New Hampshire Debt Payment Priority

New Hampshire pays estate debts in the six classes RSA 554:19 sets out. Costs and expenses of administration come first, then reasonable and necessary funeral, burial and cremation expenses, then debts and taxes with a federal preference, then Department of Health and Human Services assistance claims, then the just debts of the deceased, and last the legacies and distributions. Each class is paid in full before the next receives anything.

That fourth rung is what makes New Hampshire different from most of its neighbors. Medicaid estate recovery outranks credit cards, personal loans and old medical bills here, so an administrator who pays the ordinary creditors first can end up short on a claim that was entitled to be paid ahead of them. This guide walks the six classes, the rule that no claim outranks another in the same class, the insolvency petition in RSA 554:19-b, and the assets creditors can still reach after the probate estate runs dry. Read it with the New Hampshire creditor claims guide and the New Hampshire executor duties guide. It is general information, not legal advice. Confirm any figure or deadline that touches your estate with the Circuit Court, Probate Division for the decedent's county or a licensed New Hampshire attorney.

Say Administrator, Not Personal Representative

New Hampshire never adopted the Uniform Probate Code. RSA 553:1 says the word administrator may include every person to whom the administration of an estate or the execution of a will may be granted, so administrator is the umbrella term and executor describes the one a will named. Chapter 554 is written in those words and so are the NHJB forms. The statutes stop lining up with the paperwork the moment the Uniform Probate Code vocabulary is swapped in.

The court is the Circuit Court, Probate Division, and each county is its own judicial district for that division under RSA 490-F:4. No New Hampshire probate division carries its county's name, so the court you file in is named by circuit number and city. The New Hampshire courts directory lists all ten.

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The Six Classes of RSA 554:19

RSA 554:19, titled Priority of Charges, opens by saying the administrator of an estate shall make payment of the claims in the following order. Read the table from the top down.

Order	Class as RSA 554:19, I prints it	What lands here
1	(a) Costs and expenses of administration of the estate	Court filing fees, the administrator's compensation, attorney and appraisal charges, bond premiums, and the cost of holding estate property during the case
2	(b) Reasonable and necessary funeral, burial, and cremation expenses	Funeral home charges, burial or cremation, and related costs that fit the size of the estate
3	(c) Debts and taxes with preference under federal law	Amounts federal law ranks ahead of other claims, including federal taxes
4	(d) Claims for financial or medical assistance provided by the Department of Health and Human Services, debts collected by the state under RSA 126-A:34, and charges under RSA 166:19	Medicaid estate recovery, cash-assistance recovery, and the county-assistance recovery in RSA 166:19, titled Recovery From Estates
5	(e) Just debts of the deceased	Credit cards, personal loans, utility accounts, older medical bills, promissory notes, and money judgments entered before death
6	(f) Legacies given by the will of the deceased or distribution to heirs according to law	Whatever survives every class above it

Two rules ride along with that list, and they decide how the money actually moves.

No preference inside a class. RSA 554:19, II says no preference shall be given in the payment of any claim over any other claim of the same class. A creditor whose bill came due first gets no head start over another creditor in the same class.

Nothing skips down. RSA 554:19, III says no creditor of a lower class shall receive any payment until all those of the preceding class have been fully paid. So the ladder is strict, and it is the administrator's job to hold the line on it.

When the money runs out partway through a class, those two rules together produce a pro rata split. Suppose the estate clears classes (a) through (d) and has $18,000 left for the just debts, while the general creditors are owed $60,000. Each of them receives 30 cents on the dollar. Class (f) then receives nothing, which is the ordinary result of an insolvent estate: the heirs and legatees are last in line by statute.

Class 1 Reaches Further Than It Looks

Administration costs cover more than filing fees. RSA 554:20, titled Expenses of Assignment, Etc., charges the expense of assigning the homestead right, of the division and assignment of the real estate, and of appointing guardians of minors and others incapacitated to take care of their interest as expenses of administration. Those costs ride at the top of the ladder rather than competing with creditors lower down.

Class 2 Turns on Two Words

The statute says reasonable and necessary funeral, burial and cremation expenses. A funeral that fits the size of the estate is a class (b) claim. A lavish one for a modest estate can be trimmed to what the court considers reasonable, with the balance dropping to class (e). Where a prepaid funeral plan already covers the bill, only the amount above the plan falls on the estate.

Assistance Claims Outrank Ordinary Creditors

Class (d) is the New Hampshire answer that most surprises an administrator who learned probate in another state. Claims for financial or medical assistance the Department of Health and Human Services provided to the decedent are paid in full before a single dollar reaches the just debts in class (e).

