Ohio Probate Debt Payment Order: Priority Classes Under ORC 2117.25

Ohio probate debt payment order is a strict statutory framework that every executor and administrator must follow when paying the debts and obligations of a deceased person's estate. Under Ohio Revised Code Section 2117.25, debts must be paid in a specific sequence of priority classes, and paying debts out of order can expose the fiduciary to personal liability. Whether you are an executor settling a loved one's estate or an administrator appointed by the court, understanding these priority rules is key to fulfilling your fiduciary duties and protecting yourself from claims.

Why Payment Order Matters in Ohio Probate

When a person dies, their debts do not simply disappear. Creditors have the right to file claims against the estate, and the executor must pay valid claims from estate assets. But what happens when there is not enough money to pay everyone? Or even when there is, how do you decide who gets paid first?

Ohio law answers these questions definitively. ORC 2117.25 establishes 10 priority classes of claims, and the executor must pay all claims in a higher-priority class before paying anything to a lower-priority class. This system ensures that the most important obligations, like funeral expenses and administration costs, are paid before general creditors such as credit card companies.

Consequences of Ignoring the Priority Order

Paying debts out of the statutory order is not merely a procedural misstep. It can result in:

• Personal liability for the executor or administrator
• Surcharge by the Probate Court, requiring the fiduciary to repay the estate from personal funds
• Removal as fiduciary
• Claims by higher-priority creditors who were not paid because funds were improperly distributed

For example, if an executor pays a credit card company (Class 10) before paying the decedent's funeral expenses (Class 2), and the estate runs out of money, the executor may be personally responsible for covering the unpaid funeral costs.

The 10 Priority Classes Under ORC 2117.25

Ohio Revised Code Section 2117.25 establishes the following order of priority for the payment of debts from a decedent's estate. Each class must be paid in full before any payment is made to the next class. If the estate does not have sufficient funds to pay all claims within a single class, claims within that class are paid proportionally (pro rata).

Here is an overview of all 10 classes:

Let us examine each class in detail.

Class 1: Administration Costs and Attorney Fees

The first priority for payment from any Ohio estate is the costs of administering the estate itself. This makes practical sense: if administration costs are not paid, the estate cannot be properly managed, and no other creditors can be paid at all.

What Qualifies as Administration Costs

• Court filing fees - Costs to open the probate case and file required documents
• Fiduciary compensation - The executor or administrator's statutory fees
• Attorney fees - Compensation for the estate attorney
• Appraisal fees - Costs of appraising estate assets
• Accounting fees - Costs of preparing tax returns and fiduciary accounts
• Publication costs - Newspaper notice to creditors
• Bond premiums - The cost of the fiduciary's surety bond
• Estate management expenses - Costs necessary to preserve and protect estate assets

Key Considerations

Administration costs must be reasonable. The Probate Court reviews these expenses when the fiduciary files their account. Excessive fees can be reduced by the court. Attorney fees in Ohio are subject to reasonableness review under ORC 2113.36, and fiduciary compensation is governed by ORC 2113.35.

For a detailed look at typical administration costs, see our Ohio probate costs guide.

Class 2: Funeral and Burial Expenses

Funeral and burial expenses hold the second-highest priority in Ohio's payment order. The law recognizes the fundamental importance of providing a dignified burial or cremation for the deceased.

What Is Covered

• Funeral home charges (preparation, service, facilities)
• Casket or urn
• Cemetery plot or cremation
• Headstone or grave marker
• Transportation of remains
• Flowers and other customary arrangements
• Death notices and obituaries

Reasonable Expense Standard

The funeral expenses must be "reasonable" considering the size of the estate and the decedent's station in life. If the family arranged an extravagant funeral for someone with a modest estate, the court may limit the reimbursable amount to what is considered reasonable.

Prepaid Funeral Plans

If the decedent had a prepaid funeral plan, those expenses are already covered and do not come from the estate. But any amounts exceeding the prepaid plan would be an estate obligation at Class 2 priority.

Classes 3-6: Federal and State Priority Claims

Classes 3 through 6 cover government tax claims at different levels. These reflect the legal priority that government entities have over private creditors.

Class 3: Federal Taxes

All debts due to the United States government, primarily:

• Federal income taxes owed by the decedent
• Federal estate taxes (for estates exceeding the federal exemption, currently $13.99 million in 2025)
• Federal tax liens
• Penalties and interest on unpaid federal taxes

The IRS has powerful collection tools and its claims take precedence over state and local tax obligations. The executor should file the decedent's final federal income tax return (Form 1040) and any required estate tax return (Form 706) as early as possible to determine the federal tax liability.

