J. Kelly Kennedy, Attorney/CPA, PLLC

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Paying creditors and the IRS is part of probate

Before an estate can be formally administered, there are certain things the deceased's personal representative will need handled first. In Florida, probate is often necessary in order to fully and adequately close out an estate. During probate, the decedent's family members will have the opportunity to file objections to any claims anyone makes on the estate if they feel it is appropriate. Creditors and the IRS will also have the chance to collect any funds owed them.

How long do creditors have to file claims on an estate?

In Florida, after someone dies, his or her personal representative must give notice to all of the decedent's creditors. After giving notice, creditors will have a period of three months to file any claims against the estate. If they file after this time frame, the court has the right to deny request for payment.

Dealing with creditor claims

The personal representative of the estate will have two options for dealing with creditor claims. The first would be to pay the outstanding debt. The second would be to fight the claims.

In order to fight a creditor claim, the personal representative will need to file an objection in court. A judge will then decide whether the claim is valid and subject to payment. If the court does not approve payment, a creditor may still be able to pursue compensation by filing a lawsuit in civil court.

Paying taxes on an estate

When someone dies, the personal representative will still need to file the deceased's federal income tax return in addition to the payment of estate taxes. The representative will need to fill out various forms to make sure the Internal Revenue Service receives the appropriate taxes and amounts. Tax forms used may include:

  • 1040 – Income tax for the year of the death
  • 1041 – Estate income tax
  • 709 – Gift tax return
  • 706 – Estate tax return

The estate representative will usually pay taxes from the decedent's assets. This is not a debt that surviving family members will need to pay out of their own pockets. However, the estate representative may find him or herself personally responsible if there are any errors in the tax filings.

Seek help with creditor and IRS claims

According to Florida laws, beneficiaries cannot receive their share of the estate until debts and taxes are appropriately addressed. Handling such matters can effect how long the probate process will ultimately take. An experienced estate planning attorney can help personal representatives navigate through the complicated process of dealing with creditor claims and making sure taxes are properly paid.

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