4 types of creditors that get priority during probate in Georgia

On Behalf of | Dec 15, 2023 | Estate Administration

When people pass away, their estate goes through probate. During probate, the deceased person’s assets undergo management and distribution to settle outstanding debts.

In Georgia, the probate court follows a specific order of priority when it comes to paying creditors.

1. Funeral expenses and administrative costs

The first priority in settling an estate in Georgia is covering funeral expenses and administrative costs. These include the expenses incurred in managing and distributing the estate, such as court fees, accounting fees and fees for the executor’s services.

2. Debts that property secures

Secured debts, which specific assets back, take precedence over unsecured debts. For example, a car usually backs a car loan, while a house may back a mortgage loan. The median value of an owner-occupied home in Georgia is $245,900. Proceeds from the sale of that property can settle the debts.

3. Unsecured creditors

After settling funeral expenses, administrative costs and secured debts, unsecured creditors come next in line. Unsecured debts include credit card debts, medical bills and personal loans. The estate will use its remaining assets to satisfy these obligations in the order Georgia law prescribes.

4. Taxes

Outstanding tax debts also receive priority. They include any federal, state or local taxes. The estate must settle these tax obligations before distributing the remaining assets to beneficiaries.

After the settlement of higher-priority debts, any remaining assets in the estate undergo distribution to heirs or beneficiaries according to the terms of the will or, if there is no will, according to Georgia’s laws of intestate succession.

Understanding the hierarchy of creditor priority during probate in Georgia ensures a fair and lawful distribution of the deceased person’s assets.