Creditor Probate Claims are likely one of the biggest stresses a family will encounter. Luckily, our Minnesota laws have tried to sort through the mess by helping us rank or prioritize creditor claims.
Without question, the grieving process is painful on its own. If part of your stress is trying to sort through Creditor Probate Claims, use the law to your family’s advantage.
If you put every creditor in a room and asked them who wanted a dollar from your loved one’s estate, who would jump first? Yes, if you allowed every creditor to line-up and argue why they should get paid, Creditor Probate Claims would turn into fist fights.
Because Minnesota probate law 524.3-805 ranks which creditor will get paid first and which creditor will get paid last, fist fights are less likely.
Creditor Probate Claims – 1st Priority
Whom ever was responsible for writing Minnesota statute 524.3-805, they identified court fees, court costs, accountants, and attorney’s as the group of entities having the first priority over every creditor. Yes, this is true even if a creditor has a lien.
2nd Priority of Creditor Probate Claims
Would you believe the average cost of a funeral in more than $7,000? The second group of creditors having more rights than other creditors goes to funeral expenses.
Likely, our legislators made it this way to encourage funeral homes to help lay to rest those who are insolvent or in need.
The IRS wants their cut too
The third ranking creditor is the IRS. If you are connecting the dots, the government has purposely identified those with a 1st priority of creditor probate claims so there is an incentive to assure our federal income taxes are properly paid.
I am sure those in power would encourage a better solution. As it stands now, this is our system.
Generally, medical bills are closely related to a person who has recently passed. Creditor probate claims for medical bills are 4th and 5th place with a distinction being medical bills for the care of the decedent during the year immediately preceding death.
Minnesota is in 6th Place
Yes, the sixth ranking creditor is Minnesota. In other words, any tax owed to Minnesota’s Department of Revenue is deemed less important than the expenses listed above.
Creditor Probate Claims for everybody else
Everybody else is left to 7th place. Of course this is where lien prioritization and secured transactions become relevant. However, lien prioritization is a topic for a different post.
Again, if you or your family needs help with creditor probate claims, please contact this law office for help.