Insolvent Probate Estate Claim-Payment Priority in Colorado
At a glance
| Statutory payment order | § 15-12-805(1) sets ten ordered classes for allowed claims; its first class is fiduciary or trust property held by the decedent, subject to specified expenses and court determination. |
|---|---|
| Administration costs | First class permits reasonable costs of administering and investigating fiduciary property from that property, as court-determined; other administration costs class 2 (§ 15-12-805(1)(a),(b)). |
| Funeral and last illness | Reasonable funeral and final-disposition expenses class 3; necessary medical/hospital last-illness expenses, including attendants, class 5 (§ 15-12-805(1)(c),(e)). |
| Family and homestead allowances | §§ 15-11-403 and 15-11-404 put exempt property and family allowance ahead of all claims except administration and reasonable funeral/final disposition; exempt property abates as needed to pay family allowance. |
| Taxes and public claims | Federal-law-preference debts and taxes class 4; other Colorado-law-preference debts and taxes class 6; named medical-assistance and excess-public-assistance recoveries classes 7 and 8 (§ 15-12-805(1)(d),(f),(f.5),(f.7)). |
| Secured claims | § 15-12-809 allows full allowed-claim payment on surrender of security; otherwise the creditor's estate payment is reduced by fair value or determined value of the security. |
| Support and special debts | Court-ordered or recorded-agreement unpaid child support at death and court-determined future child support class 9 (§ 15-12-805(1)(g)). |
| General claims | All other claims class 10 (§ 15-12-805(1)(h)). |
| Underfunded class | No payment preference within one class; currently payable claims do not outrank claims not yet due (§ 15-12-805(2)). |
Requirements one by one
Claim order and family benefits
Under § 15-12-805, the personal representative makes payment of allowed claims in ten classes. Its first class concerns property the decedent held as fiduciary or trustee; reasonable administration and investigation costs for that property are paid from it as the court determines. Other administration costs are class two, and reasonable funeral and final-disposition expenses are class three. Federal-preference debts and taxes, last-illness care, Colorado-law-preference debts and taxes, two specified public-assistance recoveries, child support, and residual claims follow.
Under § 15-11-403, exempt property has priority over claims other than administration and reasonable funeral/final disposition; it abates as necessary for the family allowance. Under § 15-11-404, the family allowance likewise precedes claims other than administration and reasonable funeral/final disposition. These provisions supply priority outside the ten numbered claim classes.
Secured claims and an underfunded class
Under § 15-12-809, a creditor who surrenders security may be paid on the full allowed claim. Otherwise, payment from the estate is reduced by the fair value of exhausted security or the value determined under the statutory methods when security remains.
Under § 15-12-805(2), the law bars preferring one claim over another in its class, including preferring an already due claim over one not yet due.
What trips people up
The last-illness class follows the federal-preference class and precedes Colorado-law-preference debts. Unpaid child support due at death must arise from the stated order or recorded agreement; future support is included if determined by the court.
Common questions
Are family benefits merely residual claims? No. The cited § 15-11-403 and § 15-11-404 give them separate priority over most creditor claims.
Does the payment ladder treat all public claims as one class? No. Under § 15-12-805, Colorado separates federal-law preference, Colorado-law preference, medical-assistance recovery, and excess-public-assistance recovery.
Statutes and sources
- Colo. Rev. Stat. §§ 15-11-403, 15-11-404, 15-12-805, and 15-12-809. Verbatim current official text, URL, and access dates appear in the source fields above.
Source links
Every statute quoted above, linked, with the date we checked it.
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