Dealing with debt under Arizona probate law

By April 8, 2011Uncategorized

One of the many responsibilities that personal representatives have under Arizona probate law contacting the decedent’s creditors.  The reason for this, which should be obvious, is to give the creditors an opportunity to collect unpaid debts from the estate before the personal representative distributes it according to the decedent’s wishes.  The first thing that many personal representatives want to know about this is to what extent they are required to put forth effort reaching out to creditors.  The Arizona Probate Code has a very specific statute controlling this process, which requires personal representatives to publish notice in a local newspaper, or mail notice directly to each and every creditor.  Not until creditors are given an opportunity to recover any outstanding balance from an estate are personal representatives allowed to make distributions from the estate.

That personal representatives must contact creditors brings up a related question:  Can family members inherit a decedent’s debt?  The answer to this is that so long as the debt was solely in the decedent’s name, the debt itself will not pass to another person.  In other words, nobody has to worry about inheriting a hefty credit card debt from their mom or dad unless the credit card was also in their name.  Of course, this does not mean that a debt goes away upon its owner’s death – the lender still has a chance to recoup the debt from the estate.  But, while debt may reduce an intended inheritance quite substantially, creditors are typically barred from recovering anything beyond what the estate has to offer.

Dealing with creditors can be very complicated for personal representatives, particularly when more than one person owns some or all of the debts.  The best approach for personal representatives is to work with an Arizona probate lawyer who understands the Arizona Probate Code and can shield as much of the estate from creditors as possible.