One step of the probate process is dealing with probate creditors. This includes identifying and notifying the creditors of the deceased and settling the deceased’s debts.

After death, a personal representative (the PR), assigned by either a written will or by the court, will handle the estate left by the decedent. One of the first acts of the PR will be to file a petition to open probate with the court, which will begin the probate process. Assuming there is a will and it is valid, the court will then provide “letters testamentary” (sometimes called letters of administration) to the PR so that the PR can prove to third parties that he or she has the authority to govern the assets of the decedent’s estate.

Finally, after posting a bond (if necessary), the PR will provide notice to probate creditors. But how?

Generally the order for dealing with creditors in probate is as follows: (1) publishing notice to possible probate creditors; (2) mailing notice to known creditors; (3) finding out which, if any, creditors are barred from making a claim after four months of the first publication or mailing; (4) addressing claims made by creditors, which can be made by delivering a written statement of the claim or by commencing action in court; and finally, (5) paying the claims.

Publishing Notice. The PR must publish notice to probate creditors announcing the PR’s appointment and address, and notifying creditors that claims must be presented within four months after the date of publication. The PR must publish this notice once a week for three successive weeks in a publication (like a newspaper).

Mailing Notice. If there are known creditors, the PR must deliver notice announcing the PR’s appointment and address, and notifying creditors that claims must be presented within four months or sixty days after the date of receipt of the notice. The PR should provide this kind of notice by certified mail or manner of delivery requiring confirmation by the recipient.

Applying the “Non-Claim” Statute. The PR must make sure that claims against the decedent that arose before his or her death are not otherwise barred, and if the creditor’s claim is brought within four months after the PR has published or mailed notice to the creditor. However, this limitation does not apply to the creditor’s right to enforce a mortgage, pledge or other lien upon the decedent’s property; nor does it apply to a proceeding to establish decedent’s liability which is covered by insurance. The relevant statutes are A.R.S. §14-3803(A) – (D).

Addressing Claims Presented by Creditors. If the PR is presented a claim by a probate creditor, either by delivery or commencement of an action in court, the PR must either “allow” or “disallow” each creditor’s claim(s). The PR must investigate each claim with reasonable care, and generally will either disallow the claim, negotiate with the creditor or petition the court for instructions.

Paying the Claims. The PR is authorized by statute to pay “just claims” at any time, though it is better to wait until after the creditor claims period has expired, in order to determine whether or not some claims will be barred, avoid liability and properly set the order of priority of the creditors. And although there is no statutory deadline for the PR to pay probate creditors, interest on just claims begins to accrue interest on the date that the PR could disallow claims (either 60 days after the deadline for presentation or four months).

With Powers & Neal representing you, this process is much less daunting, as we are responsive to our clients’ needs, and as we go through the process, we provide you with clarity so that you can make the right decisions. Call Powers & Neal today at 480-699-7992 for help with your probate matter.