Massachusetts Debt Payment Priority

Massachusetts ranks estate debts in seven classes under M.G.L. c. 190B, § 3-805. The order bites only when the assets cannot cover every allowed claim: administration costs first, then funeral expenses, federal-preference debts, last-illness medical bills, commonwealth-preference debts, MassHealth, and everything else last. Pay out of that order and the money can come out of your own pocket.

Two protections sit outside the seven classes and still come off the top: exempt property under § 2-403 and the discretionary family allowance under § 2-404, both of which outrank every unsecured claim. This guide walks the classes one at a time, shows what an insolvent Massachusetts estate does, and marks where a personal representative's own money is exposed. Read it with the Massachusetts creditor claims guide, the Massachusetts executor duties guide, and the Massachusetts probate timeline. Confirm any figure that touches your estate with your Register of Probate or a licensed Massachusetts attorney.

When the Seven-Class Order Applies

Read the first line of § 3-805(a) closely. The ranking applies "if the applicable assets of the estate are insufficient to pay all claims in full." A Massachusetts estate that can pay everyone pays everyone, and the classes never decide anything. The order matters when the allowed claims add up to more than the estate holds, because somebody is going home empty.

Test for that early. Compare the inventory against the claims already presented and the ones you expect, and keep testing as values move. An estate can look solvent in month two and turn insolvent in month ten when a MassHealth statement lands or a last-illness hospital bill arrives at full price. Treat the estate as insolvent until your own arithmetic says otherwise.

Timing runs on a separate track from priority. Massachusetts gives creditors 1 year from the date of death to sue, and within that year the process has to be served in hand on you or accepted, or a notice naming the estate, the creditor, the amount, and the court has to be filed with the register (§ 3-803(a)). No shorter published notice window exists to cut that year down: § 3-801, the Uniform Probate Code slot for notice to creditors, is printed in the Massachusetts code as "Reserved." Priority sorts the claims that survive the year. The Massachusetts creditor claims guide covers which claims are still timely.

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The Seven Classes of Claims Under M.G.L. c. 190B, Section 3-805

Section 3-805 is headed "Classification of claims." Its seven classes run top to bottom, and a class must be satisfied before the next class receives a dollar.

Order	Class under § 3-805(a)	What it covers
1	Costs and expenses of administration	Court fees, personal representative compensation, attorney and appraisal fees, bond premiums, and the cost of preserving estate property
2	Reasonable funeral expenses	Funeral home charges, burial or cremation, and related costs that are reasonable for the size of the estate
3	Debts and taxes with preference under federal law	Amounts federal law puts ahead of other claims, such as certain sums owed to the United States
4	Reasonable and necessary medical and hospital expenses of the last illness	Bills from the final illness, including compensation of persons attending the decedent
5	Debts and taxes with preference under other laws of the commonwealth	Amounts owed to Massachusetts that state law puts ahead of general creditors
6	Debts due to the division of medical assistance	MassHealth estate recovery
7	All other claims	Credit cards, personal loans, older medical bills, utility balances, and other general unsecured debt

Three features of that list catch Massachusetts executors out. The family protections are not in it at all, because Massachusetts keeps exempt property and the family allowance in Article II with their own priority language rather than ranking them as classes. Last-illness medical bills sit in class 4, above commonwealth-preference taxes in class 5, which reverses the order most people assume. And MassHealth gets a class of its own at number six instead of riding along with other commonwealth debt.

Classes 1 and 2: Administration and Funeral Costs

Nothing gets settled without paying the people and processes that settle it, so administration costs lead. This class covers filing fees, the personal representative's compensation under § 3-719, attorney and appraisal fees, bond premiums, and the cost of maintaining property while the case runs. The reasonableness constraint on class 1 comes from § 3-719's reasonable-compensation standard and account practice rather than from § 3-805(a)(1), which says only costs and expenses of administration, and the Probate and Family Court reviews them on the account.

Funeral expenses come second, and the word that governs is "reasonable." A funeral scaled to the estate is a valid class 2 claim. An extravagant one against a modest estate can be trimmed. When a prepaid plan already covers the bill, only the amount above the plan falls on the estate.

