Skip to main content
South Dakota Debt Payment Priority
Support GuideSouth Dakota24 min read

South Dakota Debt Payment Priority

SDCL 29A-3-805 pays South Dakota estate debts in five classes, with no last-illness medical class. Here is the full order and who ranks ahead of it.

By Settled Editorial

When a South Dakota estate cannot pay everything it owes, SDCL 29A-3-805(a) decides who gets paid. There are five classes: costs and expenses of administration, reasonable funeral expenses, debts and taxes with federal preference, debts and taxes with preference under other South Dakota laws, and all other claims. Unlike the model Uniform Probate Code, South Dakota has no separate class for last-illness medical bills.

South Dakota law calls the estate's manager the personal representative, and this page does too, though most people search for "executor." Every rule below was read on September 27, 2026 through the South Dakota Legislature's own statute service, with each section's source line checked for later session laws. Section 29A-3-805 was enacted by SL 1994, ch 232 and has never been amended. South Dakota probate is heard in the circuit court of the county. Read this page beside the guide to how claims are presented, which owns the deadlines and the bar. This is general information about South Dakota law, not advice about one estate.

ClassWhat it coversStatute
Ahead of all claimsHomestead allowance and exempt property, then the family allowance29A-2-402(b), 29A-2-403(d)
1Costs and expenses of administration29A-3-805(a)(1)
2Reasonable funeral expenses29A-3-805(a)(2)
3Debts and taxes with preference under federal law29A-3-805(a)(3)
4Debts and taxes with preference under other laws of South Dakota29A-3-805(a)(4)
5All other claims, including last-illness medical and hospital bills29A-3-805(a)(5)

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 bill lands after the heirs have been paid. SDCL 29A-3-807(b) is what turns that into a personal problem for the personal representative.

Section 29A-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.

Do you need probate in South Dakota?

Answer a few questions to see whether South Dakota probate is required and which process applies.

Take the 2-minute assessment

South Dakota Dropped the Last-Illness Class

This is where South Dakota parts ways with its neighbors. The Uniform Probate Code, and states that follow it closely such as Idaho, put "reasonable and necessary medical and hospital expenses of the last illness" in a class of their own, ahead of ordinary debts. South Dakota's list has five entries, and none of them names medical care.

So a hospital, a clinic or a hospice bill from the final illness lands in class five, "all other claims." It stands in the same line as credit cards, personal loans and utility bills, and shares pro rata with them when class five cannot be paid in full. A guide or form written for another state that places the hospital ahead of the credit card company gets South Dakota wrong.

The Family Allowances Come First

South Dakota gives a surviving spouse and certain children three rights that rank ahead of every class in 29A-3-805. The South Dakota exempt property guide explains the first two in full. Here is where they rank.

  • Homestead allowance and exempt property, SDCL 29A-2-402. The homestead allowance runs through chapter 43-31, which lets the survivor keep possessing and occupying the home, and it carries no dollar figure. Exempt property is "the property and cash described as exempt property in chapter 43-45." Subsection (b) says both "have priority over all claims against the estate."
  • Family allowance, SDCL 29A-2-403. A reasonable allowance in money for the family's maintenance during administration. The personal representative may set it without court approval at a lump sum up to $18,000 or installments up to $1,500 a month for one year. Subsection (d) says it "is exempt from and has priority over all claims except the homestead and exempt property allowances."

The definition of claims makes that rank broader than it first looks. SDCL 29A-1-201(7) says claims include "liabilities of the estate which arise at or after the death of the decedent, including funeral expenses and expenses of administration." South Dakota's part 4 of chapter 29A-2 ends at 29A-2-403, and neither allowance section carves out administration costs. So on the statute's own words, the working order is:

  1. Homestead allowance and exempt property (29A-2-402)
  2. Family allowance (29A-2-403)
  3. The five classes of 29A-3-805, starting with administration costs

That puts what the family takes before creditors ahead of the lawyer and the funeral home. Where the allowances would leave nothing for administration costs, 29A-2-402(d) and 29A-2-403(f) both let an aggrieved interested person petition the circuit court for relief, and attorney review is commonly sought before anyone is paid.

