Connecticut Debt Payment Priority

Connecticut ranks estate debts in seven classes under Conn. Gen. Stat. § 45a-365, and funeral expenses lead the list. The order runs funeral expenses, expenses of settling the estate, claims for the decedent's last sickness, lawful taxes and claims due Connecticut and the United States, certain laborer and mechanic wages, other preferred claims, and then everything else in proportion to what each creditor is owed.

That first rank is where most cross-state pages get Connecticut wrong. The Uniform Probate Code states put administration costs at the top and the funeral second. Connecticut reverses those two. If a page tells you probate fees and fiduciary fees come before the funeral home, it is describing another state's statute. This guide walks the seven classes, shows where the Medicaid claim really sits, covers what the Probate Court does once an estate is declared insolvent, and marks the places where a Connecticut fiduciary's own money is exposed. Read it with the Connecticut creditor claims guide, the Connecticut executor duties guide, and the Connecticut probate timeline. Confirm any figure that touches your estate with the Probate Court for your district or a licensed Connecticut attorney.

The Seven Classes Under Section 45a-365

Section 45a-365 is headed "Order of payment of claims, expenses and taxes." One sentence carries the whole rule: claims, expenses and taxes in the settlement of a decedent's estate shall be entitled to preference and payment in the following order of priority.

Rank	Class under § 45a-365	What falls in it
1	Funeral expenses	The funeral home bill, burial or cremation, and the costs that go with them
2	Expenses of settling the estate	Statutory probate fees, the fiduciary's fee, attorney and appraisal fees, the cost of legal notices, and expenses of maintaining estate property after the death
3	Claims due for the last sickness of the decedent	Medical and hospital bills from the final illness
4	All lawful taxes and all claims due the state of Connecticut and the United States	Connecticut estate tax, unpaid income taxes, federal debts, and state agency claims
5	Personal wages of a laborer or mechanic	Wages for labor performed for the decedent within the three months immediately before the death
6	Other preferred claims	Claims that some other statute puts ahead of general creditors; § 45a-365 leaves the class undefined
7	All other claims	Credit cards, personal loans, older medical bills, utility balances, and other general unsecured debt, allowed in proportion to their respective amounts

Read the opening words again. Connecticut writes no "if the applicable assets are insufficient" preface into § 45a-365, which the Uniform Probate Code version of this rule carries. The ranking is the payment rule for the settlement of any decedent's estate, and it decides who goes without on the day the money runs short. It operates as the order of payment from the start rather than as a tiebreaker reached for at the end.

Pro-rata sharing is written into one class only. Class 7 claims are "allowed in proportion to their respective amounts," so general creditors split what is left rather than racing each other. Section 45a-380(c) uses the same pro-rata language when the court sets assets aside for a creditor who has appealed.

Ranks 1 and 2: the Funeral Bill Before the Probate Fee

The Probate Court Administrator's booklet on decedents' estates states the rule plainly: funeral expenses take priority over virtually all other expenses for which the estate is responsible. Administration expenses, which the booklet defines as statutory probate fees, attorney's fees, fiduciary's fees, the cost of legal notices, and expenses of maintaining the decedent's property after death, come next.

One more rule sits alongside rank 1. Under § 45a-366, the funeral expenses and the expenses of the last illness of a married person are paid out of that person's estate if the estate is enough for them, and if it is not, those expenses are paid by the surviving spouse. So for a married decedent, the estate is not always the end of the matter.

Ranks 3 Through 6: the Last Sickness, Taxes, and Wages

Rank 3 covers claims due for the last sickness, which means the medical bills have to be sorted by which illness produced them: a bill from an earlier illness drops all the way to rank 7. Rank 4 gathers all lawful taxes plus all claims due the state of Connecticut and the United States, which is where the Connecticut estate tax and unpaid income taxes land.

Rank 5 is the one nobody expects: personal wages owed to a laborer or mechanic for labor performed for the decedent within the three months immediately before the death. It is narrow, and it beats every general creditor. Rank 6, "other preferred claims," carries no definition in the statute. It is the slot for a claim that some other law puts ahead of general creditors, and what belongs in it on a particular estate is a question for counsel.

