What Happens to Debts and Taxes in Florida Probate

In Florida probate, a deceased person’s debts are paid out of the estate’s assets before anything passes to heirs, following a strict statutory order of priority. Creditors must file timely claims, and most debts that are not properly filed are barred forever. Florida imposes no state estate tax or inheritance tax, but the estate may still owe final federal income tax and, in rare cases, federal estate tax.

If you have just been named personal representative, or you are an heir watching the estate shrink before your eyes, the question is almost always the same: who gets paid, in what order, and what is left over? Below is how a Florida probate court actually sorts it out, drawn from the Florida Probate Code (Chapter 733, Florida Statutes) rather than the half-remembered rules people carry across state lines.

The core principle: the estate pays, not the heirs

This is the single most misunderstood point I explain in consultations. When someone dies owing money, their children do not personally inherit that debt. The estate, a separate legal entity opened through probate, is responsible for settling obligations from the assets the decedent owned at death. Once those assets are exhausted, remaining unsecured debt generally dies with the estate.

There are real exceptions. A co-signer on a loan remains liable. A surviving joint account holder or spouse on a jointly held debt is still on the hook. And if an heir received assets improperly while creditors went unpaid, a court can claw those distributions back. But the baseline rule holds: you do not inherit Grandpa’s credit card balance simply by being his grandchild.

How creditor claims work in Florida probate

Florida runs a notice-and-claim system. The personal representative is required to publish a Notice to Creditors in a local newspaper and to serve that notice directly on any creditor who is “reasonably ascertainable.” Doing this properly is what starts the clock, and the clock is the whole game.

The deadlines that decide everything

• 3 months from first publication. Under section 733.702, Florida Statutes, a creditor who was served or who saw the published notice generally has three months from the date of first publication to file a claim with the court.
• 30 days from being served. A known creditor served directly gets the later of the three-month window or 30 days after service.
• 2 years, no matter what. Section 733.710 sets an absolute outer limit: two years after death, almost all claims are barred even if no probate was ever opened and no notice was ever published. This is Florida’s nonclaim statute, and courts enforce it firmly.

A claim filed one day late is, in most cases, simply gone. I have watched sophisticated lenders forfeit five-figure balances because they missed the window. The flip side is a cautionary tale for personal representatives: skip the notice requirements or pay debts out of order, and you can end up personally liable for the mistake.

Objecting to a claim

Filing a claim does not mean it gets paid. The personal representative (or any interested person) may file a written objection. The creditor then has 30 days to file an independent lawsuit to enforce the claim, or it is barred. This is one of the more common pressure points in a contested estate, especially when a guardianship preceded the probate and disputed care costs, loans, or “promised” repayments surface after death.

The order debts get paid: Florida’s priority ladder

When an estate may not have enough to cover everything, Florida does not pay creditors first-come, first-served. Section 733.707 sets a strict order of payment. Higher classes are paid in full before lower classes receive anything; within a class that cannot be paid fully, claimants share pro rata.

1. Class 1 — Costs of administration. Court costs, attorney’s fees, and the personal representative’s compensation.
2. Class 2 — Reasonable funeral and burial expenses (capped at $6,000 for priority purposes).
3. Class 3 — Debts and taxes with federal preference, such as certain federal tax obligations.
4. Class 4 — Reasonable and necessary medical expenses of the last 60 days of the final illness.
5. Class 5 — Family allowance provided to the surviving spouse and dependents.
6. Class 6 — Arrearages from court-ordered child support.
7. Class 7 — Debts from the continuation of the decedent’s business, within limits.
8. Class 8 — All other claims, including ordinary credit cards and unsecured personal loans.

Notice where the everyday consumer debt lands: dead last. In a strained estate, the credit card companies are often paid pennies, or nothing, after administration, funeral, medical, and family-protection claims are satisfied.

Secured debts: the house and the car follow their collateral

Mortgages, car loans, and other secured obligations work differently from the unsecured ladder above. The lien rides with the property. If heirs want to keep a mortgaged home, the mortgage generally must be paid or assumed; the debt does not vanish just because the borrower died. Federal law (the Garn-St. Germain Act) lets certain relatives take over a mortgage without triggering a due-on-sale clause, which can be a lifeline for a family home.

One Florida quirk deserves its own sentence: the homestead. A constitutionally protected Florida homestead that passes to a spouse or heirs is generally shielded from the claims of the decedent’s general creditors, though it remains subject to its own mortgage, taxes, and liens. Homestead questions are technical and frequently litigated, so do not assume the family home is automatically safe or automatically lost.

Taxes in Florida probate: what the estate actually owes

Here is the relief most families do not expect. Florida has no state estate tax and no inheritance tax. The state-level estate tax was eliminated when the federal credit it relied on was phased out, and Florida’s constitution prohibits an inheritance tax. So beneficiaries receiving Florida assets owe no Florida death tax on what they inherit.

That does not mean the estate is tax-free. Several federal obligations can survive a person’s death.

Final personal income tax (Form 1040)

The decedent still owes income tax on income earned up to the date of death. The personal representative is responsible for filing a final federal Form 1040 covering that final partial year.

Estate income tax (Form 1041)

If the estate itself earns income during administration, say, interest, dividends, rent, or gain on a sale, it may need to file a fiduciary income tax return, Form 1041, and pay tax on that income. Estates reach the top federal income tax bracket at a very low threshold, so this matters more than people expect when probate drags on for a year or more.

