Hawaii Debt Payment Priority

Hawaii ranks estate debts only when the money runs short. HRS 560:3-805(a) opens on that condition: if the applicable assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in a stated order of seven classes. Administration costs come first, reasonable funeral expenses second, and the Department of Human Services shows up in three classes: two for its funeral-related claims, four for the last illness, and six for everything else it can recover.

Two features of the Hawaii list change the arithmetic. It carries a class of its own, class six, for the department's other claims, which puts them below the hospital and the tax collector and above every ordinary creditor. And three family protections sit above the whole ladder: a $30,000 homestead allowance, a family allowance, and up to $20,000 of exempt property. Every section quoted here was read on September 24, 2026 in the Hawaii Revised Statutes on the Legislature's data site, along with each section's history note. That compilation runs through the 2025 session, so the 2026 Acts were screened separately, and none of them amends a section on this page. This page explains how Hawaii law works, not how it applies to one estate. How the ladder applies to a short estate is a question for a licensed Hawaii attorney.

Class	What HRS 560:3-805(a) puts in it
1	Costs and expenses of administration
2	Reasonable funeral expenses, including any claim by the Department of Human Services under HRS 346-15
3	Debts and taxes with preference under federal law
4	Reasonable and necessary medical and hospital expenses of the last illness, including compensation of persons attending the decedent and any department claim under HRS 346-37 for expenses of the last illness
5	Debts and taxes with preference under other laws of Hawaii
6	Any other claim against the estate under HRS 346-37
7	All other claims

Section 560:3-805 has read this way since its last amendment, Act 102 of 2000. It sits in Article III of the Hawaii Uniform Probate Code, beside the notice, presentation and payment rules covered in how a claim is presented and allowed.

The Order Starts at Insufficiency

Nothing switches this section on. The ranking applies when the applicable assets are insufficient to pay all claims in full, and the code sets no separate petition to have an estate declared insolvent first. An estate deep enough to pay every allowed claim never reaches 560:3-805, and the personal representative simply pays.

Subsection (b) then settles two arguments in one sentence. No preference shall be given in the payment of any claim over any other claim of the same class, and a claim due and payable shall not be entitled to a preference over claims not due. So a creditor who presented a claim in week one gains nothing over a creditor in the same class who presented on the last day. And a balance that is due today gains nothing over one that comes due next year.

Notice what the section leaves out. It ranks the classes and bans preference inside a class, and it prints no formula for splitting a class the estate cannot pay in full. Where a Hawaii class runs short, how that shortfall is shared is a question for the circuit court and a Hawaii attorney, rather than something this page can read off the statute.

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What Counts as a Claim, and What Does Not

HRS 560:1-201 defines the word the whole ladder turns on. Claims, in respect to estates of decedents, include liabilities of the decedent whether arising in contract, in tort, or otherwise, and liabilities of the estate which arise at or after the death, including funeral expenses and expenses of administration. The same definition then says the term does not include estate or inheritance taxes, or disputes over whether a specific asset belongs to the estate at all.

Two things follow. Funeral bills and administration costs are claims, which is why they can sit in classes one and two. And the Hawaii estate tax under HRS chapter 236E sits outside the seven classes by definition. It runs on its own return and its own rules, which the Hawaii estate tax guide covers. Hawaii has no inheritance tax to rank at all.

Section 560:3-805 does not itself list what counts as costs and expenses of administration. Two nearby sections bear on it. HRS 560:3-719 entitles a personal representative to reasonable compensation for services, with no percentage schedule. And HRS 560:3-803(d)(3) keeps the claim deadline from blocking collection of compensation and reimbursement of expenses by the personal representative, or by the attorney or accountant for the personal representative.

The Department of Human Services Appears in Three Classes

Hawaii names the Department of Human Services in three classes and splits its recovery by what the money paid for.

Class two, HRS 346-15. Section 560:3-805(a)(2) folds any department claim under 346-15 into reasonable funeral expenses. Read 346-15 itself before assuming what that covers. As compiled through the 2025 session, and last amended by Act 108 of 2024, section 346-15 lets the department issue a lump-sum death benefit for a medical or financial assistance recipient who is ineligible for the Social Security lump-sum benefit, and bear the cremation cost of an unclaimed body up to $1,600. The section does not itself describe how the department recovers that money from an estate, so the size and shape of any class-two department claim is a question for the department and a Hawaii attorney.