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Where the Medicaid Claim Actually Sits

Two ladders exist, and the specific one controls the state's Medicaid claim. Section 45a-365 would put a claim due the state of Connecticut in rank 4. Section 17b-95(b) writes its own order for the Medicaid claim: the claim has priority over all unsecured claims against the estate except (1) expenses of last sickness not to exceed $375, (2) funeral and burial expenses in accordance with §§ 17b-84 and 17b-131, and (3) administrative expenses, including probate fees and taxes, and fiduciary fees not exceeding 5 percent of the first $2,000, 4 percent of the next $8,000, and 3 percent of the excess over $10,000.

Two consequences follow, and both surprise families. A last-sickness bill that would rank third in full under § 45a-365 outranks the Medicaid claim only to the first $375. And the fiduciary fee that outranks the state is capped at that schedule, though § 17b-95(b) lets the Probate Court allow more for extraordinary services after a hearing, with ten days' notice to the Commissioner of Administrative Services. Any amount paid from the estate above those limits has to be repaid to the estate by the person who received it, and it can be recovered in a civil action with interest at 6 percent from the date of demand.

Section 45a-273(e) confirms which ladder wins. In a small estate settled by affidavit, the court determines who is paid under § 45a-365 except that, where the decedent received aid or care from the state, reimbursement runs under §§ 4a-12 and 17b-95 instead. For what the state can recover and which survivors block the claim, see Connecticut Medicaid estate recovery.

The Spouse and Family Come Off the Top

Connecticut has no probate homestead and no fixed-dollar exempt-property allowance, so two other provisions do that work.

Household goods in an insolvent estate, § 45a-435. When the personal property of the deceased, exclusive of household goods exempt from execution, is not sufficient to pay the debts, the Probate Court shall set out those household goods to the surviving spouse and may set out any other exempt property. The right switches on precisely because the estate is short.
Allowance for support, § 45a-320. The Probate Court may allow out of any real or personal estate in settlement the amount it judges necessary for the support of the surviving spouse or family during the settlement, including in a small estate handled under § 45a-273. The court may run the allowance for the whole settlement or a fixed period, order it as a lump sum, or vest it in the spouse as of the moment of death. It may also allow the family the use of the car the decedent maintained as a family car.

Section 45a-356(b) protects the fiduciary who pays either one: no fiduciary is chargeable for assets paid or distributed at any time under a widow's allowance or family allowance ordered by the Probate Court. Form PC-204 asks for the estate's numbers excluding the assets that may be set out to the spouse and the support allowance, which tells you where the court expects that money to sit. Our guide to Connecticut surviving spouse rights covers the statutory share and the right to occupy the home.

Declaring the Estate Insolvent

Connecticut's insolvency track is a court track, and it starts with a filing. The fiduciary uses Petition/Declaration of Insolvent Estate, form PC-204, and files it with the Probate Court holding the estate. The form asks whether the estate opened as solvent and has since gone insolvent, lists the known creditors, and requires the inventory (PC-440) and the return of claims (PC-237) unless those are already on file.

Section 45a-376 runs the hearing. The Probate Court publishes notice of the alleged insolvency in a newspaper of general circulation in the probate district, notifies the interested persons it directs, hears them, then decides whether to declare the estate insolvent and sends the decree to all persons in interest. Section 45a-377 applies the same procedure when the fiduciary represents the estate insolvent partway through a settlement that began as solvent.

A declaration restarts the creditor clock. Under § 45a-378, the court publishes a fresh notice within 14 days of the determination, and a creditor who fails to present a claim within 150 days of the determination of insolvency is forever barred from recovering on it from the fiduciary, the estate, or any creditor of the estate. That is a genuine bar, unlike the ordinary 150-day period in § 45a-356, which only exonerates a fiduciary who paid in good faith. The fiduciary has to notify every creditor it actually knows of, no later than 30 days before that period ends. A creditor who missed the date through no fault of its own may apply within 60 days for an extension of up to 30 more days.

