What Happens to Your Debt After You Die in Florida? | Cuzmar Law

What Happens to Your Debt After You Die in Florida?

One of the most common — and stressful — questions people ask when thinking about end-of-life planning is this: what happens to my debt when I die? From credit card balances to car loans and medical bills, many Floridians are concerned that their loved ones may be left responsible for what they owe. Fortunately, Florida law provides clarity — and with the right estate plan, you can minimize complications and protect your family from financial surprises.

In this comprehensive guide, we’ll explain what actually happens to your debt when you pass away, how Florida probate handles it, what types of assets are at risk, and most importantly, how to shield your loved ones and your legacy.

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First Things First: Debts Don’t Vanish — But They Rarely Transfer to Family

Contrary to popular belief, debt doesn’t just disappear when someone dies. But it also doesn’t automatically transfer to children or surviving family members. In Florida, when a person dies, their estate becomes responsible for paying off valid debts.

This happens through probate — the legal process of settling a person’s affairs after death. During probate, a personal representative (executor) is appointed to gather the deceased person’s assets, notify creditors, pay valid claims, and distribute remaining property to heirs.

The good news? Unless someone is a co-signer, joint account holder, or liable by law, heirs don’t inherit debt. Instead, creditors are limited to the estate’s assets.

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So Who Actually Pays the Debt?

Here’s a simplified breakdown:

• Your Estate: Assets titled solely in your name (bank accounts, cars, property) will be used during probate to pay off debts.
• Your Family: Typically not responsible, unless:
  
  • They co-signed a loan or were a joint account holder
  • They inherited property tied to the debt (like a mortgaged home)
  • They’re your spouse and specific Florida spousal obligations apply (rare)
• Your Trust: Assets held in a revocable living trust typically avoid probate, and creditors may be unable to access them.

By creating a trust and properly funding it, you can protect valuable property from creditor claims. Learn more about this in our guide on Trust Administration in Florida.

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What Happens to Specific Types of Debt?

Not all debts are treated equally. Here’s what often shows up during estate administration:

• Credit Cards: Unsecured and lowest priority. Usually get paid last — or not at all.
• Mortgages: The property may be sold to pay off the mortgage, or inherited with the loan attached.
• Auto Loans: The vehicle may be repossessed or sold to satisfy the debt.
• Medical Bills & Nursing Home Costs: Especially from the last illness — these have higher payment priority.
• IRS or Florida Tax Debts: Must be paid and have collection power.
• Student Loans: Federal loans are discharged at death; private loans depend on the lender.

Understanding how each type of debt is handled helps families avoid surprises. For more about probate’s role in this process, read our Florida Probate Guide.

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What If the Estate Doesn’t Have Enough Money?

This is more common than you’d think. When someone’s estate has more debt than assets, Florida law lays out a strict priority list for payments:

1. Probate administration expenses (attorney and court fees)
2. Funeral and burial costs
3. Federal and state taxes
4. Final 60 days of medical and nursing home bills
5. Family allowance for dependents
6. Child support arrears
7. Business debts
8. Everything else — credit cards, personal loans, etc.

If the estate is insolvent, creditors lower on this list simply don’t get paid — and your family doesn’t owe them a dime.

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Are Any Assets Safe From Creditors?

Yes — and this is where good planning can make all the difference. Some assets bypass probate entirely and are protected from most creditor claims:

• Homestead Property: Florida’s homestead laws offer strong protections. If your primary residence is left to a spouse or minor children, it cannot be used to pay creditors.
• Joint Property with Rights of Survivorship: Passes directly to the surviving owner and is usually protected.
• Life Insurance & Retirement Accounts: If a beneficiary is properly named, these pass outside probate and are usually shielded.
• Revocable Living Trust Assets: When funded correctly, trust assets are harder for creditors to reach.

Curious how your property would be treated? Learn more about your options in our article on the Florida Estate Planning Process.

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Why You Still Need a Plan — Even If You’re Debt-Free

Even if you don’t owe much now, things can change — and planning ahead is critical. Without an estate plan:

• Your family might face delays and court costs during probate
• Assets could be lost to creditors unnecessarily
• Your wishes about who gets what might not be honored
• You could lose key tax advantages or Medicaid eligibility

Creating a custom estate plan is the best way to protect your loved ones from debt-related stress. You’ll gain peace of mind knowing your affairs are in order and your assets are going where you want them to go — not to bill collectors.

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Let Cuzmar Law Help You Protect What Matters

At Cuzmar Law, we guide Florida families through every step of the estate planning and probate process. Whether you're starting from scratch or updating an old plan, we make it simple, personal, and proactive.

We’ll help you:

• Understand how your debts and assets will be treated
• Avoid unnecessary probate and creditor claims
• Use tools like trusts, Lady Bird deeds, and beneficiary designations to protect your legacy
• Draft a plan that reflects your values and long-term goals

Have questions about your unique situation? Reach out through our contact page to schedule a consultation.