Whose Debt Takes Priority When an Estate is Insolvent and NJ Medicaid Gets Involved?

HNWElder Law, Estate Administration and Probate

estateIf an estate has debts greater than the value of Estate assets, cash, etc., the estate is known as insolvent. Insolvent Estates create competing demands upon Executors and Administrators. Who gets paid first, especially if there is a New Jersey Medicaid lien filed against the Estate?

Medicaid Liens vs. Creditor Liens – Who Comes First?

By statute, Medicaid has priority against most creditors and claims filed against an insolvent estate, but certain other claims are superior in priority to the State such as funeral and administration expenses. Secured liens can also take priority like a mortgage or municipal real estate tax lien. These liens are superior to a Medicaid claim.

In a published case the administrator of the estate tried to get the parties to compromise a tax lien. The tax sale certificate holder refused so counsel filed for a judgement of insolvency and requested instructions on the distribution. See the case of “Matter of Edith Pryor”. The court ruled that tax liens along with Estate Administration expenses take priority over Medicaid and other creditors.

To discuss your NJ Estate and Probate Administration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Administration and Probate Attorney

Previous PostNext Post