Question

Claims are being paid out of Tom's estate. What is the correct order of payment?

Answer 1

The order of payment from Tom's estate includes funeral expenses, secured debts, unsecured debts, taxes, family allowances, claims of creditors, and distribution of assets.

Step-by-step explanation:

In the context of the question, the order of payment from Tom's estate would typically follow the laws of the jurisdiction where the estate is being administered. However, some common guidelines for the order of payment in an estate include:

1. Funeral expenses and administration costs: These would typically be paid first from the estate.
2. Secured debts: Any debts that are secured by collateral, such as a mortgage or a car loan, would be paid next.
3. Unsecured debts: Debts like credit card balances and personal loans would be paid after secured debts.
4. Taxes: Estate taxes and other tax liabilities would be paid next.
5. Family allowances and exemptions: Depending on the laws of the jurisdiction, certain allowances or exemptions may be granted to surviving spouses and dependents.
6. Claims of creditors: Any remaining debts owed to creditors would be paid.
7. Distribution of assets: Once all debts and claims have been satisfied, the remaining assets of the estate are distributed to the beneficiaries in accordance with the terms of the will or, if there is no will, the laws of intestacy.