How does an estate trustee decide which estate debts get paid first from property sale proceeds?

An estate trustee generally has to identify and address the estate's debts before making final distributions to beneficiaries, and there's a rough order of priority that guides this. Funeral and testamentary expenses, along with the direct costs of administering the estate, are typically dealt with first. Secured debts tied to the specific property being sold, such as an outstanding mortgage, are generally paid out of that property's sale proceeds as part of closing, before the remaining net proceeds become part of the general estate funds. Unsecured debts and other estate liabilities are then addressed from the estate's overall assets.

Trustees also commonly seek a tax clearance certificate from the Canada Revenue Agency before making final distributions, confirming that outstanding taxes have been addressed, since distributing funds and later discovering unpaid taxes can expose the trustee personally. Because priority among competing claims can get complicated, particularly where the estate's assets aren't enough to cover everything, or where a dependant support claim or other dispute is in play, a trustee dealing with significant or uncertain debts should get legal and accounting advice rather than proceeding on assumptions about who gets paid first.