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In a Florida probate, what if the available assets are insufficient to pay all eight classes of claims?

| Jan 17, 2014 | Probate |

The eight classes of obligations in a probate estate are paid, beginning with class 1 and proceeding downward . Each class must paid in full before proceeding to the next class. 

Florida Statutes Section 733.707 sets forth eight classes which establish the order of payment by the Personal Representative of the costs of administration and of creditor claims. In considering these classes, the issue may arise as to what happens if the available estate assets are insufficient to pay all of the classes? A related issue is what happens if the available assets are sufficient to pay some classes but not all? The statute states that each class is paid in full before proceeding to the next class. So, all of class 1 would be paid before proceeding to class 2. After paying any preceding class, if the estate is insufficient to pay all of the next succeeding class, the creditors of the latter class shall be paid ratably in proportion to their respective claims. For example, consider an estate where the non-exempt assets total $100,000.00 and the class 1 claims total $35,000.00, the class 2 claims total $40,000.00 and the class 3 claims total $45,000.00. Classes 1 and 2 get paid in full. The remaining $20,000.00 gets divided among the class 3 creditors in the proportion that their claim bears to the total class 3 claims. So if class 3 is made up of a total of $100,000.00 and a particular creditor has a claim of $10,000.00, then that creditor will be paid $2,000.00, or 10% of that creditor’s claim.

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