Class four, HRS 346-37, last illness. A department claim under 346-37 for expenses of the last illness ranks with the hospital and the people who attended the decedent. It is the same class as the private bill for the same care.

Class six, HRS 346-37, everything else. Any other claim under 346-37 drops to class six, one step above ordinary unsecured creditors. That covers medical assistance outside the last illness, and it covers the first sentence of 346-37(a): where a recipient dies leaving no surviving spouse, child, parent, grandparent, grandchild, stepparent or designated heir, the department has a valid claim for social services overpayments, financial assistance overpayments, or burial payments granted.

Rank is only half the answer. HRS 346-37(a) limits when the department files a medical assistance claim in the first place:

Community care. The department shall file a claim only if the recipient was age fifty-five or over when the assistance was received, and there is no surviving spouse, and no surviving child who is under twenty-one years of age, or blind, or disabled.
Inpatient care. For a recipient who was an inpatient in a nursing facility, an intermediate care facility for individuals with intellectual disabilities, or another inpatient medical facility, the claim depends only on the same survivor test, with no age condition.
Fraud or unreported income. Subsection (b) lets the department file even where subsection (a) would not allow it, if any assistance was obtained by a fraudulent device, or was furnished after the recipient received income or resources that were not reported as required.

So in an estate with a surviving spouse, section 346-37(a) gives the department no medical assistance claim to file, outside the fraud and unreported-income case in subsection (b). The Med-QUEST Division's own procedures, including any hardship process, were not reachable from our research tools on the date of review, so confirm them with the department directly.

The Allowances Come Off the Top

Three family protections stand ahead of every class, and the statutes say so in their own words. Each belongs to a surviving spouse or reciprocal beneficiary, and in some cases to children.

Protection	Amount	Rank against claims	Statute
Homestead allowance	$30,000 to the surviving spouse or reciprocal beneficiary; otherwise $30,000 divided among the minor and dependent children	Exempt from and has priority over all claims against the estate	HRS 560:2-402
Family allowance	A reasonable allowance for maintenance during administration; the personal representative may set up to $36,000 as a lump sum or up to $3,000 a month for one year	Exempt from and has priority over all claims except the homestead allowance	HRS 560:2-404, 560:2-405
Exempt property	Up to $20,000 in excess of security interests, in household furniture, automobiles, furnishings, appliances and personal effects	Priority over all claims, but assets used to make up a shortfall abate to permit earlier payment of the homestead and family allowances	HRS 560:2-403

Two limits matter in a short estate. Section 560:2-404(a) says the family allowance may not continue for longer than one year if the estate is inadequate to discharge allowed claims. And section 560:2-405(a) says that if the estate is otherwise sufficient, property left by a specific devise shall not be used to satisfy the homestead allowance or exempt property. The dollar figures in 2-402, 2-403 and 2-405 were raised by Act 158 of 2023, and older copies of the code still circulating online show the lower amounts. The details of choosing and valuing these items live on the exempt property allowance and the family allowance pages.

Nothing Gets Paid Until the Claim Period Runs

HRS 560:3-807(a) sets the start. Upon the expiration of the earlier of the time limitations in 560:3-803, the personal representative shall pay allowed claims in the order of priority, after making provision for homestead, family and support allowances, for claims already presented that have not yet been allowed or whose allowance has been appealed, and for unbarred claims that may yet be presented, including costs and expenses of administration.

The clock depends on notice. Under 560:3-803(a), a claim that arose before death is barred four months after the first publication of notice to creditors, or sixty days after mailed or delivered notice to a known creditor, whichever runs later. With no published or served notice, the bar falls eighteen months after the death. A claimant whose allowed claim goes unpaid can petition the court for an order directing payment to the extent estate funds are available.

Paying early is allowed, and it carries a price. Section 560:3-807(b) lets the personal representative pay any just claim that has not been barred at any time, and makes that person personally liable to any other allowed claimant injured by the payment in two cases:

The payment went out before the claim deadline and the personal representative failed to require the payee to give adequate security for a refund.
The payment was made, through negligence or wilful fault, in a way that deprived the injured claimant of priority.

