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Idaho Debt Payment Priority
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Idaho Debt Payment Priority

Idaho Code 15-3-805 pays administration costs first and funeral expenses second when an estate cannot cover every claim. Here is the full order.

By Settled Editorial

When an Idaho estate cannot pay everything it owes, Idaho Code 15-3-805(a) decides who gets paid. The order is costs and expenses of administration, reasonable funeral expenses, debts and taxes with federal preference, last-illness medical and hospital expenses, debts and taxes with preference under other Idaho laws, and all other claims. Administration comes first, ahead of the funeral home.

Idaho calls the estate's manager the personal representative, and this page does too. Every rule below was read on September 24, 2026 at the section pages of the Idaho Code on legislature.idaho.gov. Section 15-3-805 was last amended in 1973, so the order is settled law. Idaho probate is heard in the magistrate division of the district court in the county where the decedent lived. Read this page beside the guide to how claims are presented, which owns the deadlines and the bar. This is general information about Idaho law, not advice about one estate.

ClassWhat it coversStatute
1Costs and expenses of administration15-3-805(a)(1)
2Reasonable funeral expenses15-3-805(a)(2)
3Debts and taxes with preference under federal law15-3-805(a)(3)
4Reasonable and necessary medical and hospital expenses of the last illness, including compensation of persons attending the decedent15-3-805(a)(4)
5Debts and taxes with preference under other laws of Idaho, including a Medicaid recovery claim under 56-218(5)15-3-805(a)(5)
6All other claims15-3-805(a)(6)

The Order Only Matters When the Money Runs Out

The section opens with a condition: "If the applicable assets of the estate are insufficient to pay all claims in full, the personal representative shall make payment in the following order." When the estate covers every allowed claim, nobody goes short and the classes decide nothing. They decide outcomes in two situations.

The first is an estate that is insolvent from the start. The claims exceed the assets, someone goes unpaid, and the statute picks who.

The second is an estate that looked solvent and stopped being solvent. A hospital bill arrives in month three, or a tax assessment lands after the heirs have been paid. Idaho Code 15-3-807(b) is what turns that into a personal problem for the personal representative.

Section 15-3-805(b) sets two rules inside the order. "No preference shall be given in the payment of any claim over any other claim of the same class," so a class that cannot be paid in full is shared pro rata by everyone in it. And "a claim due and payable shall not be entitled to a preference over claims not due." The creditor calling every day ranks no higher than the one who has not called yet.

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The Family Allowances Sit Between Class One and Class Two

Idaho gives a surviving spouse, or certain children, two claims against the estate that outrank most creditors. The Idaho exempt property guide covers them in full. Here is where they rank.

  • Homestead allowance, 15-2-402. A flat $50,000. The statute says it "is exempt from and has priority over all claims against the estate except as hereinafter set forth." It goes to the surviving spouse, or, with no spouse, is split among children under 21 the decedent was obligated to support and disabled children the decedent was supporting.
  • Exempt property, 15-2-403. Up to $10,000 of tangible personal property, measured above any security interests, such as furniture, cars, appliances, heirlooms and personal effects. "Rights to exempt property have priority over all claims against the estate."

The exception is in the last sentence of Idaho Code 15-2-405: "the homestead allowance and exempt property do not take precedence over reasonable administrative costs and expenses of the estate of the decedent." So the working order is administration costs, then the two allowances, then funeral expenses and the rest of 15-3-805. That puts what the family takes before creditors above the funeral bill and below the cost of running the estate.

Two more rules from 15-2-405 change how this plays out:

  1. The allowances must be applied for. They "are not mandatory or automatic," and the application follows the same manner and time period as a creditor's claim under 15-3-801, 15-3-803 and 15-3-804. A spouse who misses the window loses the priority, and the money flows down to creditors.
  2. The personal representative owes the family no warning. The personal representative "shall not be required to give actual notice" of the right to apply, and has no liability for giving or failing to give notice.

A third point trips up readers of the payment statute. Section 15-3-807(a) tells the personal representative to pay claims "after making provision for homestead, family and support allowances." Idaho has no family allowance today: chapter 2, part 4 of Title 15 runs 15-2-401, 402, 403, 405 and 406, with no 15-2-404. The words survive in 15-3-807, and the only allowances left to set aside are the homestead allowance and exempt property.

