’s size and complexity. If the estate qualifies for summary administration, the process is generally simpler and faster than formal probate. However, creditors must follow specific rules, including Florida’s two-year nonclaim rule, to ensure their claims are properly addressed.
In this blog, we’ll explore the role of creditors in a Florida Summary Administration case, highlight the significance of the two-year nonclaim rule, and outline the procedures creditors must follow to protect their interests.
What is Summary Administration?
Summary administration is a simplified probate process in Florida available when the estate meets certain conditions:
- The estate’s value is less than $75,000 (excluding homestead property).
- The decedent has been deceased for more than two years.
This process is quicker and less costly than formal probate, but creditors still have specific rights and responsibilities in filing claims against the estate.
Creditors’ role in Summary Administration
Creditors must file claims within a specified period to collect any debts owed by the decedent’s estate. In summary administration, they are typically notified through a Notice of Administration, which marks the beginning of the filing period. Although the process is streamlined for heirs, creditors must follow Florida’s rules to ensure their claims are addressed.
The two-year nonclaim rule
Florida law has a strict rule regarding how long creditors have to file claims against a decedent’s estate. This rule is known as the two-year nonclaim rule, and it applies in both formal probate and summary administration cases.
What is the two-year nonclaim rule?
The two-year nonclaim rule, found in Florida Statutes Section 733.710, states that creditors must file their claims within two years of the decedent’s death. This period is the maximum time a creditor can wait to file a claim against the decedent’s estate, regardless of whether the estate is in summary administration or formal probate. If a creditor fails to file a claim within this two-year window, their ability to collect payment is generally barred.
This rule is designed to bring closure to the estate administration process. It ensures that creditors do not indefinitely pursue claims, which could delay the distribution of assets to heirs. However, this rule does not mean that creditors must wait two years to file their claims. They can file their claims at any point during the probate process, but they must adhere to the two-year deadline to avoid losing their right to payment.
Exceptions to the two-year rule
There are a few exceptions where creditors may still file claims beyond the two-year period:
- Fraud or concealment: If the decedent or the personal representative engaged in fraudulent activities or hid assets, the deadline may be extended.
- Claims not discovered within two years: If a creditor was unaware of the decedent’s death or did not learn of a claim until after the two years, they may request an extension, provided they can show reasonable cause.
- State claims: Claims by the state, such as unpaid taxes, may not be subject to the two-year limit.
Steps for creditors in a Florida Summary Administration case
1. Notice of administration
The first step in any probate process is the Notice of Administration, which informs interested parties, including creditors, that the decedent’s estate is being administered. The notice must be published in a local newspaper, and creditors typically have 30 days from publication to file claims.
2. Filing a claim
After receiving the notice, creditors must file a claim with the court to collect from the estate. The claim must include:
- The creditor’s name and contact information.
- The amount owed.
- A description of the debt (e.g., medical bills, loans).
- Documentation supporting the claim, such as invoices or contracts.
3. Review of claims
The personal representative of the estate reviews the submitted claims. If the claim is valid and the estate has enough assets, payment will be made. If the claim is disputed, creditors may need to resolve the dispute through legal action.
4. Payment of debts
If the estate has sufficient funds, creditors will be paid in order of priority, starting with administrative expenses (e.g., funeral costs) and moving down to general unsecured debts (e.g., credit card bills). Summary administration generally allows for quicker payments than formal probate.
5. Final distributions
Once all debts are settled, the personal representative distributes the remaining assets to the heirs. Creditors can no longer file claims unless they fall within one of the exceptions to the two-year rule.
What happens if there are no assets to pay creditors?
If the estate lacks sufficient assets to pay all creditors, the personal representative must prioritize payments. Secured creditors (those with liens on property) generally have priority over unsecured creditors. In cases where there aren’t enough funds, some creditors may not be paid at all.
Creditors in this situation may have limited options outside of probate court to pursue payments, depending on the nature of the debt.
How can a Florida Probate Lawyer help?
Navigating the probate process, particularly in a Summary Administration case, can be complex for both heirs and creditors. Michael T. Heider, P.A., a dedicated Florida probate lawyer, can help creditors file their claims on time, address disputes, and ensure their rights are protected throughout the process.
If you’re a creditor in a Summary Administration case, it’s important to act quickly and adhere to the two-year nonclaim deadline. If you need assistance with filing your claim or have questions about your rights, contact us today.
Call 727-235-6005 or schedule a consultation.