Then the fiduciary reports. Section 45a-380 has the fiduciary file a report listing every claim presented, whether each was allowed or rejected in whole or in part, and every creditor given notice. The court holds a hearing within 30 days of the filing, notifies each creditor who presented a claim, accepts or modifies or rejects the report, and orders distribution of the assets it finds payable in accordance with § 45a-365. A creditor aggrieved by that order may appeal under §§ 45a-186 to 45a-193 or proceed under § 45a-364, and the distribution is stayed while that runs.

If the numbers turn around, § 45a-381 sends the estate back to the ordinary claims procedure of §§ 45a-353 to 45a-375 after notice and hearing, with no further newspaper notice required.

The Short-Form Route Under Section 45a-383

Not every short estate needs the full insolvency machinery. Section 45a-383 covers the case where the assets, excluding what may legally be set out to the surviving spouse and the support allowance, will not be more than enough to pay the funeral expenses, the expenses of settling the estate, the expenses of the last sickness, and the lawful taxes and claims due Connecticut and the United States. After notice and hearing, the Probate Court may fix those amounts and order the settlement completed without the procedures in §§ 45a-376 to 45a-382. Form PC-204 carries a request for exactly that treatment, and the instructions confirm it removes the extra notice steps in §§ 45a-378 to 45a-380.

Read that list of four categories again. It is ranks 1 through 4 of § 45a-365. The short form exists for the estate that never reaches its general creditors at all.

Suits Stop, and Secured Creditors Move Aside

Section 45a-382 shuts the courthouse door. Except as § 45a-380 provides, no suit shall be brought against the fiduciary of an estate in course of settlement as insolvent. A judgment rendered before the insolvency settlement began cannot go to execution; that creditor presents the judgment and takes a proportionate share with everyone else. A suit already pending abates, the creditor submits a claim to the fiduciary instead, and it may ask for the costs incurred up to the abatement to be added to the claim.

Secured creditors run on their collateral first. Under § 45a-379, a creditor holding security participates in the estate only for the excess of the claim over the fair market value of that security, unless it files a written election with the Probate Court to relinquish the security. The fiduciary values the security, notifies the creditor and the court how the value was determined, and the creditor has 30 days to object and get a hearing. Assets that pass outside probate, such as a survivorship account, a payable-on-death account, or life insurance to a named beneficiary, never enter the order at all. The guide to avoiding probate in Connecticut covers those routes.

Which Gifts Get Used Up First

When debts eat into a testate estate, Connecticut protects specific gifts last. Section 45a-426 makes pecuniary legacies a charge on real property the will does not describe and devise by name, if the personal property runs short, unless the will says otherwise. It also keeps specific legacies from being taken or sold for debts while other property, real or personal, is available and not already promised to a named beneficiary.

Section 45a-428 adds a step when the estate is insolvent and the will devised the real property to a named person. The Probate Court must order personal notice of the pending application to sell or mortgage that property to every devisee it can identify, plus whatever other notice it thinks advisable for devisees it cannot locate.

After distribution, § 45a-368 lets a creditor reach beneficiaries in the Superior Court, up to the fair market value on the date of distribution of the assets each one received, and § 45a-369 sets the order they are reached in: distributees first, then residuary beneficiaries, then beneficiaries of general dispositions, then specific gifts of personal property, then specific gifts of real property, then transfer-on-death beneficiaries.

Where a Connecticut Fiduciary's Money Is Exposed

Section 45a-356(a) is the shield, and it has a hole in it. When a claim arrives after the 150-day presentment period, no fiduciary is chargeable for assets the fiduciary paid or distributed in good faith before that claim was presented. Good faith fails the moment the fiduciary had actual knowledge of the claim when the money went out. A credit card paid in month three while a known hospital bill goes unpaid falls outside the exoneration.