Section 29A-3-807(a) repeats the point for the personal representative. Claims are paid "after making provision for homestead, family and support allowances." Life insurance payable to the estate adds one more layer: SDCL 43-45-6 sends up to $10,000 of it to a surviving spouse or minor children, and that amount "shall not be subject to the payment of any debt" of the decedent.

A Joint Tenant Can Owe the Decedent's Debts

Joint tenancy with right of survivorship moves property to the survivor outside probate. South Dakota's chapter 43-46 lets the decedent's creditors follow some of it there.

SDCL 43-46-1 says that on the death of a joint owner of real or personal property held "in joint tenancy, with right of survivorship, the surviving joint owner or owners shall be liable for the debts and obligations of the deceased joint owner." The rest of the chapter sets the conditions:

  1. Six months to sue. Unless the survivor settles, a creditor or the personal representative may start an action "within six months after the death of the deceased joint owner" (SDCL 43-46-2).
  2. The estate must come up short. The person suing must "allege and prove that there is not sufficient other property standing in the name of the deceased joint owner" to pay the debts. If no petition to probate the estate is filed within 30 days of death, the law presumes the decedent's own property was insufficient (SDCL 43-46-3).
  3. A cap on the survivor's exposure. The survivor is liable "only to an amount equal to the value of the amount contributed to the jointly owned property by the deceased joint owner," valued at death and "subject to all homestead and legal exemptions" (SDCL 43-46-4).
  4. Several joint accounts share the load. Where the decedent held more than one joint tenancy, the survivors are jointly and severally liable, and a survivor who is sued can bring the others in and claim pro rata contribution (SDCL 43-46-5).

This matters most to families who used joint accounts or a joint deed to skip probate. The South Dakota avoid probate guide explains why joint tenancy does not dodge debts as a planning point. The mechanics above are the part a creditor uses.

A Living Trust Pays in the Same Order

A revocable trust does not shelter the settlor's debts once probate assets run out. SDCL 55-4-58(a) makes the property of a trust "that was revocable at the settlor's death" answer for creditors' claims, estate administration costs, funeral expenses and "statutory allowances to a surviving spouse and children to the extent the settlor's probate estate is inadequate."

When the trust cannot pay every unbarred creditor in full, subsection (h) gives the trustee a list that mirrors 29A-3-805: administration of the trust or estate, reasonable funeral expenses of the settlor, federal-preference debts and taxes, South Dakota-preference debts and taxes, and all other claims. Subsection (i) adds the same no-preference-within-a-class rule, with one exception for claims compromised in part or in full.

The trustee's protection runs on different terms than the personal representative's. Under 55-4-58(j), a trustee who pays creditor claims is not liable unless the trustee knew of a pending contest or claim proceeding, or was warned of one that was then filed within 60 days. A creditor paid invalidly or wrongfully must give the money back under 55-4-58(k).

Where a Medicaid Recovery Claim Sits

SDCL 28-6-23 makes medical assistance paid for a nursing facility or similar inpatient care, and listed services paid for a recipient 55 or older, "a debt due to the department." The Department of Social Services says that in a probate it "will submit a claim to the Clerk of Court for the amount of the debt as a creditor."

Section 29A-3-805 does not name that debt, and the sections read for this page do not assign it to a class. What South Dakota does say is how the department collects outside probate. Under SDCL 29A-3-817, the department can collect personal property by affidavit under 29A-3-1201. A bank or other holder that knows of the debt may make no payment "except for payment of funeral expenses" until the department is paid or issues a satisfaction. So outside probate, the funeral bill is the one payment the statute lets through ahead of the department.

Two more points shape the Medicaid claim:

  • Real estate liens. SDCL 28-6-24 makes assistance paid for an inpatient a lien against real property the recipient owns, and SDCL 28-6-27 dates its priority from recording with the register of deeds. A recorded lien is a secured claim, handled under the rules below.
  • The surviving spouse's estate. The department "may file a claim against the estate of the surviving spouse" of a recipient under 28-6-23, and 28-6-23.1 lets that spouse petition within six months of the recipient's death to cap the exposure. The creditor claims guide covers that petition.

