Probate is a legal process whereby a probate court helps oversee the administration and distribution of a deceased’s estate when that person died with or without a will -- as opposed to having a trust. One aspect of probate is paying off any valid debts owed at the time of death. State probate laws generally provide for a creditor hierarchy that determine who receives payment first.
Probate costs money. State probate laws generally require the estate to pay administrative claims first. Although in Georgia, for example, administrative costs are third on the priority list. Administrative claims include things such as filing fees, appraisal fees for property or taxes and money owed to the personal representative for acting in that capacity. According to FindLaw, state laws may assess these fees based on a percentage of the estate’s value.
Family allowances typically receive a high priority. Georgia’s probate code, for example, gives these costs the highest priority. A family allowance is not a debt but a priority payment made to the decedent’s immediate family members, such as a spouse and children, to help cover expenses during probate. Often, the surviving spouse and/or children may receive money to stay in the house and pay utilities, referred to as a homestead allowance; a family allowance to pay for necessities, such as groceries or clothing; and an exempt property amount that allows the family to keep a certain amount of personal property from the decedent.
Medical and Funeral Expenses
Medical costs and funeral costs usually fall directly under either administrative costs or the family allowances. For example, in Wisconsin and Michigan, the estate must pay funeral and burial expenses second after administrative costs and before any family allowances. The exact costs for medical care may vary; probate codes generally give priority to the expenses that were “reasonable and necessary."
Other Claims and Issues
State and federal taxes generally have a lesser priority than administrative costs, family allowances, funeral and medical costs. The lesser priority debts generally include unsecured debt, such as credit card debt. The exact priority payment schedule varies by state, however. You should review your state’s probate code before proceeding on your own and seek legal assistance as necessary to resolve any problems.
- Michigan Compiled Laws: Section 700.3805 -- Priority of Claim Payments
- Justia US Law: 2011 Wisconsin Code -- Section 859.25 - Priority Payment of Claims and Allowances
- Montana State University: Probate in Montana
- FreeAdvice.com: The Cost of Probate -- Administrative Expenses
- Onecle.com: Georgia Code Section 53-7-40