If you are a personal representative, appointed to administer a probate estate under Arizona probate law, you are probably aware that you need to repay the decedent’s creditors. In fact, to make sure that creditors are properly repaid, you have a duty under Arizona probate law to give notice to all creditors that you know exist, and to also publish notice if there are creditors that you cannot physically locate. Rightfully so, Arizona probate law takes repayment of creditors quite seriously.
Ideally, a probate estate has enough funds to not only repay creditors, but to also provide the decedent’s heirs with an inheritance. Many times, however, this is not the case, and personal representatives must then decide how to divide and distribute the insufficient funds. If you are in this situation, know that Arizona probate law provides guidance so that you will know precisely how to divide the estate. More specifically, Arizona probate law provides a very specific framework that you must follow if the estate that you are handling has insufficient funds to repay all of the creditors.
First of all, you should pay for the costs and expenses of administering the estate, which includes a fair and reasonable fee for your services as the personal representative. Secondly, you should make sure the funeral expenses are paid for. Third, you should pay debts and taxes under federal law. Fourth, you should pay for the expenses that arose from the decedent’s last illness. Fifth, you should pay debts and taxes that arose under Arizona law. And, lastly, with whatever is remaining, you should repay all other legitimate claims.
Although Arizona probate law is clear on the order in which you should repay creditors, creditors themselves will not line up in an orderly fashion and wait for their disbursement. Rather, they will likely demand immediate payment, and operate under the assumption that the estate has the funds to repay their claim. As such, you should have a game plan of how you will repay creditors well before you make the first payment. To help you establish such a plan, you should work with an Arizona probate attorney who is familiar with this area of the law.
To schedule a consultation with an Arizona probate attorney, do not hesitate to contact JacksonWhite by calling (480) 818-6912.