Ever wonder who gets paid first in an estate? Here’s the order in which claims are paid. Practically it makes no difference unless there are insufficient assets to pay all the debts. If that happens, you may have some creditors holding the bag if they are too low in priority.
After payment of costs and expenses of administration, the claims against the estate of a decedent must be paid in the following order:
First class. Claims which by law have a specific lien on property to an amount not exceeding the value of such property.
Second class. Funeral expenses to the extent of three thousand five hundred dollars ($3,500). This limitation shall not include burial place or gravestone.
Third class. Costs associated with gravestones and reasonable costs for the purchase of a suitable burial place to the extent of one thousand five hundred dollars ($1,500).
Fourth class. All dues, taxes, and other claims with preference under the laws of the United States.
Fifth class. All dues, taxes, and other claims with preference under the laws of the State of North Carolina and its subdivisions.
Sixth class. Judgments of any court of competent jurisdiction within the State, docketed and in force, to the extent to which they are a lien on the property of the decedent at the decedent’s death. The Department of Health and Human Services is a sixth-class creditor for purposes of determining the order of claims against the estate; provided, however, that judgments in favor of other sixth-class creditors docketed and in force before the Department seeks recovery for medical assistance shall be paid prior to recovery by the Department.
Seventh class. Wages due to any employee employed by the decedent, which claim for wages shall not extend to a period of more than 12 months next preceding the death; or if such employee was employed for the year current at the decease, then from the time of such employment; for medical services within the 12 months preceding the decease; for drugs and all other medical supplies necessary for the treatment of such decedent during the last illness of such decedent, said period of last illness not to exceed 12 months.
Eighth class. A claim for equitable distribution.
Ninth class. All other claims.
