states. It may be said, however, as a general rule, that where preference is shown at all, it will be given in the following order:

I. Debts due the government and taxes

2. Judgment creditors

3. Specialty debts, i.e., mortgages

4. Simple contract debts

It may be noted here that in some jurisdictions, at the discretion of the court, money due the deceased's landlord for rent due or accruing on a lease or leases in the possession of the deceased during his lifetime may take precedence over the fourth class of preferred claims.

Where the personal representative gives his own money in order to cover a debt for payment of which the deceased has pledged valuable security or collateral, he may either take possession of the collateral or be reimbursed from later funds of the estate.

§ 112. Invalid or Doubtful Claims

Claims based on the oral agreements of the decedent to do some particular thing or to pay for something, and merely alleged by the creditors or claimants, without written proof of any kind, are quite the most frequent and puzzling for the representatives to settle, and require substantial proof on the part of the claimant before they will be accepted as valid.

An executor or an administrator in his individual capacity as a creditor of the estate has the right to present a claim and to have it proved and verified, but he must not satisfy his own debt (this has nothing to do with the administration fees) from the estate that he is settling until his claim has been approved by the proper official of the probate court.

Claims against the estate of the decedent, whether oral or written, which have not been presented during the lifetime of

the decedent, should be carefully examined by the representative. Claims of this sort, brought forward only when the debtor is dead and unable to explain or refute such debts, should be allowed only upon the best of proof.

The representative whose duty it is to defend the estate against such claims should use to the best advantage any counterclaims against such creditors which there may be, and also plead the Statute of Limitations against others where possible. Debts of the decedent become barred by the Statute of Limitations after a specified period after their maturity, and to continue the debt beyond that time there must be a promise in writing signed by the party to be charged.

§ 113. Failure of Assets.

Debts are to be paid out of the personal estate; when, however, that is insufficient to pay them, an order of court may be secured (see §125) authorizing the sale of real estate in order to obtain sufficient money to pay such debts as cannot be satisfied out of the personalty. If enough is finally realized from the sale of personalty to pay all debts and yet real property devised or descended to someone has been sold, the devisee or heir may demand reimbursement from the personalty.

When it happens that one claimant has the right to be paid. from two or more funds and another from only one fund, the claims should be so arranged that the one who has access to more than one fund shall be compelled to exhaust the assets of the other funds before the one fund open to the other claimant is levied upon. This process is termed "marshaling assets."

§ 114. Paying Debts Promptly

The personal representative is supposed to pay all claims at the earliest possible time. Such time is not, however, until

the statutory period within which he may collect debts and recover assets has come to an end. If the representative pays any legacies and debts in full before he has knowledge of the full amount of indebtedness, and the amount of assets, he makes himself responsible, and he may be held for payment by any creditors who are ascertained after such time, where the assets run short. In this last case, the representative will be liable to later creditors for the amount to which they would have been entitled ratably with the other creditors. An executor or an administrator can never be held liable for non-payment of such claims until the close of such statutory period.

REVIEW QUESTIONS

1. What must be paid before legacies are satisfied? If an executor immediately gave a legatee a specific legacy of a diamond pin and later the estate proved insolvent, what would happen? In your state how long may an executor postpone the payment of legacies?

2. Within what time must claims against an estate be presented in your state? How are creditors notified? If claims do not mature until after the administration has been closed, can they be collected?

3. To whom should a claim against an estate be presented in your state? If the representative rejects a good claim, what can the claimant do? Suppose the valid claims presented exceed in amount the aggregate of the personal property, what is done? When must a legacy be paid?

4. What charges against an estate are payable first? Why are these paid first? May the statutory allowance be defeated by will? Is the allowance a substitute for dower? How does it differ from dower? How much should be allowed for burial expenses? If there is not enough to pay these three kinds of charges, what is done?

5. As between the claims filed, what, if any, should be the order of payment? Have charges for rent any preference in your state?

If the representative advances his own money, how may he be reimbursed?

6. How could a claim against an estate founded on an oral contract be proved? Can an executor give any preference to a claim of his own against the estate?

7. Where there is a deficiency of personal assets, debts are to be settled at the expense of what legatees and devisees? If real property has been sold before personal property is exhausted, what recourse has the devisee or heir? What is "marshaling assets"?

8. What is the statutory period within which debts against an estate are to be paid in your state? If the executor pays some debts or some legacies in advance, what risk does he run?

CHAPTER XV

SELLING PERSONAL PROPERTY

$ 115. The Need for Cash

In nearly every case where an estate is administered, the first need is to secure cash for the following purposes:

1. To pay funeral expenses, last illness allowances, and any taxes that may be due.

2. To pay inheritance taxes.

3. To pay all outstanding debts and claims.

4. To pay the expenses of administration.

5. To pay legacies or to apportion residue among those entitled to it.

In comparatively few cases is there enough cash on hand to avoid a sale of some part of the estate. In the majority of cases the will itself necessitates the sale of some of the property, and where there is no will the personal estate must of necessity be turned into cash for distribution. Hence the personal representative has unrestricted authority to sell personal property for the purpose of securing cash, but before making any such sale the representative should inform himself as to any law, which may require a certain kind of sale or certain notices to interested persons. Where specific legacies of personalty have been made these would not be sold if it were possible to pay all debts from the sale of other personal assets.

§ 116. The Power to Sell

Without any order from court or express authorization in the will, an executor or an administrator has authority to sell