The fiduciary's own claim gets special treatment. Under § 45a-367, a fiduciary shall not pay any personal claim of their own until the Probate Court approves it after newspaper notice and hearing, unless the court waives notice for cause. The unsecured part of that claim waits until the 150-day period in § 45a-356(a) has expired. Reimbursement for a funeral the fiduciary paid for is still a claim, so it runs through the same approval.

Paperwork closes the loop. Section 45a-361 requires the return and list of claims, form PC-237, within 60 days after the 150-day presentment period ends, signed under penalty of false statement, showing what was allowed and what was rejected. Section 45a-359 lets the fiduciary or a claimant ask the court to set a reserve for an unmatured, contingent, or unliquidated claim, and the court's reserve order discharges the fiduciary from personal liability on that claim beyond maintaining the reserve. That procedure exists for the estate with a lawsuit or a guaranty hanging over it. The Connecticut probate accounting guide covers the account that follows.

Eight Things the Connecticut Order of Payment Decides

Solvency is a running question, not a one-time finding. The inventory measured against the claims already presented and the ones still expected is what answers it, and a Medicaid statement or a full-price hospital bill can flip a solvent estate in month nine.
The funeral is rank 1. Section 45a-365 puts it ahead of the probate fee and ahead of the fiduciary's own fee.
Medical bills split by illness. The last sickness is rank 3. An earlier illness falls to rank 7.
State aid changes the ladder. Where the decedent received it, the § 17b-95(b) order governs the state's claim, and § 45a-355 bars the Department of Administrative Services if it fails to present that claim within 90 days of the court's certified mailing or the fiduciary's appointment, whichever is later.
Family money comes off the top. Household goods under § 45a-435 and the support allowance under § 45a-320 are set aside before general creditors are paid.
PC-204 is the filing that raises insolvency. Insolvency is declared by the Probate Court after notice and hearing, not by the fiduciary at the kitchen table.
Section 45a-383 is the short form for an estate whose assets will not clear ranks 1 through 4. It removes the cost of the full insolvency notices.
Distribution is the last step, not an early one. Property handed to heirs before the debts are resolved is a common way a fiduciary ends up paying a creditor personally.

Claims that are large, disputed, or close to the line are the ones a licensed Connecticut attorney reviews before they are paid or rejected. The Probate Court Administrator's booklet makes the same point about insolvent estates, that the procedure differs a great deal from a solvent settlement and the fiduciary should obtain competent legal advice. A Probate Court can confirm filing steps and forms, and the districts are listed in the Connecticut Probate Court directory.

This guide is general information about how Connecticut ranks estate debts, not advice about a particular estate.

Frequently Asked Questions

What is the order of paying debts in a Connecticut estate?

Conn. Gen. Stat. § 45a-365 sets seven ranks. In order: (1) funeral expenses; (2) expenses of settling the estate; (3) claims due for the last sickness of the decedent; (4) all lawful taxes and all claims due the state of Connecticut and the United States; (5) claims of any laborer or mechanic for personal wages for labor performed for the decedent within the three months immediately before death; (6) other preferred claims; and (7) all other claims, allowed in proportion to their respective amounts.

Do funeral expenses really outrank administration costs in Connecticut?

Yes. Section 45a-365 puts funeral expenses in rank 1 and the expenses of settling the estate in rank 2, so the funeral bill sits ahead of probate fees, fiduciary fees, and attorney fees. The Probate Court Administrator's own booklet says the same thing: funeral expenses take priority over virtually all other expenses for which the estate is responsible. Pages that copy the Uniform Probate Code order, which leads with administration costs, describe another state.

How does a Connecticut estate get declared insolvent?

The fiduciary files Petition/Declaration of Insolvent Estate, form PC-204, with the Probate Court for the district handling the estate. Under Conn. Gen. Stat. § 45a-376 the court publishes newspaper notice of the alleged insolvency, holds a hearing, decides whether to declare the estate insolvent, and sends the decree to every person in interest. Section 45a-377 runs the same hearing when the estate turns out to be insolvent partway through settlement.

Where does the Medicaid claim rank in a Connecticut estate?