The department runs an Estate Recovery Unit for exactly this. Its published guidance describes a lien as a document filed with the county Registry of Deeds, and it lists the programs it recovers for: Old Age Assistance, Aid to the Needy Blind, Aid to the Permanently and Totally Disabled, Medicaid for Employed Adults with Disabilities, Granite Advantage, and the Breast and Cervical Cancer Program. Three points from that page matter to whoever is paying the bills:

Age 55 is the line for medical assistance. The state files a claim for medical assistance received after age 55 where the decedent was unmarried or widowed at death with no minor or disabled children. The department says there is usually no recovery for medical assistance before that age. Cash assistance carries no such age limit.
The claim reaches past probate. For recovery purposes the department treats the estate as including assets that pass outside probate, including property held in joint tenancy, life estates and living trusts, and it sends notice of its claim to the surviving owners of those assets.
A hardship waiver exists. Where repaying medical assistance would put the family in hardship, the family or the administrator can apply to have the debt forgiven if the criteria are met.

Two statutes sit behind the class. RSA 167:14-a, titled Recovery of Assistance, and RSA 166:19, titled Recovery From Estates, in the chapter on aid to county assisted persons. A companion duty runs the other way: RSA 554:19-a requires every administrator to notify the office of reimbursements under the direction of the commissioner of the department if the administrator has knowledge of liability under RSA 126-A:37. That notice going out early is what surfaces a class (d) claim in time. Finding out about one after the class (e) checks have cleared is the sequence that costs an administrator money.

New Hampshire Has No Allowance Class

Look back at the six classes and notice what is missing. There is no homestead allowance, no family allowance, no exempt property. Those three rungs belong to Uniform Probate Code states, and a guide that ports them into New Hampshire is describing law that does not apply here.

New Hampshire protects a surviving spouse a different way, and the difference changes who bears the cost.

RSA 560:1, titled Making; Account. The judge may make the widow a reasonable allowance out of the personal estate for her present support. In the decree of distribution of the personal estate, the whole or such part as the judge deems reasonable shall be accounted as part of her distributive share, and it is so accounted when she elects to take a share of the real estate under RSA 560:10. So the allowance is charged against what she inherits rather than paid off the top ahead of creditors.
RSA 560:2, titled Use of House, Etc. The widow may remain in the house of her husband for 40 days after his death without being chargeable with rent, with reasonable sustenance out of the estate in the meantime, and the judge takes that into consideration in setting the allowance.
RSA 554:4 and RSA 554:5. Certain items never enter the ladder at all. Wearing apparel and ornaments of the widow and the wearing apparel, Bibles and school books of the minor children are their property and are not regarded as assets. Wearing apparel, Bibles, family pictures, photographs, albums and other personal trinkets of sentimental rather than intrinsic value are not inventoried or accounted for and go straight to the surviving spouse, otherwise to the children or heirs.

The New Hampshire family allowance guide works through how the judge sets that figure, and the New Hampshire surviving spouse rights guide covers the waiver and the homestead right.

Declaring the Estate Insolvent: RSA 554:19-b

Start with a correction, because the wrong chapter is still in wide circulation. RSA 557, titled Insolvent Estates, is repealed in its entirety by 2010, 189:5, II, effective January 1, 2011. The table of contents still prints the chapter name, which is how the mistake survives, but the chapter page itself carries nothing except the repeal note. Anything describing a commissioner of insolvency, a report of commissioners, or an appeal from commissioners is describing machinery New Hampshire retired more than a decade ago.

The replacement arrived in the same session law. RSA 554:19-b, titled Insolvent Estate, carries the source line 2010, 189:4, eff. Jan. 1, 2011. Here is the sequence it sets:

Petition for an initial determination. When it appears to the administrator that known claims and expenses of administration exceed the value of the assets, the administrator may petition the court for an initial determination that the estate is insolvent (paragraph I).
Show the whole picture. The petition states the value of the estate, the names and addresses of all known creditors, the amount each claims, whether the decedent had a revocable trust, and the value of trust property available under RSA 564-B:5-505 (paragraph II).
Notify everyone beneficially interested, as RSA 550:12 defines them (paragraph III).
The court may rule without a hearing, and its order may waive the inventory or the accounts (paragraph IV).
The order stays actions and suits against the deceased and the administrator, with two carve-outs: matters the decedent carried insurance for, where recovery is capped at the policy, and matters where the court lifts the stay, in which case a judgment for the plaintiff is certified to the probate court and added to the list of claims (paragraph IV(a) and IV(b)).
Wait six months from the grant. No sooner than six months after the grant of administration, the administrator petitions for an order to distribute assets under RSA 554:19 (paragraphs V and VI).
Thirty days to object. The petition must state that beneficially interested persons have 30 days to object. Absent a timely objection the court may order distribution without a hearing (paragraph VII).
Distribute, certify, and get discharged. Not sooner than 30 days after the order, the administrator distributes the estate and files an affidavit certifying that distribution followed the order. The judge then discharges the administrator by decree from all creditor claims against the estate (paragraph VIII).

