Insolvent Probate Estate Claim-Payment Priority in Texas
At a glance
| Statutory payment order | Eight claim classes; funds held pay capped funeral/illness first, then family allowance, administration/preservation, then other classes (§§ 355.102–.103). |
|---|---|
| Administration costs | Class 2 includes administration, preservation and management; third cash-payment category (§§ 355.102(c), .103(3)). |
| Funeral and last illness | Class 1; each reasonable court-approved amount capped at $15,000, excess unsecured; first cash-payment category (§§ 355.102(b), .103(1)). |
| Family and homestead allowances | Second cash-payment category, ahead of administration expenses (§ 355.103(2)). |
| Taxes and public claims | Tax liens can be class 3 secured; named Texas tax claims class 5, confinement cost class 6, state medical-assistance repayment class 7 (§ 355.102(d),(f)–(h)). |
| Secured claims | Class 3 matured secured money claims to collateral proceeds; lien order controls; creditor may elect preferred debt/lien (§§ 355.102(d), .104(a), .151(a)). |
| Support and special debts | Class 4 specified confirmed or administratively determined child-support arrears and other named unpaid child support (§ 355.102(e)). |
| General claims | Class 8 claims not in classes 1–7; excess funeral/illness sums treated as other unsecured claims (§ 355.102(b),(i)). |
| Underfunded class | Nonsecured claims in an insufficient class paid pro rata as court directs (§ 355.108(a)). |
Requirements one by one
Payment order and allowances
Sections 355.102 and 355.103 do different jobs. Section 355.102 classifies claims, while § 355.103 directs the representative holding estate funds to pay capped funeral and last-illness expenses first, then allowances to the spouse or children, then administration and preservation expenses, then other claims by class. Thus the cash-payment command places the family allowance ahead of administration expenses even though the allowance is not one of the eight numbered claim classes.
Funeral and last illness
Under § 355.102(b), class 1 includes court-approved reasonable funeral and last-illness expenses, each up to $15,000. Any excess is paid as another unsecured claim.
Secured claims
Tex. Est. Code § 355.151(a) lets a secured money claimant choose a matured secured claim paid during administration or a preferred debt and lien against the particular property. Class 3 under § 355.102(d) covers the former claim only to the collateral proceeds available. Tex. Est. Code § 355.104(a) directs payment from sale proceeds according to lien priority after debts with a preference over the lien.
Shortfall within one class
If assets cannot pay a whole class, § 355.108(a) requires nonsecured claims in that class to be paid pro rata under the court's direction. The provision expressly excludes secured money claims from that formula.
What trips people up
Class 4 child-support claims require the court or administrative determination specified in § 355.102(e). The tax and public-claim classes are also particular: class 5 names Texas tax laws, class 6 addresses state confinement costs, and class 7 state medical-assistance repayment. A tax lien may instead be treated as a secured class 3 claim to collateral proceeds.
Common questions
Does the funeral cap cover last-illness costs too? Section 355.102(b) sets separate $15,000 limits for funeral and last-illness expenses.
Are all claims that do not fit a preferred class lost? No. Section 355.102(i) places claims outside classes 1 through 7 in class 8.
Statutes and sources
- Tex. Est. Code §§ 355.102–.104, .108, and .151. Verbatim 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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