Creditor Claim Priority Under Tennessee Estate Law – Who Gets Paid First?

Posted on Mar 20 2016 8:50PM by Attorney, Jason A. Lee

One question that is often asked is how creditor claims are handled if there is insufficient money in the estate to pay all of the claims.  T.C.A. § 30-2-317 provides a list showing the priority for any creditor claim against the estate of a deceased individual in Tennessee.  Claims and demands against an estate are divided into certain categories and the statue provides the order in which the claims or demands are to be paid.  T.C.A. § 30-2-317 provides the priority for claims against the estate as follows:


(a) All claims or demands against the estate of any deceased person shall be divided into the following classifications, which shall have priority in the order shown:

(1) First: Costs of administration, including, but not limited to, premiums on the fiduciary bonds and reasonable compensation to the personal representative and the personal representative's counsel;

(2) Second: Reasonable funeral expenses;

(3) Third: Taxes and assessments imposed by the federal or any state government or subdivision of the federal or any state government, including claims by the Bureau of TennCare pursuant to § 71-5-116; and

(4) Fourth: All other demands that may be filed as aforementioned within four (4) months after the date of notice to creditors.


Category number four basically provides the last layer of priority and is designed to account for all other possible categories of creditors.  This statute also provides specific instructions to the personal representative of the estate on how to pay the claims according to the priority found in this statute.  T.C.A. § 30-2-317(b) provides as follows:


(b) All demands against the estate shall be paid by the personal representative in the order in which they are classed, and no demand of one class shall be paid until the claims of all prior classes are satisfied or provided for; and if there are not sufficient assets to pay the whole of any one class, the claims in that class shall be paid pro rata.


It is very important for the personal representative to be aware of the rules pertaining to the priority of creditor claims.  A personal representative can be personally liable for claims that are not handled in the correct manner.  Nobody wants to be in this situation.  This is where an experienced probate attorney can be very helpful to guide and advise the personal representative in this process.  Ignorance of the law does not excuse a personal representative from the responsibilities of the law for the administration of an estate.

TAGS: Executor/Executrix, Creditor claims, Tennessee Probate Law
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Jason A. Lee is a Member of Burrow Lee, PLLC. Contact Jason at 615-540-1004 or jlee@burrowlee.com for an initial consultation on wills estate planning and probate issues.

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Tennessee Wills and Estates Blog
Jason A. Lee, Member of Burrow Lee, PLLC
611 Commerce Street, Suite 2603
Nashville, TN 37203
Phone: 615-540-1004
E-mail: jlee@burrowlee.com