When the decedent received Medicaid and the estate cannot pay everyone, where the department places its claim is a question a licensed South Dakota attorney can answer for the specific estate before money moves.

Secured Claims Are Settled Outside the Ladder

A lender holding collateral does not stand in line with unsecured creditors. SDCL 29A-3-803(c)(1) says the claims bar does not affect "any proceeding to enforce any mortgage, pledge, or other lien upon property of the estate." SDCL 29A-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."

SDCL 29A-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 five classes, and it usually lands in class five. SDCL 29A-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 Not Yet Due, Contingent or Unliquidated

SDCL 29A-3-810 handles the claim nobody can price yet. If it becomes due or certain before distribution and has been allowed, 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, and South Dakota's rate is high. Under SDCL 29A-3-806(e), allowed claims bear interest at the category B rate in SDCL 54-3-16, which is ten percent a year, starting 60 days after the time for original presentation has expired. A contract with its own interest term controls instead. A slow insolvent administration grows the claims it cannot pay.

Counterclaims shrink them. SDCL 29A-3-811 lets the personal representative deduct any counterclaim the estate holds against a claimant before allowing the claim.

Timing, and the Liability That Attaches to Paying Early

Section 29A-3-807(a) sets the moment. Once the earlier of the 29A-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 29A-3-807(b) is the trap. A personal representative may pay "any valid claim that has not been barred, with or without formal presentation," but 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 the personal representative did not require the payee to give adequate security for a refund, or
  2. the payment was made, "due to negligence or willful fault of the personal representative, in such manner as to deprive the injured claimant of priority."

Put that beside 29A-3-805(b). A class-five credit card paid in month two because the collector kept calling is the payment both clauses describe if a class-three federal tax 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 29A-3-806(a), if the personal representative does not mail a claimant notice of action on a claim for 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 South Dakota 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 29A-3-807(b) already binds. When a South Dakota estate that cannot pay everyone owes federal income tax or another federal debt, how the two rules fit together is a question for a licensed South Dakota attorney before any money moves.

Class four covers debts and taxes with preference under other South Dakota laws. South Dakota has no personal income tax, no estate tax and no inheritance tax, so this class is often empty for an ordinary household estate.

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 and $45,000 in a bank account, renting rather than owning a home, with no Medicaid history and no joint accounts. The claims are $5,000 of administration costs, a $9,000 funeral bill, $4,000 of unpaid federal income tax, a $30,000 hospital bill from the last illness and $20,000 of credit card balances. The spouse keeps the household goods and clothing as exempt property, and the personal representative sets the family allowance at the $18,000 lump sum.

  1. Family allowance, $18,000. Paid to the spouse ahead of every claim under 29A-2-403(d). That leaves $27,000.
  2. Administration costs, $5,000. Class one. That leaves $22,000.
  3. Funeral, $9,000. Class two, paid in full. That leaves $13,000.
  4. Federal income tax, $4,000. Class three, paid in full. That leaves $9,000.
  5. Class four. Empty in this estate.
  6. Hospital bill and credit cards, $50,000 together. Class five shares the remaining $9,000 pro rata, 18 cents on the dollar: $5,400 to the hospital and $3,600 to the card issuers.

Now run the same numbers under a Uniform Probate Code state with a last-illness class. The hospital would take the whole $9,000 before the card issuers saw anything. In South Dakota, the hospital and the bank split it.

Abatement Is a Different Ladder

Creditors and beneficiaries run on separate rules. Section 29A-3-805 ranks claims. SDCL 29A-3-902 ranks the shares of beneficiaries once the claims are settled. Unless the will shows a contrary intent, shares abate in this order: property not disposed of by the will, then property devised to a residuary devisee, then property that is not the subject of a specific devise, then all other property. Within each class, abatement is proportional.

An insolvent estate never reaches 29A-3-902 at all. A solvent estate with more gifts than assets reaches it without consulting 29A-3-805.