Classes 3, 4, and 5: Federal Debts, the Last Illness, and Commonwealth Debts

Class 3 picks up debts and taxes that federal law prefers. Class 4 covers the reasonable and necessary medical and hospital expenses of the decedent's last illness, and the statute writes in compensation of persons attending the decedent, which reaches paid caregivers who sat with the decedent through that illness. Bills from an earlier illness do not qualify and fall to class 7. Class 5 then covers debts and taxes that other Massachusetts laws prefer.

That sequence puts a hospice invoice from the final weeks ahead of an unpaid commonwealth tax bill. Sort medical claims by which illness they came from before you pay any of them, because that single question moves a bill from class 4 to class 7.

Class 6: MassHealth Estate Recovery

Debts due to the division of medical assistance form class 6, one step above the catch-all. MassHealth can seek repayment for benefits it paid, and M.G.L. c. 118E, § 32(b) gives the division two routes. It may file a written statement of the amount claimed with the registry of probate within 4 months after approval of the personal representative's official bond, delivering or mailing you a copy, and that claim counts as presented the moment it is filed. Or it may commence an action within 1 year after the date of death. Subsection (b)(2) points that action at M.G.L. c. 197, § 9, and chapter 197 no longer carries a section 9 in the General Laws, so read that route as the plain 1-year deadline the subsection states, which lines up with the § 3-803 bar.

Your clock starts at presentment. Section 32(d) gives you 60 days to mail the division certified-mail notice of one or more findings: that you disallow the claim in whole or in part, that conditions requiring the division to defer recovery exist, or that undue-hardship waiver conditions exist. Fail to mail the disallowance notice and § 32(d) deems the claim allowed. Section 32(g) then runs interest on an allowed claim at 3.25 percent per year, starting 4 months plus 60 days after the bond was approved, so a missed notice costs money as well as the argument.

Section 32(a) reaches back further than most executors expect. The petition for probate of the will or for administration must carry a sworn statement that copies of the petition and the death certificate went to the division by certified mail. Skip that, and if the decedent received recoverable medical assistance, anyone who takes a distribution from the estate is liable to the division up to what they received.

Class 7: All Other Claims

The last class holds most of what people picture as debt: credit card balances, personal loans, utility accounts, older medical bills, promissory notes, and money judgments entered before death. It is paid only after the six classes above it are covered in full, which in an insolvent Massachusetts estate often means it is paid in cents or not at all.

Exempt Property and the Family Allowance Come Off the Top

Here is the piece that is easy to miss, because it does not live in § 3-805 at all. Massachusetts puts two family protections in Article II, and each carries its own priority language.

Exempt property, § 2-403. The surviving spouse takes value at date of death up to $10,000, in excess of any security interests, in household furniture, automobiles, furnishings, appliances, and personal effects. With no surviving spouse, the children take the same value jointly. If the estate does not hold $10,000 of that property, other assets make up the difference. The statute says these rights "have priority over all unsecured claims against the estate," and the make-up right abates as needed so the family allowance can be paid first.
Discretionary family allowance, §§ 2-404 and 2-405. The surviving spouse, minor children the decedent had to support, and children the decedent was in fact supporting are entitled to a reasonable allowance in money for maintenance during administration. It may not run longer than 1 year when the estate is inadequate to discharge allowed claims. Section 2-404 says the allowance "is exempt from and has priority over all unsecured claims." Under § 2-405 the personal representative may set a lump sum up to $18,000, or installments up to $1,500 per month for 1 year, and the personal representative or an interested person aggrieved by a selection, determination, payment, proposed payment, or failure to act under the section may petition the court for appropriate relief.

Section 3-807(a) ties the two systems together: once the § 3-803 time limit has expired, the personal representative pays allowed claims in the prescribed order "after making provision for family allowances," for presented claims not yet allowed or on appeal, for unbarred claims that may still arrive, and for administration costs. So reserve the family money before you start down the classes.

One more protection rides alongside. Section 2-403(b) lets the surviving spouse remain in the decedent's house for up to 6 months after the date of death without being chargeable for rent. Our guide to exempt property and the family allowance works through how a spouse claims both, and what else Massachusetts hands a survivor ahead of unsecured creditors.

No Preference Inside a Class

The ranking runs between classes, never inside one. Section 3-805(b) says no preference shall be given to any claim over another claim of the same class, and that a claim due and payable is not entitled to a preference over claims not due. A creditor whose invoice matured first gets no head start on a creditor whose claim comes due next year.