That six-month wait in step 6 lines up with the creditor clock. New Hampshire runs the claim window from the original grant of administration, not from the date of death and not from published notice: RSA 556:3 gives a creditor six months from the grant to exhibit a demand, RSA 556:1 bars any suit begun inside that same six months, and RSA 556:5 requires suit within one year of the grant. The New Hampshire creditor claims guide works through all three, and the New Hampshire probate deadlines guide puts them on the calendar with the inventory and accounting dates.

One more tool sits in the same chapter. RSA 554:24, titled Oath on Claims, lets the administrator require any claim against the estate to be exhibited under oath, in the form the statute prints. When a claim looks inflated and the estate is short, that demand costs nothing and puts the claimant on record.

What the Order Does Not Touch

Three categories sit outside the RSA 554:19 ranking, and each one changes the arithmetic.

Secured debts follow their collateral. A mortgage stays with the house and a car loan stays with the car, so the lender can foreclose or repossess wherever the estate stands in the payment order. If the asset is sold, the secured lender is paid from the proceeds first, and only a leftover balance drops into class (e) to compete with the other unsecured claims.

A revocable trust is reachable once the probate estate is inadequate. RSA 564-B:5-505(b) subjects the property of a trust that was revocable immediately before the settlor's death to the settlor's creditors, the costs of administration, and the expenses of the funeral and disposal of remains, to the extent the probate estate cannot satisfy them. Subsection (c) says a spendthrift provision does not change that. Subsection (d) carves out life insurance proceeds under RSA 408:6 and claims already barred under RSA 564-B:5-508, which is the trustee's own one-year notice bar.

Transfer-on-death deed property is reachable too. RSA 563-D:16, titled Liability For Creditor Claims And Statutory Allowances, lets the estate enforce liability against real property that passed by a transfer-on-death deed to the extent the probate estate cannot satisfy an allowed claim, apportioned among several deeded properties in proportion to their net values at death. Paragraph III shuts that door where no administration was granted within two years of the transferor's death. The New Hampshire transfer-on-death deed guide covers the deed itself, including the 60-day recording rule in RSA 563-D:9 that voids a deed recorded late.

A separate two-year clock protects real estate generally. RSA 556:29 says that where no administration is granted within two years of the date of death, no creditor may afterward maintain an action to reach the real estate the decedent died seized of. That one runs from death, unlike the chapter 556 windows that run from the grant. For the planning side of all this, see how to avoid probate in New Hampshire.

Where the Administrator's Own Money Is at Risk

Paying out of order is not a paperwork slip. If a creditor wins a judgment and the sheriff returns "no goods" or "waste" on the execution, RSA 556:26 allows an execution on scire facias against the goods, estate and person of the administrator, as for the administrator's own debt, to the amount of the waste if it can be ascertained and otherwise to the amount of the whole debt. That is personal exposure, in the administrator's own name.

Three patterns show up in estates that stay clear of that exposure:

Solvency is tested before anything discretionary is paid. The RSA 554:1 inventory, due within 90 days of appointment, compared against the filed and expected claims, is what shows whether a surplus exists.
Money stays put through the exhibition window. Late claims in a higher class are the ones that hurt, and the Department of Health and Human Services claim in class (d) is the one that most often arrives after a family assumed the estate was clear.
Distribution comes last. Property handed to the heirs before the debts are resolved is the common route to a personal shortfall. Class (f) is last in the statute for a reason.

Consider a $12,000 credit card balance cleared in month three, followed by a $12,000 assistance claim from the Department of Health and Human Services landing with nothing left to pay it. That pays class (e) ahead of class (d), and RSA 554:19, III makes that the wrong order. Where a claim is large, disputed, or close to the line, a licensed New Hampshire attorney is the right place to review it before it is paid or rejected. The New Hampshire executor duties guide covers the rest of the administrator's obligations, and the New Hampshire probate guide walks the whole case from filing to closing.

Frequently Asked Questions

What is the order of debt payment in a New Hampshire estate?

RSA 554:19 sets six classes. In order: costs and expenses of administration; reasonable and necessary funeral, burial and cremation expenses; debts and taxes with preference under federal law; claims for financial or medical assistance provided by the Department of Health and Human Services along with debts under RSA 126-A:34 and charges under RSA 166:19; just debts of the deceased; then legacies under the will or distribution to heirs. No lower class receives a dollar until the class above it is paid in full.

Does Medicaid get paid before credit cards in New Hampshire?

Yes. Department of Health and Human Services assistance claims sit in class (d) of RSA 554:19, and ordinary unsecured debts such as credit cards and personal loans sit in class (e), the just debts of the deceased. An administrator who clears the credit cards while a Health and Human Services claim is still outstanding has paid a lower class ahead of a higher one.