What Survives Distribution

Closing the estate does not end every claim.

  • SDCL 29A-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, homestead or family allowances," 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.
  • SDCL 29A-3-1006 sets the outer limit: a creditor's claim against a distributee is "forever barred" three years after the decedent's death.
  • SDCL 29A-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.

Skipping probate does not skip the order either. A successor who collects personal property by affidavit must apply it "to liens and encumbrances, homestead allowance, exempt property, family allowance, funeral expenses, expenses of administration and creditor claims, as required by law" under SDCL 29A-3-1202(d). A successor who takes land by the real-property affidavit carries the same duty under SDCL 29A-3-1203. The South Dakota small estate guide covers both affidavits.

When to Call a South Dakota Attorney

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

  • the claims exceed the assets, so the 29A-3-805 classes decide who goes unpaid
  • the allowances would leave too little for administration costs or the funeral
  • 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, since 28-6-23 makes that a debt to the Department of Social Services and 29A-3-817 lets it collect by affidavit
  • a creditor has sued, or may sue, a surviving joint tenant under chapter 43-46
  • a secured creditor and the estate disagree on the value of the collateral under 29A-3-809
  • a claim has already been paid and a higher class may now go short

Frequently Asked Questions

What order does South Dakota pay estate debts in?

SDCL 29A-3-805(a) sets five classes for an estate that cannot pay every claim in full: costs and expenses of administration, reasonable funeral expenses, debts and taxes with preference under federal law, debts and taxes with preference under other South Dakota laws, and all other claims. Under 29A-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 South Dakota give last-illness medical bills a priority?

No. The model Uniform Probate Code and states such as Idaho put reasonable medical and hospital expenses of the last illness in their own class. South Dakota's 29A-3-805, enacted by SL 1994, ch 232 and never amended, has no such class. A hospital bill from the final illness falls in class five, all other claims, and shares pro rata with credit cards and other unsecured debt.

Do the family allowances come before the funeral and administration costs in South Dakota?

The statute text puts them first. SDCL 29A-2-402(b) gives the homestead allowance and exempt property priority over all claims against the estate, and 29A-2-403(d) puts the family allowance ahead of all claims except those two. SDCL 29A-1-201(7) defines claims to include funeral expenses and expenses of administration. South Dakota's part 4 of chapter 29A-2 ends at 29A-2-403 and carries no carve-out for administration costs.

Is a surviving joint tenant liable for the decedent's debts in South Dakota?

Yes, within limits. SDCL 43-46-1 makes a surviving joint tenant liable for the deceased joint owner's debts under the conditions in chapter 43-46. A creditor or the personal representative must sue within six months after the death (43-46-2) and prove the decedent's other property is insufficient, which is presumed if no probate petition is filed within 30 days of death (43-46-3). Liability is capped at the value the decedent contributed to the joint property, subject to homestead and legal exemptions (43-46-4).

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

Yes. SDCL 29A-3-807(b) lets the personal representative pay any valid 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 willful fault deprived the injured claimant of priority.

Does a living trust have to pay the settlor's debts in South Dakota?

If the probate estate falls short, yes. SDCL 55-4-58(a) makes the property of a trust that was revocable at the settlor's death answer for creditors' claims, estate administration costs, funeral expenses and statutory allowances to the extent the probate estate is inadequate. Subsection (h) gives the trustee the same five-class order as 29A-3-805.

Do unpaid South Dakota estate claims earn interest?

Yes. SDCL 29A-3-806(e) makes allowed claims bear interest at the category B rate in SDCL 54-3-16, which is ten percent a year, starting 60 days after the time for original presentation of the claim has expired. A contract that sets its own interest term controls instead, and a court judgment can provide otherwise.

Related Guides

Sources:

It is not legal advice.

Information current as of September 27, 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 South Dakota can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.

All South Dakota guides← Back to all articles

More South Dakota Resources

Explore the rest of the South Dakota probate hub.

Do I need probate?5 pages
For the executor4 pages
Money and taxes5 pages
Family and inheritance5 pages
Transfer assets5 pages
File and learn5 pages