Section 3-810(a) carries that through. When a claim that will come due later, or a contingent or unliquidated claim, becomes due or certain before distribution and has been allowed, it is paid in the same manner as presently due claims of the same class.

The arithmetic follows. Suppose classes 1 through 6 are covered and $20,000 remains for class 7, while the general creditors are owed $50,000. Nobody in that class may be preferred, so each claim shares proportionally and collects 40 cents on the dollar. Run that math before you write any class 7 check.

Representing the Estate Insolvent

Massachusetts gives the insolvent estate its own procedure, and it is a court procedure rather than a private one. Section 3-807(b) says a personal representative who finds that the estate will probably be insufficient to pay the decedent's debts shall represent the estate to be insolvent to the court, and shall then, pursuant to court order and after notice to all persons interested, divide and pay over what remains among the creditors who prove their debts.

Representing insolvency also changes what creditors can do to you. After the representation, no action may be maintained against the personal representative except for a claim entitled to a preference that insolvency would not affect, or if the assets turn out to be more than enough to pay all allowed debts. A pending action on a non-preferred claim may be stayed without costs until the question is settled. Section 3-812 already blocks execution and levy against estate property under a judgment against the decedent or the personal representative, though it leaves mortgages, pledges, and liens enforceable in an appropriate proceeding.

The 6-Month Window and Personal Liability Under Section 3-807

Section 3-807 also builds a shelter for the personal representative who has heard nothing alarming. Under subsection (c), if you have not within 6 months after the date of death had notice of demands sufficient to warrant representing the estate insolvent, you may pay the estate's debts after those 6 months, and you are not personally liable to a creditor for payments made before notice of that creditor's demand. When a debt's validity is doubtful, subsection (c) lets you pay it with court approval after notice to all persons interested.

Subsection (e) limits the damage if a late demand shows up after you paid under (c): you are liable on that demand only for so much as then remains, and the creditors already paid do not have to give anything back. If two or more late demands together exceed what you hold, you may represent the estate insolvent and distribute the remainder by court order.

Outside that shelter, subsection (g) puts your own money on the line. It opens generously: you may pay any just claim that has not been barred at any time, with or without formal presentation. Then it names two payments that make you personally liable to another claimant whose claim is allowed and who is injured by yours. First, paying before the time limit in subsection (a) expired, which is the § 3-803 one-year mark, without requiring the payee to give adequate security for refunding whatever is needed to pay other claimants. Second, paying in a way that, through your negligence or willful fault, deprives the injured claimant of priority.

Picture a $15,000 credit card balance paid in month four, followed in month nine by a $12,000 MassHealth claim the estate can no longer cover. The card sits in class 7 and MassHealth in class 6, so the payment stripped a higher-ranked claimant of priority, and the gap can land on you. Paying estate debts in the right order is a named duty of the personal representative, covered further in the Massachusetts executor duties guide.

Secured Claims and Assets That Never Enter the Order

A mortgage or car loan follows its collateral rather than the class list. Section 3-809 sets how a secured claim is paid: on the full allowed amount if the creditor surrenders the security, and otherwise on the allowed amount less the fair value of the security once the creditor exhausts it, or less the value of the security determined by agreement, arbitration, compromise, or litigation. Whatever balance survives that math stays in the class its NATURE gives it under § 3-805(a), not automatically in class 7. A MassHealth claim secured by a c. 118E lien leaves a class 6 deficiency and a federal tax lien leaves a class 3 deficiency. Only an ordinary secured debt such as a mortgage or car loan leaves a class 7 deficiency. Selling the collateral has its own Massachusetts steps, covered in the guide to selling inherited property.

Assets that pass by beneficiary designation or survivorship never enter the estate, so the classes never touch them. Life insurance with a named beneficiary, a payable-on-death account, a joint account with rights of survivorship, and property held as tenants by the entirety go straight to the survivor. The guide to avoiding probate in Massachusetts covers those routes, including the fact that Massachusetts has no transfer-on-death deed for real estate.

