Board certified Stuart estate planning lawyer John Mangan can guide you through the process of protecting your estate from creditor claims.

Dan D. owned several businesses, including some with high potential liability. For example, his roller skating rink had been sued several times. His boat tours of the coast were enjoyable, but there was always the possibility of property damage, injury or even death. Some of his other business concerns carried fairly high levels of debt. In fact, any time someone owns property or a business, there is the potential for creditor claims or civil judgments. But how are these claims handled when probating the estate of the owner? And are there ways to head off potential claims before the owner passes away?

During Probate

The estate’s personal representative gathers estate assets and claims against the estate.

In most probate cases, the personal representative publishes a notice to creditors in a newspaper published in the county where the estate is being administered. The notice is published once a week for two weeks. It contains information about the estate so that creditors know who to contact about their claim. Creditors also are given a time limit within which to file their claims against the estate. The personal representative may also serve copies of the notice to creditors on any parties that may seem to have a claim against the estate.

Any creditor that fails to file a timely claim against the estate is barred from recovering funds from the estate.

How Creditors Get Paid

 

During Estate Planning

Include creditors and potential creditor claims when discussing your estate plans with an attorney. There may be ways to limit the number of claims against your estate.

  • Titling Your Property as Tenancy by the Entireties. Using this type of title for your property means it will pass directly to your spouse. Generally, a creditor must have a judgment against both spouses to go after the property. However, tenancy by the entirety is not without its dangers.
  • Establish an LLC. Creditors have very limited remedies against multi-member LLCs. Many times, their only option is to obtain a charging order against LLC cash distributions. The creditor’s judgment is only paid if the LLC makes those distributions.
  • Family Limited Liability Partnership. This entity may serve as a holding company for family assets. Creditors may find it difficult or impossible to penetrate the asset protection provided by an FLLP.
  • Asset Protection Trusts. Domestic asset protection trusts (DAPT) may be opened in some states and offer some protection. Foreign or offshore asset protection trusts typically offer higher levels of asset protection.

The time to protect your estate from creditor claims is before probate begins.

For more information, visit:

Estate Administration in Stuart
Stuart Probate Process
Interested Persons in Palm City Probate
Asset Protection