Unpaid Legal Fees and Debts of An Insolvent Estate- What Gets Paid First?

If Your Estate is in Debt, What Expenses Need to be Paid First?

If an estate is considered to be insolvent it means that the estate does not have enough assets to pay off debts, claims, and other administrative expenses. When this happens, Pennsylvania law provides an order in which expenses, taxes, and claims that must be paid and which have priority.

1.    The first expense that needs to be paid off is administration costs.

2.     Secondly, the family tax exemption needs to be paid.  This exemption includes spouses, children, parents, or any other person living with the decedent during the time of death. 

3.    The third category that needs to be paid is any funeral or burial expenses. During this time, any medical services; including hospital visits, nursing home costs, or the cost of any medicine, that the descendant was receiving at the time of his death needs to be paid.

Note: there is a difference in priority of medical expenses depending on when they were incurred. 

4.    The fourth set of expenses that the executor needs to pay is the cost of the grave marker. 

5.    The fifth cost that an executor needs to acknowledge is cost regarding the rent for the occupancy of the decedent’s residence. 

6.    Next, any claims made by the Commonwealth of Pennsylvania or any subdivisions of the Commonwealth need to be addressed.

7.    Finally, any other claims that have been brought against the descendant. 

It is important to know that there is no priority of claims if they are in the same level of priority. And, this list is general. If assets are insufficient to pay the decedent’s bills and expenses you as executor should get legal and accounting advice to avoid personal liability.

For more information regarding claims against an estate please email or call David M. Frees, III at [email protected] or 888-573-7407.

David M. Frees, III
Attorney, Speaker and Author