Where a Medicaid Recovery Claim Sits

Idaho answers this one in the statute itself. Idaho Code 56-218(5) says: "Claims made pursuant to this section shall be classified and paid as a debt with preference as defined in section 15-3-805 (5), Idaho Code." That is class five, behind last-illness medical bills and ahead of credit cards and other unsecured debt.

The same subsection carries two rules a personal representative has to act on:

  • "Any distribution or transfer of the estate prior to satisfying such claim is voidable and may be set aside by an action in the district court."
  • The personal representative of every estate subject to a recovery claim "must, within thirty (30) days of the appointment, give notice in writing to the director." Idaho Code 15-3-801(d) repeats that duty for any decedent who received medical assistance at 55 or older.

Recovery applies only to assistance paid when the recipient was 55 or older. Under 56-218(1)(a) there is no recovery until both the recipient and any spouse have died, and none while a child under 21, or a blind or permanently and totally disabled child, survives. Under 56-218(4), the estate the state reaches includes property that passed outside probate by joint tenancy, survivorship, life estate or living trust. So a Medicaid claim can sit in class five of an estate that holds far more than the probate inventory shows.

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Community Debts and Separate Debts

Idaho is a community property state, and Idaho Code 15-3-902(c) adds a rule the six classes do not mention. If the estate is partly separate property and partly community property, "community debts shall be charged to community property and separate debts to separate property." Expenses of administration are split between the two kinds of property in proportion to their value, "except that none of such expenses shall be apportioned or charged to the survivor's share of the community property."

That rule decides which pool of property pays a claim before the class order decides who gets paid from it. A debt the decedent ran up alone before the marriage looks to separate property. A debt of the marriage looks to community property. Sorting the property comes first, and the Idaho community property guide explains how.

Secured Claims Are Settled Outside the Ladder

A lender holding collateral does not stand in line with unsecured creditors. Idaho Code 15-3-803(e)(1) says nothing in the claims bar prevents "any proceeding to enforce any mortgage, pledge, or other lien upon property of the estate." Idaho Code 15-3-812 bars execution and levy against estate property under a judgment, while preserving the enforcement of "mortgages, pledges or liens upon real or personal property in an appropriate proceeding."

Idaho Code 15-3-809 sets the math. A creditor who surrenders the security is paid on the full amount allowed. Otherwise:

  • a creditor who exhausts the security before payment is paid on the allowed claim less the fair value of the security, or
  • a creditor who cannot or has not exhausted it is paid on the allowed claim less the value of the security, fixed under the security agreement or by the creditor and personal representative through agreement, arbitration, compromise or litigation.

Only the shortfall enters the six classes, and it usually lands in class six. Section 15-3-104 makes the same point from the other side: the probate claims procedure does not apply to a secured creditor enforcing its security, "except as to any deficiency judgment." The house with a mortgage on it passes with the mortgage.

Claims That Are Not Yet Due, Contingent or Unliquidated

Idaho Code 15-3-810 handles the claim nobody can price yet. If it becomes due or certain before distribution and has been allowed or established, it is paid "in the same manner as presently due and absolute claims of the same class." Otherwise, the personal representative or the court can pay the claimant the present or agreed value with the claimant's consent, or arrange future payment by creating a trust, giving a mortgage, or obtaining a bond or security from a distributee.

Interest runs too. Under Idaho Code 15-3-806(d), allowed claims bear interest at the legal rate starting 60 days after the time for original presentation of the claim has expired, unless a contract sets its own interest term. A slow insolvent administration grows the claims it cannot pay.

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Timing, and the Liability That Attaches to Paying Early

Section 15-3-807(a) sets the moment. Once the earlier of the 15-3-803 time limits expires, the personal representative "shall proceed to pay the claims allowed against the estate in the order of priority prescribed." Before paying, provision must be made for the allowances, for claims presented but not yet allowed or under appeal, and for unbarred claims that may still come in, including costs of administration. A claimant whose allowed claim goes unpaid can petition the court for an order directing payment.

Section 15-3-807(b) is the trap. You may pay any just claim that is not barred at any time, "but he is personally liable to any other claimant whose claim is allowed and who is injured by its payment if":

  1. the payment went out before the time limit expired and you did not require the payee to give adequate security for a refund, or
  2. the payment was made, "due to negligence or wilful fault of the personal representative, in such manner as to deprive the injured claimant of priority."