Here is why that matters. A personal representative who pays the credit card in full in month two, then finds the funeral home unpaid in month five, may owe the difference personally. The personal representative's duties page covers the wider duty of care.

A Secured Creditor Surrenders the Security or Exhausts It

HRS 560:3-809 decides how much of a secured debt joins the queue. Payment is on the amount allowed if the creditor surrenders its security. Otherwise payment is on one of two smaller bases:

If the creditor exhausts the security before payment, on the amount allowed less the fair value of the security.
If the creditor has no right to exhaust the security or has not done so, on the amount allowed less the value of the security, set by converting it into money under the security agreement, or by the creditor and the personal representative through agreement, arbitration, compromise or litigation.

A lender cannot keep the collateral and also collect the full balance from the general pot. Only the shortfall joins the ranked claims.

HRS 560:3-814 runs the other direction. Where estate assets are encumbered by a mortgage, pledge, lien or other security interest, the personal representative may pay the encumbrance, renew or extend it, or convey the asset to the creditor in satisfaction of the lien, whether or not the holder presented a claim, if it appears to be for the best interest of the estate. Paying the encumbrance does not increase the share of the beneficiary who receives that asset unless the beneficiary is entitled to exoneration. And HRS 560:3-803(d)(1) keeps the nonclaim bar from stopping a proceeding to enforce a mortgage, pledge or other lien on estate property.

Claims That Are Not Due, and Claims Nobody Can Price Yet

HRS 560:3-810 handles the claim that will not sit still. If a claim that will become due later, or a contingent or unliquidated claim, becomes due or certain before distribution, and it has been allowed or established by a proceeding, it is paid in the same manner as presently due claims of the same class.

In other cases the personal representative, or the court on petition, may pay the claimant the present or agreed value of the claim if the claimant consents, or arrange for future payment by creating a trust, giving a mortgage, obtaining a bond or security from a distributee, or otherwise. Neither route lets an unmatured claim jump its class, which is the second half of 560:3-805(b).

The Federal Claim Runs on Its Own Statute

Class three is debts and taxes with preference under federal law, and the federal statute behind it does not describe itself as third. Under 31 U.S.C. 3713(a)(1)(B), a claim of the United States Government shall be paid first when the estate of a deceased debtor, in the custody of the executor or administrator, is not enough to pay all debts of the debtor. Subsection (b) then makes a representative who pays any part of a debt of the estate before paying a claim of the Government liable to the extent of the payment for unpaid claims of the Government.

That is a second liability rule, on federal terms, aimed at the same person 560:3-807(b) already exposes. Where a short Hawaii estate owes federal tax or another federal debt, how 31 U.S.C. 3713 sits against classes one and two is a question to put to a Hawaii attorney before any money leaves the account.

Property That Passed Outside Probate Can Be Called Back

A short probate estate is not always the end of the money. Three Hawaii statutes reach assets that passed outside probate, and each reaches a different list of debts.

Asset	What it can be made to answer for	Deadline	Statute
Transfer on death deed property	Allowed claims and statutory allowances to a surviving spouse or child, to the extent the probate estate is insufficient	Proceeding no later than eighteen months after death	HRS 527-15
Trust property that was revocable at death	Creditors' claims, administration costs, funeral and disposal expenses, and statutory allowances, to the extent the probate estate is inadequate, subject to the settlor's right to direct the source	None stated in the section	HRS 554D-505(a)(3)
Joint and payable-on-death accounts	Taxes, expenses of administration, and the homestead and family allowances only	Proceeding no later than two years after death	HRS 560:6-107

Look at the last row closely. A multiple-party account can be pulled back for taxes, administration expenses and the two allowances, and section 560:6-107 does not list ordinary creditors' claims. The Hawaii transfer on death deed guide covers how deeded property shares the liability among several parcels.

Which Gift Shrinks Is a Different Ladder

Ranking creditors and ranking beneficiaries are separate jobs. Section 560:3-805 decides who gets paid. HRS 560:3-902 decides whose inheritance shrinks to pay them.

