Liability of Personal Representative To Pay Decedent’s Mortgages

Husband and wife each have previously been married with separate children. The husband’s estate plan names surviving spouse as personal representative. The will leaves a mortgaged property jointly to two of the husband’s children in a testamentary trust. . Two years after the husband’s death the children find they cannot afford to pay the mortgage. They believe that the surviving spouse should pay the mortgage from estate funds, or her personal funds, because she represents the decedent who personally signed the mortgage note.

Estates do not have perpetual liability for obligations incurred by decedents. Florida Statute 733.710 imposes a two year time limit on actions against an estate, its personal representative, or the heirs and beneficiaries. A creditor may extend the window to litigate a claim only by filing timely a formal claim in an estate administration. The statute specifically reserves a mortgagee’s security in real estate and its right to foreclosure in the event the mortgage is not paid. But, two years after the decedent died and without filing a claim in an estate adminstration the mortgagee may not seek a deficiency judgment.

Many mortgage lenders neglect to file an estate claim when mortgages are current. They preserve their security interest but lose their right to sue the make of the promissory note or their personal representative.

In the example above, the person who acts as trustee is not personally liable to the lender after the trust takes title to the real estate subject to the mortgage. A trustee’s is obligated to used trust assets, including cash, to reasonably preserve trust property, but a trustee does not assume the personal obligations of the trustmaker.

About the Author

Jon Alper is an expert in asset protection planning for individuals and small businesses.

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