Conn. Gen. Stat. § 17b-95(b) puts the state's Medicaid claim ahead of every other unsecured claim except three items: expenses of the last sickness up to $375, funeral and burial expenses under §§ 17b-84 and 17b-131, and administration expenses including probate fees, taxes, and fiduciary fees on the schedule in that subsection. A last-sickness bill that would rank third in full under § 45a-365 outranks the Medicaid claim only to the first $375.

Can a creditor sue a Connecticut estate that has been declared insolvent?

No. Conn. Gen. Stat. § 45a-382 bars any suit against the fiduciary of an estate in course of settlement as insolvent, except as § 45a-380 allows. A judgment entered before the insolvency settlement began cannot be executed; that creditor presents the judgment to the fiduciary and shares proportionally. A suit still pending abates, and the creditor submits a claim instead, and may ask that costs incurred up to the abatement be added to the claim.

What does the surviving spouse keep when a Connecticut estate is insolvent?

Conn. Gen. Stat. § 45a-435 says that when the personal property of the deceased, exclusive of household goods exempt from execution, is not enough to pay the debts, the Probate Court shall set out those household goods to the surviving spouse and may set out other exempt property. The § 45a-320 allowance for support of the surviving spouse and family comes out of the estate as well, and § 45a-356(b) says no fiduciary is chargeable for assets paid under a court-ordered allowance.

Connecticut Creditor Claims: the 150-day presentment window and how a claim gets rejected.
Connecticut Executor Duties: paying debts in the right order is a fiduciary duty.
Connecticut Medicaid Estate Recovery: what the Department of Administrative Services can recover.
Connecticut Surviving Spouse Rights: the statutory share, the support allowance, and the right to occupy.
Connecticut Probate Timeline: where the claim and payment deadlines fall.
Connecticut Probate Guide: how a Connecticut estate runs from application to closing.

Sources:

Title: Conn. Gen. Stat. § 45a-365, Order of payment of claims, expenses and taxes. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-365
Title: Conn. Gen. Stat. § 45a-366, Payment of funeral and last illness expenses of married person. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-366
Title: Conn. Gen. Stat. § 45a-367, Payment of claims of fiduciary. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-367
Title: Conn. Gen. Stat. § 45a-376, Determination of insolvency. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-376
Title: Conn. Gen. Stat. § 45a-378, Notice to creditors. Presentation of claims; effect of failure to present claim. Discretionary extension of time. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-378
Title: Conn. Gen. Stat. § 45a-379, Creditor having secured claim. Determination of value of security. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-379
Title: Conn. Gen. Stat. § 45a-380, Fiduciary's report. Notice to creditors. Hearing. Appeal. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-380
Title: Conn. Gen. Stat. § 45a-382, Suits against insolvent estate prohibited; pending suits. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-382
Title: Conn. Gen. Stat. § 45a-383, Settlement of estate without claims procedures. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-383
Title: Conn. Gen. Stat. § 45a-435, Personal property that may be set out to spouse from insolvent estate. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-435
Title: Conn. Gen. Stat. § 45a-320, Allowance for support of surviving spouse and family. Family car. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-320
Title: Conn. Gen. Stat. § 45a-273, Settlement of small estates without probate of will or letters of administration. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_802b.htm#sec_45a-273
Title: Conn. Gen. Stat. § 17b-95, Claim of state on death of Medicaid beneficiary for amounts due under federal law. Priority of claims. Publisher: Connecticut General Assembly. Publication Date: Not listed. URL: https://www.cga.ct.gov/current/pub/chap_319s.htm#sec_17b-95
Title: Administration of Decedents' Estates User Guide. Publisher: Connecticut Probate Courts, Office of the Probate Court Administrator. Publication Date: 2026. URL: https://www.ctprobate.gov/trusts-estates/trusts-estates-user-guides
Title: Petition/Declaration of Insolvent Estate, form PC-204. Publisher: Connecticut Probate Courts. Publication Date: October 2019. URL: https://www.ctprobate.gov/Forms/PC-204.pdf

It is not legal advice.