Under 560:3-902(a), and except as otherwise provided for a surviving spouse or reciprocal beneficiary who takes an elective share, shares of distributees abate without any preference between real and personal property in this order:

Property not disposed of by the will.
Residuary devises.
General devises.
Specific devises.

Abatement inside each group is in proportion to what each beneficiary would have received on full distribution. Under 560:3-902(b), a will that states its own order of abatement controls, and so does the testator's plan where the printed order would defeat it.

A Worked Example

These figures are invented to show the order, not drawn from any real estate. Say a Honolulu resident dies leaving a surviving spouse, a car and household goods worth $20,000, and $70,000 in a bank account in the decedent's sole name. The personal representative publishes notice, waits out the four months, and finds these allowed claims: $8,000 in administration costs and fees, $9,000 for the funeral, $6,000 from the hospital for the last illness, and $20,000 on credit cards.

Exempt property. The spouse selects the car and household goods, worth $20,000, under 560:2-403.
Homestead allowance. The spouse takes $30,000 in cash under 560:2-402, leaving $40,000.
Family allowance. The personal representative sets a $12,000 lump sum under 560:2-405, well under the $36,000 cap, leaving $28,000.
Class one. Administration costs of $8,000 are paid, leaving $20,000.
Class two. The $9,000 funeral bill is paid, leaving $11,000.
Class four. The $6,000 hospital bill is paid, leaving $5,000.
Class seven. $5,000 remains for $20,000 of credit card debt, shared with no preference among those creditors under 560:3-805(b).

No department claim appears, because a spouse survives and nothing suggests fraud. No federal claim appears in class three. And in this example the card issuers do not reach the spouse's allowances, because the statutes give each of those allowances priority over the claims below it. A real estate can differ on facts this example leaves out.

When to Call a Hawaii Attorney

The statute answers the order. It does not answer every dispute inside it. These are common points at which a personal representative consults a licensed Hawaii attorney before paying anyone:

Any federal tax or other federal debt is owed, because 31 U.S.C. 3713 carries its own personal liability.
The Department of Human Services has presented a claim, or the decedent received medical or financial assistance and no spouse survives.
A single class cannot be paid in full and the creditors in it disagree about the split.
A secured lender and the personal representative disagree about the value of the collateral.
Property passed by transfer on death deed, revocable trust or joint account, and the probate estate will not cover the allowances.
A beneficiary disputes which gift should abate.

The circuit court of the judicial circuit where the case is filed decides disputes over allowance and payment. For the process around these rules, start with how probate works in Hawaii, and for the dates in one place see the Hawaii probate timeline.

Frequently Asked Questions

What order does Hawaii pay estate debts in?

HRS 560:3-805(a) sets seven classes and applies only if the applicable assets of the estate are insufficient to pay all claims in full. One, costs and expenses of administration. Two, reasonable funeral expenses, including any claim by the Department of Human Services under HRS 346-15. Three, debts and taxes with preference under federal law. Four, reasonable and necessary medical and hospital expenses of the last illness, including compensation of persons attending the decedent and any department claim under HRS 346-37 for expenses of the last illness. Five, debts and taxes with preference under other laws of Hawaii. Six, any other claim against the estate under HRS 346-37. Seven, all other claims.

Where does a Hawaii Medicaid estate recovery claim rank?

In two places. HRS 560:3-805(a)(4) puts a Department of Human Services claim under HRS 346-37 for expenses of the last illness in class four, beside the hospital bill. Any other claim under 346-37 falls to class six, just above ordinary creditors. Rank is only half the answer. HRS 346-37(a) directs the department to file a medical assistance claim only where no spouse survives and no child survives who is under twenty-one, blind or disabled, and, outside an inpatient stay in a nursing facility or other medical facility, only for assistance received at age fifty-five or over.

What leaves a Hawaii estate before any claim class is paid?

The three family protections. HRS 560:2-402 gives a surviving spouse or reciprocal beneficiary a $30,000 homestead allowance that is exempt from and has priority over all claims against the estate. HRS 560:2-404 gives a family allowance that has priority over all claims except the homestead allowance. HRS 560:2-403 gives exempt property worth up to $20,000 in excess of security interests, in household furniture, automobiles, furnishings, appliances and personal effects, with priority over all claims.

When can a Hawaii personal representative start paying claims?

