In Wisconsin probate, claims are paid in a fixed statutory order, and the Personal Representative must strictly follow that priority when paying debts, expenses, and making distributions. Estate assets must be used to satisfy higher‑priority classes before any lower‑priority claims are paid; if assets are insufficient, lower classes may receive only partial payment or nothing at all.
The statutory order generally begins with administration expenses, such as court costs and filing fees, attorney fees for estate administration, Personal Representative compensation, and the costs of preserving estate assets like insurance and storage. Next come funeral and burial expenses, followed by expenses of the decedent’s last illness, including medical and hospital bills and nursing care related to the last illness. Thereafter, federal and state taxes are paid, along with other debts that have preference under federal law, such as certain federal tax claims. Secured debts follow, to the extent any portion remains unsecured after applying the collateral, and then general unsecured claims, including credit cards, personal loans, and medical bills not part of the last illness. Any remaining valid claims that do not fit the preceding categories are paid next, and subordinated or late‑filed claims, if allowed under an exception, are paid last, if at all.
If the estate lacks sufficient funds to pay all claims, the rule is rigid: higher classes must be fully satisfied before lower classes receive anything. Within a single class, where funds are insufficient to pay every claim in full, creditors in that class are generally paid proportionally based on the amount of their allowed claims.
If you would like to discuss this matter more thoroughly, please reach out to our Madison Wisconsin Estate Planning attorneys. We are here to help!