Put that beside 15-3-805(b). A class-six credit card paid in month two because the collector kept calling is the payment both clauses describe if a class-four hospital bill later goes short. That is the personal liability for paying out of order that the executor guide warns about.

Silence carries its own risk. Under 15-3-806(a), if you do not mail a claimant notice of action on a claim within 60 days after the time for original presentation expires, the failure "has the effect of a notice of allowance." An insolvent estate can pick up an allowed claim through inattention.

A Federal Claim Brings Its Own Priority Rule

Class three, debts and taxes with preference under federal law, points outside the Idaho Code. 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." Section 3713(b) makes a representative who pays any part of another debt before paying a Government claim "liable to the extent of the payment for unpaid claims of the Government."

That is a second personal-liability rule, running on federal terms, for the same person 15-3-807(b) already binds. When an Idaho estate that cannot pay everyone owes federal taxes or another federal debt, how the two rules fit together is a question for a licensed Idaho attorney before any money moves.

State taxes follow their own clock. Section 15-3-803(d) bars state tax claims on a separate schedule, and 15-3-803(e)(4) and (e)(5) keep the assessment and collection of certain state taxes outside the claims bar altogether.

When the Estate Is Small Enough to Close Without Notice

Idaho Code 15-3-1203 gives a short exit for the estate the top of the order would consume anyway. If the inventory and appraisal show the value of the entire estate, less liens and encumbrances, "does not exceed homestead allowance, exempt property, costs and expenses of administration, reasonable funeral expenses, and reasonable and necessary medical and hospital expenses of the last illness," the personal representative may, "without giving notice to creditors," immediately distribute the estate and close under 15-3-1204.

That list is the two allowances plus classes one, two and four. Where nothing would reach classes three, five and six, the statute lets you skip the notice those classes need. With a surviving spouse and a full $10,000 of exempt property, the allowances alone account for $60,000 of the ceiling, and the rest depends on the actual bills. The Idaho small estate guide compares this route with the $100,000 affidavit.

A Worked Example

Here is how the order plays out on a real set of numbers. Take a decedent who died in 2026 leaving a surviving spouse, $70,000 in a bank account and an $8,000 car owned outright, all separate property, with no Medicaid history. The claims are $5,000 of administration costs, a $9,000 funeral bill, a $30,000 hospital bill from the last illness and $20,000 of credit card balances. The spouse applies for both allowances inside the claim period.

  1. Administration costs, $5,000. Paid first, ahead of the allowances under 15-2-405. That leaves $65,000 in cash plus the car.
  2. Homestead allowance, $50,000. Paid to the spouse. That leaves $15,000 in cash.
  3. Exempt property, $8,000. The spouse takes the car. The cash stays at $15,000.
  4. Funeral, $9,000. Paid in full. That leaves $6,000.
  5. Last-illness hospital bill, $30,000. Receives the remaining $6,000, or 20 cents on the dollar.
  6. Credit cards, $20,000. Receive nothing.

The estate is worth $78,000 and the 15-3-1203 ceiling here is $102,000, so the personal representative could also distribute and close without publishing notice.

Change one fact and the answer changes. If the spouse never applies for the allowances, the $50,000 and the car stay in the estate. After administration and the funeral, $64,000 remains, the hospital is paid in full, the card issuers are paid in full, and $14,000 is left for the heirs. The spouse's silence moved $44,000 from the family to creditors.

Abatement Is a Different Ladder

Creditors and beneficiaries run on separate rules. Section 15-3-805 ranks claims. Idaho Code 15-3-902(a) ranks the shares of distributees once the claims are settled: property not disposed of by the will abates first, then residuary devises, then general devises, then specific devises, "without any preference or priority as between real and personal property." Within each classification, abatement is proportional. Under 15-3-902(b), a will that states its own order, or a testamentary plan the default order would defeat, controls instead.

An insolvent estate never reaches 15-3-902(a) at all. A solvent estate with more gifts than assets reaches it without consulting 15-3-805.

What Survives Distribution

Closing the estate does not end every claim.