HRS 560:3-807(a) says the personal representative pays allowed claims in the order of priority once the earlier of the HRS 560:3-803 time limits expires, after making provision for the homestead, family and support allowances, for claims presented but not yet allowed or on appeal, and for unbarred claims that may still be presented, including costs and expenses of administration. With a published notice, 560:3-803(a)(1) runs four months from the first publication.

Does a Hawaii creditor who files first get paid first?

No. HRS 560:3-805(b) says no preference shall be given in the payment of any claim over any other claim of the same class, and a claim due and payable shall not be entitled to a preference over claims not due. Filing early buys nothing inside a class, and a bill that has already matured buys nothing over one that matures later.

What happens if a Hawaii personal representative pays the wrong claim first?

HRS 560:3-807(b) makes the personal representative personally liable to any other claimant whose claim is allowed and who is injured by the payment, where the payment went out before the claim deadline without adequate security for a refund, or where negligence or wilful fault deprived the injured claimant of priority. A federal claim adds its own rule: 31 U.S.C. 3713(b) makes a representative who pays any part of a debt of the estate before paying a claim of the United States liable to the extent of that payment.

Is the Hawaii estate tax one of the seven classes?

No. HRS 560:1-201 defines claims to include funeral expenses and expenses of administration, and says the term does not include estate or inheritance taxes. So the Hawaii estate tax under HRS chapter 236E runs on its own track outside the 560:3-805 ladder. Federal taxes with a federal-law preference are a separate matter and sit in class three.

Sources:

Title: HRS 560:3-805, Classification of claims. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2000, c 102, section 2; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0805.htm
Title: HRS 560:3-807, Payment of claims. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note L 1996, c 288; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0807.htm
Title: HRS 560:3-803, Limitations on presentation of claims. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2023, c 158, section 42; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0803.htm
Title: HRS 560:1-201, General definitions. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2023, c 158, section 6; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0001-0201.htm
Title: HRS 346-15, Death benefits for deceased medical or financial assistance recipients and disposition of unclaimed dead human bodies. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2024, c 108, section 2; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol07_Ch0346-0398/HRS0346/HRS_0346-0015.htm
Title: HRS 346-37, Recovery of payments and costs of medical assistance. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2012, c 211, section 4; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol07_Ch0346-0398/HRS0346/HRS_0346-0037.htm
Title: HRS 560:2-402, Homestead allowance. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2023, c 158, section 22; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0002-0402.htm
Title: HRS 560:2-403, Exempt property. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2023, c 158, section 23; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0002-0403.htm
Title: HRS 560:2-404, Family allowance. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 1997, c 383, section 19; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0002-0404.htm
Title: HRS 560:2-405, Source, determination, and documentation. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 2023, c 158, section 24; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0002-0405.htm
Title: HRS 560:3-719, Compensation of personal representative. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note L 1996, c 288; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0719.htm
Title: HRS 560:3-809, Secured claims. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note L 1996, c 288; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0809.htm
Title: HRS 560:3-810, Claims not due and contingent or unliquidated claims. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note L 1996, c 288; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0810.htm
Title: HRS 560:3-814, Encumbered assets. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note L 1996, c 288; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0814.htm
Title: HRS 560:3-902, Distribution; order in which assets appropriated; abatement. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 1997, c 383, section 19; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0003-0902.htm
Title: HRS 527-15, Liability for creditor claims and statutory allowances. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note L 2011, c 173; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0527/HRS_0527-0015.htm
Title: HRS 554D-505, Creditor's claim against settlor. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note L 2021, c 32; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0554D/HRS_0554D-0505.htm
Title: HRS 560:6-107, Rights against multiple-party accounts. Publisher: Hawaii State Legislature. Publication Date: Not listed (history note ends L 1997, c 383, section 19; accessed 2026-09-24). URL: https://data.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0560/HRS_0560-0006-0107.htm
Title: 31 U.S.C. 3713, Priority of Government claims. Publisher: Office of the Law Revision Counsel, United States House of Representatives. Publication Date: Pub. L. 97-258, Sept. 13, 1982, 96 Stat. 972; accessed 2026-09-24. URL: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3713&num=0&edition=prelim

It is not legal advice.