Class 4: Medical Expenses of the Last Illness

This class covers the cost of the decedent's final medical care:

• Hospital bills from the final illness
• Physician fees
• Prescription medications
• Emergency medical services
• Hospice care
• Home health aides during the final illness

Note that this class covers only the "last illness," not the decedent's entire medical history. Medical bills from earlier illnesses that were not part of the final illness fall into Class 10 as general unsecured debts.

Class 5: State Taxes

Debts owed to the State of Ohio for taxes:

• Ohio income taxes
• Ohio commercial activity tax
• State tax liens
• Penalties and interest on state taxes

Ohio does not currently impose a state estate tax (it was repealed in 2013), but other state tax obligations may still exist.

Class 6: Local Taxes

Tax obligations owed to Ohio's counties, municipalities, and other local taxing authorities:

• Property taxes (county and municipal)
• Municipal income taxes
• Special assessments
• Local tax liens

Property tax obligations are common and should be identified early in the administration.

Class 7: Nursing Home and Long-Term Care

Class 7 covers debts owed for long-term care, which has become increasingly common as more Americans require extended care.

What Is Included

• Nursing home charges
• Assisted living facility fees
• Long-term care facility charges
• Medicaid reimbursement claims
• Home health care agency charges for ongoing care

Medicaid Estate Recovery

One of the largest Class 7 claims is Ohio's Medicaid estate recovery program. Under federal and state law, Ohio can seek reimbursement from the estate for Medicaid benefits paid on behalf of the decedent during their lifetime. These claims can be large, sometimes consuming a major portion of the estate.

The Medicaid estate recovery claim is filed like any other creditor claim and is subject to the same filing deadlines. That said, certain protections apply, including exemptions when a surviving spouse, minor child, or disabled child is living.

Class 8: Obligations to the State of Ohio

Class 8 covers non-tax debts owed to the State of Ohio or any of its agencies and institutions:

• Student loans from state institutions
• Workers' compensation overpayments
• Unemployment compensation overpayments
• Fines and penalties owed to state agencies
• Contract obligations with state entities

This class is distinct from Class 5 (state taxes) because it covers non-tax obligations. The state's general creditor claims have priority over private creditors but fall below tax claims and long-term care obligations.

Class 9: Manual Labor Claims

Class 9 provides priority for wages owed to individuals who performed manual labor for the decedent:

• Unpaid wages for household employees
• Unpaid wages for farm workers
• Compensation owed to personal care attendants
• Other manual labor compensation

This class reflects the historical protection afforded to laborers who may depend on their wages for basic necessities. In modern practice, this class is less commonly invoked than others, but it remains relevant for estates where the decedent employed domestic staff, caretakers, or agricultural workers.

Limitations

The priority for manual labor claims may be limited in amount per claimant. Also, the claim must be for actual wages or compensation, not for breach of an employment contract or other damages.

Class 10: General Unsecured Debts

Class 10 is the catch-all category for all remaining debts that do not fall into a higher priority class. This is where most private creditors' claims land.

Common Class 10 Debts

• Credit card balances
• Personal loans
• Medical bills from prior illnesses (not the last illness)
• Utility bills
• Unpaid rent or lease obligations
• Judgments against the decedent (unless secured by a lien)
• Promissory notes
• Contract obligations

Pro Rata Payment

If the estate has enough to pay all Class 1 through 9 claims but not enough to pay all Class 10 claims in full, the Class 10 creditors receive pro rata payment. This means each creditor receives the same percentage of their claim.

Example: If the estate has $20,000 remaining after paying all higher-priority claims, and Class 10 claims total $50,000, each Class 10 creditor receives 40 cents on the dollar ($20,000 / $50,000 = 40%).

For more on how to handle creditor claims throughout the probate process, see our Ohio creditor claims guide.

What Happens When the Estate Cannot Pay All Debts

When an estate's debts exceed its assets, the estate is considered "insolvent." Insolvent estates require very careful management by the executor.

Identifying Insolvency

An estate may be insolvent if:

• Total verified creditor claims exceed total estate assets
• Asset values have declined since the inventory was filed
• Previously unknown debts have surfaced

The executor should assess solvency early in the administration by comparing the inventory value to the total of filed and anticipated claims.

Managing an Insolvent Estate

When an estate is insolvent:

1. Do not distribute anything to beneficiaries until all debts are addressed
2. Follow the priority order strictly - pay each class in full before moving to the next
3. Pay pro rata within a class if there are insufficient funds to pay all claims within that class
4. Document everything - keep detailed records of all payments and the reasoning behind them
5. Consult an attorney - insolvent estates are among the most legally complex situations in probate

Beneficiary Rights in Insolvent Estates

When an estate is insolvent, beneficiaries may receive nothing. The priority payment system ensures that creditors are paid before beneficiaries. That said, certain assets may be exempt from creditor claims:

• The Ohio family allowance under ORC 2106.13
• Exempt property set aside for the surviving spouse
• Assets that pass outside of probate (life insurance with named beneficiaries, joint accounts, transfer-on-death designations)

The surviving spouse has several statutory protections that can shield certain assets from creditor claims even in an insolvent estate.