Is RSA 557 still the New Hampshire law on insolvent estates?

No. RSA 557, titled Insolvent Estates, was repealed in its entirety by 2010, 189:5, II, effective January 1, 2011. The live procedure is RSA 554:19-b, Insolvent Estate, added by the same session law. Older New Hampshire material describing commissioners of insolvency describes machinery that no longer exists.

Does a surviving spouse's allowance get paid ahead of New Hampshire creditors?

New Hampshire has no allowance class inside RSA 554:19. The allowance sits in RSA 560:1, where the judge may make the widow a reasonable allowance out of the personal estate for her present support, and the decree of distribution then accounts the whole or a reasonable part of it as part of her distributive share. It comes out of what she inherits rather than off the top of the creditors.

Can New Hampshire creditors reach a revocable trust or transfer-on-death deed property?

Yes, once the probate estate runs short. RSA 564-B:5-505(b) subjects the property of a trust that was revocable immediately before the settlor's death to creditor claims, administration costs and funeral expenses to the extent the probate estate is inadequate, and a spendthrift clause does not change that. RSA 563-D:16 lets the estate enforce the same shortfall against real property that passed by a transfer-on-death deed, apportioned among several deeded properties by net value.

How does a New Hampshire administrator declare an estate insolvent?

Under RSA 554:19-b, the administrator petitions the Circuit Court, Probate Division when known claims and administration expenses exceed the value of the assets. The petition lists the estate's value, every known creditor with an address and amount, and whether the decedent had a revocable trust. An order granting it stays most actions against the estate, and no sooner than six months after the grant the administrator petitions again for an order distributing assets under RSA 554:19.

Are secured debts part of the New Hampshire priority order?

No. A mortgage or a car loan follows the property that secures it, so the lender looks to the collateral whatever the RSA 554:19 ranking says. Any balance left after the collateral is sold drops into class (e), the just debts of the deceased, and competes there with the other unsecured claims.

Sources:

Title: New Hampshire RSA 554:19, Priority of Charges. Publisher: New Hampshire General Court. Publication Date: 2013, 144:38, eff. July 1, 2013. URL: https://gc.nh.gov/rsa/html/LVI/554/554-19.htm
Title: New Hampshire RSA 554:19-b, Insolvent Estate. Publisher: New Hampshire General Court. Publication Date: 2010, 189:4, eff. Jan. 1, 2011. URL: https://gc.nh.gov/rsa/html/LVI/554/554-19-b.htm
Title: New Hampshire RSA 554:19-a, Notice to Office of Reimbursements. Publisher: New Hampshire General Court. Publication Date: 1995, 310:15, eff. Nov. 1, 1995. URL: https://gc.nh.gov/rsa/html/LVI/554/554-19-a.htm
Title: New Hampshire RSA 554:20, Expenses of Assignment, Etc. Publisher: New Hampshire General Court. Publication Date: 1971, 179:15, eff. Aug. 10, 1971. URL: https://gc.nh.gov/rsa/html/LVI/554/554-20.htm
Title: New Hampshire RSA 560:1, Making; Account. Publisher: New Hampshire General Court. Publication Date: 1971, 179:19, eff. Aug. 10, 1971. URL: https://gc.nh.gov/rsa/html/LVI/560/560-1.htm
Title: New Hampshire RSA 564-B:5-505, Creditor's Claim Against a Settlor of a Revocable Trust. Publisher: New Hampshire General Court. Publication Date: 2022, 144:2, eff. Jan. 1, 2023. URL: https://gc.nh.gov/rsa/html/LVI/564-B/564-B-5-505.htm
Title: New Hampshire RSA 563-D:16, Liability For Creditor Claims And Statutory Allowances. Publisher: New Hampshire General Court. Publication Date: 2024, 1:1, eff. July 1, 2024. URL: https://gc.nh.gov/rsa/html/LVI/563-D/563-D-16.htm
Title: New Hampshire RSA 556:26, Return of "No Goods," Etc. Publisher: New Hampshire General Court. Publication Date: Not listed. URL: https://gc.nh.gov/rsa/html/LVI/556/556-26.htm
Title: New Hampshire RSA 557, Insolvent Estates (repealed in its entirety). Publisher: New Hampshire General Court. Publication Date: Repealed by 2010, 189:5, II, eff. Jan. 1, 2011. URL: https://gc.nh.gov/rsa/html/LVI/557/557-mrg.htm
Title: Estate Recoveries. Publisher: New Hampshire Department of Health and Human Services. Publication Date: Not listed. URL: https://www.dhhs.nh.gov/doing-business-dhhs/legal-services/estate-recoveries

It is not legal advice.