Federal estate tax (Form 706)

Federal estate tax applies only to very large estates. The federal exemption sits in the multiple-millions per person, so the overwhelming majority of Florida estates never file a Form 706 at all. Estates near or above the threshold should get specialized tax counsel early, because portability elections and valuation choices are time-sensitive.

Property taxes and the lurking trap

County property taxes keep accruing on real estate the estate holds. Two issues catch families repeatedly: the loss of the decedent’s homestead exemption and “Save Our Homes” cap going forward, and the recapture of improperly continued exemptions. If you keep claiming a dead parent’s homestead exemption, expect a lien for back taxes plus penalties.

How a prior guardianship complicates the debt and tax picture

When a contested guardianship transitions into a probate, the debt and tax analysis rarely starts clean. Guardianship accountings, disputed caregiver compensation, reimbursement claims from family members, and unpaid guardian or attorney fees often arrive as creditor claims the moment the estate opens. Sorting which of those obligations are legitimate Class 1 administration costs, which are ordinary Class 8 claims, and which are barred is exactly where these estates turn adversarial. If a guardianship court already approved certain expenditures, that approval can carry weight, but it does not automatically immunize a claim from objection in probate.

Families navigating that handoff between a New York guardianship and an out-of-state probate, or the reverse, benefit from counsel who handle both contested fiduciary matters and the probate that follows. Morgan Legal’s team handles exactly that intersection through their , and you can read more about the mechanics in their overview of the . For matters rooted in the Sunshine State, their Florida probate practice covers the creditor and tax issues described above.

A practical sequence for personal representatives

1. Open the estate and obtain Letters of Administration.
2. Get a federal EIN for the estate and open an estate bank account, never commingle funds.
3. Identify and value assets, and identify reasonably ascertainable creditors.
4. Publish and serve the Notice to Creditors, then track the 3-month and 30-day deadlines carefully.
5. Review, accept, or object to claims; do not pay anything out of statutory order.
6. File the final Form 1040, any Form 1041, and a Form 706 only if required.
7. Pay claims by class priority, then distribute the remainder to beneficiaries.
8. File a final accounting and petition to close the estate.

Get the order wrong, pay a Class 8 credit card before a Class 1 administration cost or a valid Class 4 medical bill, and a court can hold you personally responsible for the shortfall. This is precisely why the role is heavier than most newly appointed personal representatives expect.

When to bring in counsel

If the estate is insolvent, if creditors are aggressive, if a guardianship dispute carried over, or if real estate and homestead questions are in play, do not improvise. The deadlines are short and unforgiving, and the personal liability is real. You can learn more about the probate process on our Florida probate page or review estate documents on our wills and trusts page, and reach out through our contact page when you are ready to talk specifics.

Frequently asked questions

Do heirs have to pay the deceased’s debts in Florida?
No. Debts are paid from the estate’s assets, not from the heirs’ own money. Heirs only face exposure if they co-signed, held the debt jointly, or received estate property improperly while creditors went unpaid.

Does Florida have an estate tax or inheritance tax?
No to both. Florida has no state estate tax and its constitution prohibits an inheritance tax. Federal income tax and, for large estates, federal estate tax may still apply.

How long do creditors have to make a claim in a Florida probate?
Generally three months from first publication of the Notice to Creditors, or 30 days after being served directly if that is later, with a hard two-year cutoff from the date of death.

Frequently Asked Questions

Do heirs have to pay the deceased's debts in Florida?

No. Debts are paid from the estate’s assets, not from the heirs’ personal money. Heirs face liability only if they co-signed the debt, held it jointly, or received estate property improperly while valid creditors went unpaid. Once estate assets are exhausted, remaining unsecured debt generally dies with the estate.

Does Florida have an estate tax or inheritance tax?

No to both. Florida has no state estate tax, and the Florida constitution prohibits an inheritance tax, so beneficiaries owe no Florida death tax on inherited assets. The estate may still owe federal final income tax (Form 1040), estate income tax (Form 1041) if it earns income during administration, and federal estate tax (Form 706) only for very large estates above the multi-million-dollar federal exemption.

How long do creditors have to file a claim in Florida probate?

Under section 733.702, Florida Statutes, a creditor generally has three months from the first publication of the Notice to Creditors, or 30 days after being served directly if that date is later. Section 733.710 sets an absolute two-year limit from the date of death, after which almost all claims are barred regardless of whether probate was opened.

In what order are debts paid in a Florida estate?

Section 733.707 sets a strict priority ladder. Administration costs come first, then funeral expenses (up to $6,000 for priority), then debts with federal preference, last-illness medical expenses, family allowance, child support arrears, business-continuation debts, and finally all other claims such as ordinary credit cards. Higher classes are paid in full before lower ones receive anything.

What happens to a mortgaged house in Florida probate?

Secured debt follows its collateral. The mortgage lien stays on the home, so heirs who want to keep it must pay off or assume the loan. Certain relatives can assume a mortgage without triggering a due-on-sale clause under federal law. A Florida homestead passing to a spouse or heirs is generally protected from the decedent’s general creditors, though it remains subject to its own mortgage, taxes, and liens.