In What Order Are Debts Paid In Oklahoma Probate?

The Oklahoma probate code and case law direct that debts are paid in a certain order from a decedent’s estate, with priority given to the expenses of administration, funeral costs, and expenses of the decedent’s last illness.

Priority Debts In Oklahoma Probate – Expenses of Administration, Funeral Costs, and Expenses of Last Illness

Expenses of administration, funeral expenses, and expenses of the decedent’s last illness are paid first from an Oklahoma probate estate.  See Tims Funeral Home v. Phillips, 1972 OK 121.  This order of priority is made abundantly clear from Oklahoma case law viewed in conjunction with the Oklahoma Probate Code.

In Tims, the Oklahoma Supreme Court explained the priority given to payment of the expenses of administration:

Emphasizing the preference accorded the executor or administrator by § 594, (“He may retain in his hands the necessary expenses of administration”) is to recognize that such expenses are necessary to preserve the decedent’s estate for all creditors, especially the preferred creditors. They involve the payment of court costs, the preparation of pleadings by a lawyer for the appointment of an administrator, for notice to creditors, for inventory and appraisement, for the sale of real and personal property, for the preparation of reports and income and estate tax returns, for advice and counsel and for many other matters, including steps taken by the administrator himself, to preserve the estate. All of this is primarily for the benefit of creditors. Without it, the creditors get nothing. If a creditor petitioned for the appointment of an administrator, such a creditor’s necessary expenses of administration, including necessary attorney’s fees would be preferred. It should hardly be necessary to cite authority in support of the right of an administrator to employ counsel.

These three priority debts are also identified in the exempt property statute, section 58-312 of the Oklahoma Probate Code: “[N]o such property shall be liable for any prior debts or claims against the decedent, except, when there are no assets thereunto available, for the payment of the necessary expenses of his last illness, funeral charges and expenses of administration.”

These three payments also take priority in small estates and summary probates.  The court may “after proof, after proof of payment of funeral expenses, expenses of last sickness and of administration and allowed claims” issue an order approving the petition for summary administration.  58 OK Stat § 58-247.

Order Of Payment Of Debts – Oklahoma Probate Code

Under 58 OK Stat § 58-591, debts of the Oklahoma estate are to be paid in the following order:

  1. Funeral expenses.
  2. The expenses of the last sickness.
  3. Funds necessary for the support of the family and allowed by the court pursuant to the provisions of this chapter.
  4. Taxes to the United States or the state, county, or city.
  5. Debts having preference under the laws of the United States and of this state.
  6. Judgments rendered against the decedent in his lifetime, which are liens upon his property and mortgages in the order of their date.
  7. Demands or claims which are presented to the executor or administrator for an allowance or proved within two (2) months after the first publication of notice to creditors.
  8. All other demands against the estate except those set forth in paragraph 9 of this section.
  9. Interest resulting from the extension of time for payment of federal estate or transfer taxes. Such interest shall be a cost of administration but shall not be deductible in arriving at the Oklahoma net taxable estate under Section 808 (g) of Title 68.

 

Even though not expressly enumerated, remember that expenses of administration are given priority as part of the three types of debts of an Oklahoma probate that get paid first.

If the estate is insufficient to pay all the debts of a class, the creditors within that class will be paid a proportionate share.  58 OK Stat § 58-593.

When Are Debts Paid In Oklahoma Probate?

Section 58-594 of the Oklahoma Probate Code provides that:

The executor or administrator, as soon as he has sufficient funds in his hands, must pay the funeral expenses, and the expenses of the last sickness, and the allowance made to the family of the decedent. He may retain in his hands the necessary expenses of administration, but he is not obliged to pay any other debt or any legacy until, as prescribed in this chapter, the payment has been ordered by the court.

The Oklahoma Probate Code and case law make sure that expenses of administration (including attorney’s fees for administering the estate), funeral expenses, and last illness expenses are paid first.  These debts have been given priority because they make the payment of decedent’s last debts possible (expenses of administration), or involve the monies expended during the last illness and for the final expenses of laying a decedent to rest.  If you are an executor or administrator of an estate, your Oklahoma probate attorney will guide you on how and when to pay the debts of the estate.

 

Oklahoma Probate and Trust Information