Disclaimer: This article is for educational purposes only and does not constitute legal advice. Always consult a licensed attorney for guidance on your specific situation.
Detailed Answer
When administering an estate in Arizona, the personal representative must collect assets, pay valid debts, then distribute any remainder to heirs or beneficiaries. Arizona’s probate code sets strict procedures and deadlines for presenting, verifying and paying creditor claims. Here’s how to manage and prioritize them:
1. Identify and Notify Creditors
Within 30 days of appointment, publish a notice to creditors in a newspaper of general circulation in the county of probate. (See A.R.S. §14-3801: www.azleg.gov/ars/14/03801.htm) Also mail written notice to known creditors.
2. Creditors Present Claims
Creditors have four months from the first date of publication to file a written claim. A creditor who fails to file within that time generally loses the right to payment. (A.R.S. §14-3802: www.azleg.gov/ars/14/03802.htm)
3. Review and Allow or Contest Claims
Evaluate each claim’s validity. If a claim appears valid, formally allow it by entering it on the estate’s claims register. To contest, file an objection and set a hearing under A.R.S. §14-3806: www.azleg.gov/ars/14/03806.htm.
4. Determine Priority of Payment
Arizona law prescribes the following order (A.R.S. §14-3807):
- Administration expenses (court costs, attorney and personal representative fees)
- Funeral expenses and expenses of last illness (up to $10,000 each, combined total not to exceed $10,000 for each category if no will)
- Family allowance to surviving spouse and dependent children
- Secured claims (to the extent of collateral value)
- Priority claims—taxes due to the state or federal government
- General unsecured claims in the order presented
Always pay higher-priority debts before moving to the next category. If assets are insufficient, pay pro rata within the same priority class.
5. Distribute Remaining Assets
Once valid claims are paid, distribute any remaining estate assets per the will or Arizona’s intestacy statutes. (A.R.S. §14-2101 et seq.: www.azleg.gov/ars/14/02101.htm)
Helpful Hints
- Keep a detailed claims register and ledger recording every claim, date received, and disposition.
- Respond promptly to creditor inquiries to avoid default judgments.
- When in doubt about a claim’s validity, seek court guidance or mediation.
- Maintain clear communication with beneficiaries about timelines and potential delays.
- Consult Arizona’s probate rules regularly, as statutes and court rules can change.
- Consider using estate administration software to track deadlines and payments.