Insolvent Probate Estate Claim-Payment Priority in Michigan
At a glance
| Statutory payment order | Nine ordered categories when applicable estate property is insufficient (§ 700.3805(1)). |
|---|---|
| Administration costs | First: costs and expenses of administration (§ 700.3805(1)(a)). |
| Funeral and last illness | Second: reasonable funeral/burial; seventh: reasonable necessary last-illness medical, hospital and attendant expenses (§ 700.3805(1)(b),(g)). |
| Family and homestead allowances | Homestead allowance third, family allowance fourth, exempt property fifth (§ 700.3805(1)(c)–(e)). |
| Taxes and public claims | Federal-priority debts/taxes sixth, including specified medical-assistance recovery; Michigan-law priority eighth (§ 700.3805(1)(f),(h)). |
| Secured claims | Surrender security for allowed amount; otherwise estate pays allowed claim less security value under § 700.3809. |
| Support and special debts | Last-illness attendant compensation seventh; no separate support category in the complete § 700.3805(1) list. |
| General claims | All other claims ninth (§ 700.3805(1)(i)). |
| Underfunded class | No preference within a class or because one claim is already due (§ 700.3805(2)). |
Requirements one by one
Allowances and care expenses
Section 700.3805(1) places the homestead allowance, family allowance, and exempt property in three successive categories after administration and funeral costs. Reasonable and necessary medical and hospital expenses of the decedent's last illness, including compensation for persons attending the decedent, come after federal-priority debts and taxes.
Secured claims
Under § 700.3809, surrendering security lets a secured creditor receive payment on the allowed claim amount. Otherwise, the representative pays only the allowed amount less the value of the security, measured by the method the section specifies. This rule matters separately from the nine-category order for paying claims from applicable estate property.
Equal rank within a class
Section 700.3805(2) forbids preference between claims in the same class. It also says a currently payable claim is not preferred over one that is not yet due.
What trips people up
Section 700.3805(3) directs the representative to certify a deficiency to the trustee of a qualifying trust under § 7605(1), and, when aware of other potentially liable nonprobate transfers, to seek a reasonable proportionate or equitable contribution unless the will provides otherwise. The provision addresses the source of payment as well as its order; it does not itself decide whether a particular transfer is liable.
Common questions
Are funeral and last-illness expenses in one category? No. Section 700.3805(1) puts reasonable funeral and burial expenses second and last-illness medical, hospital, and attendant expenses seventh.
Do state-priority taxes rank with federally preferred taxes? Section 700.3805(1) places federally preferred debts and taxes sixth and Michigan-law priority debts and taxes eighth.
Statutes and sources
- Mich. Comp. Laws §§ 700.3805(1)–(3) and 700.3809. Verbatim current official text, URLs, 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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