Insolvent Probate Estate Claim-Payment Priority in Vermont
At a glance
| Statutory payment order | Four ordered claim classes; insolvent estate seeks court dividend order (§§ 1205(a), 1903(a)(1)). |
|---|---|
| Administration costs | Costs and expenses of administration class 1 (§ 1205(a)(1)). |
| Funeral and last illness | Class 2 combines funeral/burial/headstone/perpetual care up to $3,800 exclusive of public payments with reasonable necessary last illness (§ 1205(a)(2)). |
| Family and homestead allowances | Court may prioritize spouse/family allowance over debts; child support allowance precedes creditor distribution (§§ 316–317, 1207(a)). |
| Taxes and public claims | No separate tax class in the four-class ladder; all other claims are class 4 (§ 1205(a)). |
| Secured claims | Surrender security for full allowed claim; otherwise deduct fair or determined security value (§ 1209). |
| Support and special debts | Wages earned within three months before death class 3 up to $300 each; unpaid balance class 4 (§ 1205(a)(3)–(4)). |
| General claims | All other claims, including excess wage balance, class 4 (§ 1205(a)(4)). |
| Underfunded class | No same-class preference, including due over not-yet-due claims; short class prorated (§ 1205(b)). |
Requirements one by one
Four classes and the shared second class
Under § 1205(a), administration expenses are first. The second class combines specified funeral, burial, headstone, and perpetual-care expenses, capped at $3,800 exclusive of governmental payments, with reasonable and necessary last-illness medical and hospital costs and attendants' compensation. Third are wages earned in the three months before death, preferred up to $300 per worker; their unpaid balance joins all other claims in class four.
Allowances and court dividend
Under § 316, the Probate Division may give the surviving spouse and family a support allowance and may prioritize it over estate debts in its discretion. A child allowance under § 317 is made before creditor distribution. Under § 1207(a), the representative provides for homestead, family, and support allowances before paying allowed claims. If the estate appears insolvent, § 1903(a)(1) directs the fiduciary to apply for a court dividend order.
Secured claims
Under § 1209, surrendering security permits payment based on the full allowed amount. Otherwise, the claim's payment basis is reduced by the security's fair or determined value under the two statutory routes.
What trips people up
Under § 1205(b), an underfunded class is prorated, and a due claim receives no priority over a not-yet-due claim in the same class. The funeral-side $3,800 limit is exclusive of governmental payments; the class also contains last-illness costs without that stated funeral cap.
Common questions
Does every unpaid wage dollar keep third-class priority? No. Section 1205(a)(3) caps each worker's preferred amount at $300; subsection (a)(4) sends the balance to class four.
Are family allowances automatically first? Section 316 makes debt priority discretionary for the court; § 317 expressly places the specified child allowance before creditor distribution.
Statutes and sources
- 14 V.S.A. §§ 1205, 1207, 1209, 316–317, and 1903. Verbatim official text, section 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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