What Happens When an Estate Is Insolvent in North Carolina?

1. Costs and expenses of administration (pre-class, paid before all classes); 2. Class 1: Claims with specific lien on property (up to property value); 3. Class 2: Funeral expenses (up to $3,500); 4. Class 3: Gravestone and burial place costs (up to $1,500); 5. Class 4: Dues, taxes, and other claims with preference under federal law; 6. Class 5: Dues, taxes, and other claims with preference under North Carolina law and its subdivisions; 7. Class 6: Docketed North Carolina judgments, to the extent a lien on the decedent's property at death; DHHS medical-assistance recovery claims (paid after judgments docketed before DHHS seeks recovery); 8. Class 7: Employee wages (up to 12 months before death); medical services within 12 months before death; drugs and medical supplies for the last illness (up to 12 months); 9. Class 8: Equitable distribution claims; 10. Class 9: All other claimsN.C.G.S. § 28A-19-6Verified Sep 23, 2026View source.

North Carolina pays them class by classN.C.G.S. § 28A-19-13Verified Sep 23, 2026View source: the statute sets the rule class by class rather than one rule for every class.

North Carolina's statutes state no rule on the personal representative's personal liability for the decedent's debts, paying a later class before an earlier class is paid in full or distributing property to heirs while claims are unpaid.

Yes. A person named in a will who has not yet been appointed can decline the appointment, and an insolvent estate is a common reason to. In North Carolina, the way to decline is a written renunciation filed with the courtN.C. Gen. Stat. § 28A-5-1(a)Verified Sep 22, 2026View source. The Renunciation of Executor for North Carolina prepares the writing or the state's official form.