  • Idaho Code 15-3-1004 lets an undischarged claim that is not barred be pursued against distributees after distribution. No distributee is liable for amounts received as exempt property or homestead, or for more than the value of the distribution when made. A distributee who fails to tell the others about a demand in time for them to join loses the right of contribution.
  • Idaho Code 15-3-1006 sets the outer limit: a creditor's claim against a distributee "is forever barred three (3) years after the decedent's death."
  • Idaho Code 15-3-1005 bars claims against the personal representative for breach of fiduciary duty unless a proceeding starts within six months after the closing statement is filed. Fraud, misrepresentation and inadequate disclosure stay outside that bar.

When the spouse takes everything, Idaho has a separate route. Under 15-3-1205 a surviving spouse who is the sole beneficiary can use summary administration and assumes all debts, which the Idaho surviving spouse rights guide covers.

When to Call an Idaho Attorney

This page describes the statutory rules, not how they apply to one estate. A licensed Idaho attorney can apply them to a specific estate, and that review is commonly sought when:

  • the claims exceed the assets, so the 15-3-805 classes decide who goes unpaid
  • a federal tax or other federal debt is in the mix, because 31 U.S.C. 3713 adds its own priority and its own personal liability
  • the decedent received Medicaid at 55 or older, since a 56-218 claim reaches non-probate assets and makes early distributions voidable
  • the estate holds both community and separate property and the debts need sorting under 15-3-902(c)
  • a class boundary is arguable, such as whether a bill belongs to the last illness
  • a secured creditor and the estate disagree on the value of the collateral under 15-3-809
  • you have already paid a claim and now suspect a higher class will go short

Frequently Asked Questions

What order does Idaho pay estate debts in?

Idaho Code 15-3-805(a) sets six classes for an estate whose assets cannot pay every claim in full: costs and expenses of administration, reasonable funeral expenses, debts and taxes with preference under federal law, reasonable and necessary medical and hospital expenses of the last illness, debts and taxes with preference under other Idaho laws, and all other claims. Under 15-3-805(b), no claim gets preference over another claim in the same class, and a claim already due gets none over a claim not yet due.

Does Idaho pay funeral expenses before administration costs?

No. Idaho Code 15-3-805(a)(1) is costs and expenses of administration and 15-3-805(a)(2) is reasonable funeral expenses, so administration comes first. The section was last amended in 1973 (ch. 167), and the order has not changed since.

Do the homestead allowance and exempt property come before creditors in Idaho?

Before every creditor except the cost of running the estate. Idaho Code 15-2-402 gives the $50,000 homestead allowance priority over all claims against the estate, and 15-2-403 gives up to $10,000 of exempt property the same priority. The last sentence of 15-2-405 then says both do not take precedence over reasonable administrative costs and expenses of the estate. Neither is automatic: the spouse or children must apply within the creditor-claim time.

Where does an Idaho Medicaid recovery claim rank?

In class five. Idaho Code 56-218(5) says recovery claims shall be classified and paid as a debt with preference as defined in section 15-3-805(5), and any distribution or transfer of the estate before the claim is satisfied is voidable. The same subsection requires the personal representative to notify the director of Health and Welfare in writing within 30 days of appointment.

Can an Idaho personal representative be personally liable for paying debts in the wrong order?

Yes. Idaho Code 15-3-807(b) lets the personal representative pay any just claim that is not barred at any time, then makes the personal representative personally liable to an injured claimant whose claim is allowed in two cases: the payment went out before the claim deadline without requiring the payee to give adequate security for a refund, or negligence or wilful fault deprived the injured claimant of priority.

Who pays the debts when an Idaho estate holds community property?

Idaho Code 15-3-902(c) charges community debts to community property and separate debts to separate property. Administration expenses are split between the two kinds of property in proportion to value, and none of them may be charged to the surviving spouse's share of the community property.

What happens to a secured creditor when an Idaho estate is insolvent?

The collateral is dealt with first. Under Idaho Code 15-3-809, a creditor who surrenders the security is paid on the full allowed claim. A creditor who keeps it is paid only on the allowed claim less the value of the security, fixed by exhausting it, by the security agreement, or by agreement, arbitration, compromise or litigation with the personal representative. Section 15-3-803(e)(1) keeps lien enforcement outside the claim bar.

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Sources:

It is not legal advice.

Information current as of September 24, 2026

Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in Idaho can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.

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