Claims Against Your Estate
When a loved one dies, their bills don’t immediately disappear. Credit card balances, medical invoices, and back taxes may all come knocking at the executor’s door. If the estate can’t cover everyone, who gets paid and in what order? North Carolina answers that question in G.S. 28A-19-6. Ignoring its pecking order can land an executor in hot water—and sometimes personally on the hook for a mis-timed payment.
Why the Order of Payment Matters
Probate is essentially a financial cleanup mission. The personal representative (often called the “executor” or “administrator”) must gather assets, settle debts, and only then distribute what’s left to heirs. When assets are tight or creditors are impatient, following G.S. 28A-19-6 protects both the estate and the executor from costly missteps. Pay a lower-priority bill too early and a higher-priority creditor can sue to claw that money back—sometimes from the executor’s own pocket.
The Nine Classes of Claims
After covering court costs, attorney fees, and other administration expenses, the statute divides all remaining creditor claims into nine ranked classes:
Secured claims – debts tied to a particular asset (e.g., mortgage, auto loan) up to that asset’s value.
Funeral expenses – up to $3,500 for basic service costs.
Burial/gravestone expenses – up to $1,500 for marker and plot.
Federal debts and taxes – IRS, VA benefit recapture, etc.
North Carolina taxes and other state-priority debts – NCDOR, property taxes, municipal fines.
Docketed judgments + Medicaid recovery – earlier docketed judgments beat later Medicaid liens.
Employment wages & last-illness medical bills – wages owed to the decedent’s employees (last 12 months) and final-illness medical, drug, and supply bills (last 12 months).
Equitable-distribution claims – usually when divorce isn’t finalized before death.
All other unsecured claims – credit cards, personal loans, family IOUs, etc.
If the estate runs out of money mid-list, lower-class creditors share what’s left pro rata—or receive nothing at all.
Tips for Executors (and Families)
Document everything. Keep receipts for funeral and burial expenses—amounts above the statutory caps drop to ninth-class status.
Don’t pay “easy” bills first. A polite credit card rep may call daily, but that debt sits dead last.
Notify known creditors promptly. Formal notice starts the clock running on their ability to file a claim.
Consult early if funds look tight. Insolvent estates require careful, mathematical distributions; a probate attorney’s fee is usually cheaper than a personal-liability lawsuit.
Final Thought
The order-of-payment rules are complicated, but they exist to keep probate fair and predictable. Executors who follow the statute protect themselves and every legitimate creditor.
P.S. If you know someone who'd appreciate this—or someone who really should—feel free to forward it their way.