What Happens When an Estate Is Insolvent in North Carolina?
Enter the estate's assets and the claims in each class of North Carolina's payment order to see which claims are paid in full, which are paid in part, and which go unpaid, along with when the executor is personally liable.
Frequently Asked Questions
An estate is insolvent when the claims against it exceed the assets available to pay them. North Carolina then pays the claims in 10 classes, in the order its statute sets, and the classes at the end of the order are the ones left unpaid when the money runs outN.C.G.S. § 28A-19-6Verified Sep 23, 2026View source.
1. Costs and expenses of administration (pre-class, paid before all classes)N.C.G.S. § 28A-19-6(a) (lead-in)Verified Sep 23, 2026View source. 2. Class 1: Claims with specific lien on property (up to property value)N.C.G.S. § 28A-19-6(a), first classVerified Sep 23, 2026View source. 3. Class 2: Funeral expenses (up to $3,500)N.C.G.S. § 28A-19-6(a), second classVerified Sep 23, 2026View source. 4. Class 3: Gravestone and burial place costs (up to $1,500)N.C.G.S. § 28A-19-6(a), third classVerified Sep 23, 2026View source. 5. Class 4: Dues, taxes, and other claims with preference under federal lawN.C.G.S. § 28A-19-6(a), fourth classVerified Sep 23, 2026View source. 6. Class 5: Dues, taxes, and other claims with preference under North Carolina law and its subdivisionsN.C.G.S. § 28A-19-6(a), fifth classVerified Sep 23, 2026View source. 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)N.C.G.S. § 28A-19-6(a), sixth classVerified Sep 23, 2026View source. 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)N.C.G.S. § 28A-19-6(a), seventh classVerified Sep 23, 2026View source. 9. Class 8: Equitable distribution claimsN.C.G.S. § 28A-19-6(a), eighth classVerified Sep 23, 2026View source. 10. Class 9: All other claimsN.C.G.S. § 28A-19-6(a), ninth classVerified Sep 23, 2026View source.
North Carolina's statute sets the rule class by class rather than one rule for every classN.C.G.S. § 28A-19-13Verified Sep 23, 2026View source.
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.
A person named in the will files a written renunciation with the court (N.C. Gen. Stat. § 28A-5-1(a)). The writing is signed and acknowledged before a notary. Renunciation of Executor for North Carolina
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