Paying creditors from the probate estate

By December 30, 2010Uncategorized

The role of personal representative for Arizona probate law is not always an easy one to fill.  At a minimum, personal representatives can expect to serve in this capacity for several months, and it is not unheard of for probate cases to drag on for two or more years.  In addition to being time consuming, personal representatives have a wide range of obligations they must fulfill under the Arizona Probate Code.  One of these duties is seeing to it that the estate’s creditors have an opportunity to collect money owed to them by the estate.

Many people have a number of outstanding debts when they pass away.  And because death does not dissolve certain debts, the probate process provides a means for creditors to obtain payment.  Arizona probate law does not, however, write a blank check to creditors.  Rather, it is the personal representative’s responsibility to approve or reject every creditor’s claim.  Moreover, it is the personal representative’s responsibility to provide adequate notice to creditors so that they may bring their claims in the first place.

Arizona probate law requires personal representatives to provide notice in two manners.  First, they must publish notice once a week for three consecutive weeks in a newspaper circulated in the county of the probate court.  This is intended to notify creditors unknown to the personal representative.  In addition, personal representatives must provide written notice to every known creditor.  Creditors have the later of four months from the date of the newspaper publication or 60 days from receiving a written notice to make a claim against the estate.  Creditors who do not meet this deadline are barred from bringing future claims against the estate.

Arizona probate law requires personal representatives to approve or reject every creditor claim against the probate estate.  Approved claims are paid from out of the estate, and creditors can sue the estate for payment if the personal representative rejects the claim.  Personal representatives are many times required to sell estate property in order to pay for approved creditor claims.

Personal representatives commonly have legal questions about the Arizona Probate Code.  What if the estate has insufficient funds to pay all of the creditors?  How do personal representatives approach selling estate property to pay the estate’s debts?  Can personal representatives be held personally liable to the estate’s creditors?  Legal counsel can help personal representatives answer these questions.  Personal representatives who seek the assistance of an Arizona probate lawyer are best equipped to deal with creditors and navigate Arizona probate law.