Every Pennsylvania estate has expenses and obligations that have to be paid before the personal representative can close the estate.
These expenses often include the personal representative’s commissions, attorney’s fees for the personal representative’s attorneys, spousal claims, creditor claims, funeral expenses, decedent’s final medical expenses, decedent’s unpaid final bills, and other claims.
If the Pennsylvania estate is solvent and has enough money to pay the expenses and obligations of the estate, then the order of payment is not important. Everyone who is owed something from the estate gets paid, and the remainder of the assets are distributed to the beneficiaries of the estate.
If the Pennsylvania estate does not have enough money to pay all of the expenses and costs of administration in full, then Pennsylvania law provides an order that the personal representative must pay the costs in, pro rata, subject to any preference given by law to claims by the United States government. The classification and order of payment is set forth in 20 Pa. C.S. § 3392. Section 3392 states:
If the applicable assets of the estate are insufficient to pay all proper charges and claims in full, the personal representative, subject to any preference given by law to claims due the United States, shall pay them in the following order, without priority as between claims of the same class:
(1) The costs of administration.
(2) The family exemption.
(3) The costs of the decedent’s funeral and burial, and the costs of medicines furnished to him within six months of his death, of medical or nursing services performed for him within that time, of hospital services including maintenance provided him within that time, of services provided under the medical assistance program provided within that time and of services performed for him by any of his employees within that time.
(4) The cost of a gravemarker.
(5) Rents for the occupancy of the decedent’s residence for six months immediately prior to his death.
(5.1) Claims by the Commonwealth and the political subdivisions of the Commonwealth.
(6) All other claims.
What Are the Costs Of Administration Of a Pennsylvania Estate?
As set forth in section 3392, the costs of administration take first priority when the estate is unable to pay all expenses and obligations in full.
Generally, the most significant costs of administration are the commissions paid to the personal representative of the estate, and the attorney’s fees paid to the attorneys for the personal representative. Like many states, Pennsylvania wants to make sure that the people who have worked on behalf of the estate are paid for their work, above other expenses and obligations that they estate may have. This encourages both nominated personal representatives and attorneys to work to administer estates without the fear of not being compensated.