How to Work Through the Massachusetts Order of Payment

Test solvency and keep testing. Compare the inventory against presented and expected claims, and rerun the comparison when a large medical or MassHealth statement arrives.
Sort every claim into its class. Ask which illness a medical bill belongs to, whether a tax carries a federal or commonwealth preference, and whether a claim is secured.
Reserve the family protections. Set aside exempt property under § 2-403 and the family allowance under §§ 2-404 and 2-405 before any unsecured claim is paid.
Wait out the year. Section 3-807(a) starts the payment sequence after the § 3-803 limit expires, and § 3-807(c) shelters payment only after the 6-month mark with no notice of trouble.
Insolvency goes to the court. Section 3-807(b) has a personal representative who finds the estate probably insufficient represent it insolvent to the court and distribute under the court's order after notice, rather than sorting it out privately.
Split a short class proportionally. No claim in a class may be preferred, so divide what remains in proportion to the allowed amounts.
Hold distributions until debts are resolved. Handing property to heirs early is the fastest route to paying a creditor yourself.

Ask a licensed Massachusetts attorney to review any claim that is large, disputed, or close to the line before you pay it or reject it. Your Register of Probate can confirm filing steps and forms, and you can find yours in the Massachusetts probate court directory.

Frequently Asked Questions

What is the order of debt payment in a Massachusetts estate?

M.G.L. c. 190B, § 3-805(a) sets seven classes. In order: 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 decedent's last illness, including compensation of persons attending the decedent; debts and taxes with preference under other laws of the commonwealth; debts due to the division of medical assistance; and all other claims.

When does the Massachusetts payment order actually apply?

Only when the estate cannot pay everyone. Section 3-805(a) opens with the condition that the applicable assets of the estate are insufficient to pay all claims in full. A solvent estate pays every allowed claim, so the ranking never decides who goes without.

Does the surviving spouse get paid before creditors in Massachusetts?

Yes, and through a route outside the seven classes. M.G.L. c. 190B, § 2-403 gives the surviving spouse up to $10,000 of household furniture, automobiles, furnishings, appliances, and personal effects, and says those rights have priority over all unsecured claims. Section 2-404 says the discretionary family allowance is exempt from and has priority over all unsecured claims. Section 3-807(a) has the personal representative make provision for family allowances before paying claims in the § 3-805 order.

Where does MassHealth rank in the Massachusetts payment order?

Sixth. Debts due to the division of medical assistance sit in class 6 of § 3-805(a), below federal-preference debts, below last-illness medical expenses, and below debts and taxes with preference under other laws of the commonwealth. Only the catch-all class of all other claims ranks lower. M.G.L. c. 118E, § 32(b) gives the division two ways to present its claim.

What does a Massachusetts personal representative do when the estate is insolvent?

Section 3-807(b) says a personal representative who finds the estate will probably be insufficient to pay its debts shall represent the estate to be insolvent to the court, then divide and pay over what remains among the creditors who prove their debts, pursuant to court order and after notice to all persons interested.

Can a Massachusetts personal representative be personally liable for paying debts in the wrong order?

Yes. Under M.G.L. c. 190B, § 3-807(g), a personal representative is personally liable to an injured claimant when payment was made before the § 3-803 limit expired without requiring the payee to give adequate security for a refund, or when payment was made, through negligence or willful fault, in a way that deprived the injured claimant of priority.

Sources:

Title: M.G.L. c. 190B, Section 3-805, Classification of claims. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-805
Title: M.G.L. c. 190B, Section 3-807, Payment of claims. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-807
Title: M.G.L. c. 190B, Section 3-803, Limitations on presentation of claims. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-803
Title: M.G.L. c. 190B, Section 3-801, Reserved. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-801
Title: M.G.L. c. 190B, Section 2-403, Exempt property. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section2-403
Title: M.G.L. c. 190B, Section 2-404, Discretionary family allowance. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section2-404
Title: M.G.L. c. 190B, Section 2-405, Source, determination, and documentation. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section2-405
Title: M.G.L. c. 190B, Section 3-809, Secured claims. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-809
Title: M.G.L. c. 190B, Section 3-810, Claims not due and contingent or unliquidated claims. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-810
Title: M.G.L. c. 190B, Section 3-812, Execution and levies prohibited. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-812
Title: M.G.L. c. 118E, Section 32, Provision of death certificate and probate petition to division; liability of estate beneficiaries; claims against estate; sale or transfer of property subject to lien or claim. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXVII/Chapter118E/Section32
Title: M.G.L. c. 190B, Section 3-719, Compensation of personal representative. Publisher: Massachusetts General Court. Publication Date: Not listed. URL: https://malegislature.gov/Laws/GeneralLaws/PartII/TitleII/Chapter190B/Section3-719

It is not legal advice.