When someone dies, the personal representative of their estate will have to settle many matters on their behalf. The representative will usually file their last income tax return and provide family members and the probate courts with copies of the estate documents.
The probate process is not just about court hearings and asset distribution. It is also about resolving someone’s obligations after they die. Personal debt often plays a significant role in probate proceedings. How should the representative of someone’s estate manage their remaining financial obligations?
Realize that debts don’t die with the person who owes them
The property that someone owns at the time that they die will become the assets that comprise their estate. Their debts and financial liabilities will also pass to the estate. The responsibility to repay those debts is one of the biggest sources of liability for the personal representative of the estate.
The representative must resolve tax matters and debts before distributing property to beneficiaries and family members. If the representative fails to properly resolve debts, creditors can potentially take them to court and hold them personally responsible for the value of the property that they distributed inappropriately. What does a representative have to do for debts owed by an Arizona state?
Notify creditors so they can make claims
The first step toward settling debts in an Arizona state will be notifying creditors. Typically, the representative will send a letter to each of the known creditors, letting them know about probate proceedings and that they have taken responsibility for the estate. The creditors then need to make a claim against the estate in court or may lose their right to do so.
The representative will also need to publish notice about estate administration in a local newspaper for at least three weeks in a row to meet the requirements set by state law. Even if it requires the liquidation of all property in the estate, the executor should make every effort to repay all valid claims brought within the appropriate window of time.
Understanding what happens with debts during probate proceedings can help the representative fulfill their obligations and can help testators create more effective estate plans.