Use our estate assessment tool to get a preliminary understanding of how your estate's debts and assets compare.

Executor Liability for Paying Out of Order

One of the biggest risks an executor faces is personal liability for paying estate debts in the wrong order. Ohio law is clear on this point, and ignorance of the priority rules is not a defense.

How Liability Arises

An executor becomes personally liable when:

1. They pay a lower-priority creditor before a higher-priority creditor
2. The estate subsequently lacks sufficient funds to pay the higher-priority claim
3. The higher-priority creditor or a beneficiary challenges the payment

Examples of Improper Payment

Example 1: The executor pays $15,000 in credit card debt (Class 10) early in the administration. Later, the IRS files a $15,000 claim (Class 3), but the estate no longer has sufficient assets. The executor may be personally liable for the $15,000 IRS claim.

Example 2: The executor distributes assets to beneficiaries before all creditor claims have been resolved. A Class 7 Medicaid claim is later filed. The executor may need to recover the distributed assets or pay the claim personally.

Protecting Yourself

To minimize the risk of personal liability:

• Wait for the creditor claims period to expire before making large payments (Ohio allows 6 months for creditors to file claims)
• Identify all potential claims before paying any non-urgent debts
• Pay in strict priority order without exception
• Keep detailed records of all payments and the reasoning behind each
• Consult an attorney before paying any questionable claims
• Never distribute to beneficiaries until all debts and taxes are resolved

The Claims Period

Under ORC 2117.06, creditors generally have 6 months from the date of death to present claims against the estate. The executor should not pay Class 10 debts (and should be cautious about other classes) until this period expires, unless the claim is clearly valid and urgent.

Frequently Asked Questions

Does the executor have to pay the decedent's credit card debt?

The executor must pay valid credit card debt from estate assets, but only if there are sufficient funds after paying all higher-priority claims (Classes 1-9). Credit card debt falls into Class 10. If the estate is insolvent, credit card companies may receive only partial payment or nothing at all. The executor is not personally responsible for the decedent's credit card debt.

What about debts secured by collateral (mortgages, car loans)?

Secured debts (like mortgages and car loans) are treated differently. The creditor has a lien on the specific asset, so they can foreclose or repossess regardless of the priority order. If the estate wants to keep the asset, it must continue making payments. If the asset is sold, the secured creditor is paid from the proceeds before any excess goes to the estate.

How long do creditors have to file claims in Ohio?

Under ORC 2117.06, creditors generally have 6 months from the date of death to file claims. The executor must publish a notice to creditors in a local newspaper and send written notice to known creditors. Claims filed after the deadline are typically barred.

Can the executor negotiate with creditors?

Yes. Executors can negotiate settlements with creditors, especially for Class 10 debts. Many creditors will accept less than the full amount owed, especially if the estate is insolvent or close to it. Any negotiated settlement should be documented in writing and may require court approval.

Are joint debts handled differently?

If the decedent shared a debt with another person (such as a joint credit card or co-signed loan), the surviving joint debtor remains fully responsible for the entire debt. The estate may still be liable for its share, but the creditor can also pursue the surviving joint debtor directly.

What happens to student loans when someone dies?

Federal student loans are discharged upon the borrower's death. Private student loans depend on the lender's policies and the loan agreement. Some private lenders discharge the debt, while others pursue the estate. Co-signers on private student loans may remain liable regardless of what happens with the estate.

Does Ohio have an estate tax that affects debt payment?

Ohio repealed its state estate tax effective January 1, 2013. But federal estate tax (Class 3 priority) applies to estates exceeding the federal exemption amount ($13.99 million in 2025). Most Ohio estates will not owe federal estate tax, but the executor should verify this.

Related Guides

• Ohio Creditor Claims
• Ohio Probate Costs
• Ohio Executor Duties and Responsibilities
• Ohio Estate Assessment Tool
• Ohio Probate Timeline
• Ohio Full Administration Guide

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Sources:

• "Ohio Revised Code Section 2117.25 - Order of Payment of Debts," Ohio Legislature, 2025, https://codes.ohio.gov/ohio-revised-code/section-2117.25
• "Ohio Revised Code Chapter 2117 - Creditor Claims," Ohio Legislature, 2025, https://codes.ohio.gov/ohio-revised-code/chapter-2117
• "Ohio Revised Code Section 2113.35 - Fiduciary Compensation," Ohio Legislature, 2025, https://codes.ohio.gov/ohio-revised-code/section-2113.35

This guide provides general information about Ohio probate debt payment order and priority. Consult with an Ohio probate attorney for advice specific to your situation.