When an Illinois probate estate does not have enough money to pay all of its claims, Illinois law provides an order that the claims must be paid in. When an estate does not have enough money to pay all of the claims it owes, the estate is called insolvent.
Seven Classes Of Illinois Probate Claims – Higher Class Claims Paid First
Illinois law has divided probate claims into seven classes. Claims of the first class must be paid in full before any money is allocated to the next class of claims.
If there are numerous claims within one class, then the claims within the class are paid pro rata (each claim receives the same percentage of payment from the Illinois estate).
The classes depend on the nature and type of debt. Illinois law has determined that some estate creditors should be paid before others. The order of priority for payment of claims is set forth in 755 ILCS 5/18-10.
Class 1 Claims: Funeral and Burial Expenses, Administration Expenses, and Statutory Custodial Claims
Illinois law requires that the “last expenses” of funeral and burial expenses, expenses of administration, and statutory custodial claims are paid first from the probate estate.
Funeral and burial expenses include reasonable amounts paid for a burial space, crypt or niche, a marker on the burial space, care of the burial space, crypt or niche, and interest on these amounts.
Statutory custodial claims are claims made pursuant to statute by a live-in caregiver for the decedent.
Interest on these amounts shall accrue beginning 60 days after issuance of letters of office to the representative of the decedent’s estate, or if no such letters of office are issued, then beginning 60 days after those amounts are due, up to the rate of 9% per annum as allowed by contract or law.
Class 2 Claims: Surviving Spouse’s or Child’s Award
Payment of the surviving spouse’s award or child’s award is paid after the funeral and administration expenses.
Class 3 Claims: Debts Due the United States
Debts due to the United States are the third class of claims paid by the Illinois probate estate. This usually includes federal tax liens.
Class 4 Claims: Money Owed To Decedent’s Employees and Expenses Associated With Decedent’s Last Illness
Class 4 claims include money due employees of the decedent of not more than $800 for each claimant for services rendered within 4 months prior to the decedent’s death.
Class 4 claims in Illinois probate also include reasonable and necessary medical, hospital, and nursing home expenses for the care of the decedent during the year immediately preceding death.
Class 5 Claims: Money Received By The Decedent Or Held In Trust By The Decedent That Cannot Be Identified Or Traced
Class 5 claims to be paid in Illinois probate include money received by the decedent or held in trust by the decedent that cannot be identified or traced.
Class 6 Claims: Debts Owed To State and Local Entities
Illinois law classifies debts due to the State of Illinois and any county, township, city, town, village or school district located within Illinois as Class 6 claims.
Class 7: All other claims
All other claims includes anything else that might be a claim against the Illinois probate estate, such as medical expenses outside of the one year window, or payment on a personal note. Class 7 claims are paid last in Illinois probate, and the likelihood of a class 7 claim getting paid in an insolvent estate is very low.
The bottom line is that in Illinois probate the higher priority claims have a better chance of being paid in full than the lower priority claims. An Illinois probate lawyer will guide the representative of the estate as to how to satisfy the claims properly and in the correct order.
