(1) Claims allowed against the trust estate under ORS § 130.350 to 130.450 must be paid by the trustee in the following order of priority:

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(a) Expenses of administering the trust estate.

(b) Expenses of a plain and decent funeral and disposition of the remains of the settlor.

(c) Debts and taxes with preference under federal law.

(d) Reasonable and necessary medical and hospital expenses of the last illness of the settlor, including compensation of persons attending the settlor.

(e) Taxes with preference under the laws of this state that are due and payable while possession of the trust estate of the settlor is retained by the trustee.

(f) Debts owed employees of the settlor for labor performed within 90 days immediately preceding the date of death of the settlor.

(g) Child support arrearages.

(h) Claims of the Department of Human Services and the Oregon Health Authority for the net amount of public assistance, as defined in ORS § 411.010, and for the net amount of medical assistance that may be recovered from an estate under ORS § 416.350.

(i) Claims of the Department of Human Services and the Oregon Health Authority for the care and maintenance of any settlor who was a patient at a state institution under ORS § 179.610 to 179.770.

(j) All other claims against the trust estate.

(2) If the assets of the trust estate are insufficient to pay in full all expenses or claims of any one class specified in subsection (1) of this section, each expense or claim of that class shall be paid only in proportion to the amount thereof. [Formerly 128.290; 2009 c.595 § 91; 2011 c.720 § 64; 2013 c.688 § 22]