Estate planning helps us make decisions to secure our assets and make matters easier on our children and loved ones after we pass.
However, if you have debt, you may worry that your passing will put an emotional and financial burden on your children. Here are a few ways that the debt of a person who has passed is handled in Arizona.
How is debt generally handled?
The executor of a will is responsible for settling the estate and distributing assets to beneficiaries. You can appoint this person in your will or the executor can be appointed by the court after your passing.
In Arizona, widows are responsible for their deceased spouse's debts under the community property law.
Otherwise, after the estate's assets are accounted for, they must be used to pay the deceased person's debts before beneficiaries receive their inheritance.
Creditors cannot receive debt payments from beneficiaries. Creditors are required to get debt requests in writing and send it to an attorney or the executor within six months of the estate being opened.
Items that are specifically designated to beneficiaries or claimed by beneficiaries will not be liquefied to pay debts unless this is necessary to cover the debt.
Unpaid medical debts
Medical bills are often treated as the priority expense after the debtor has passed. The debt should be paid by the executor or attorney using the funds from the deceased person's estate.
Unlike some other states, medical debts are not inherited by children if the deceased person's estate cannot cover the expense.
All in all, your children will not inherit your debt, but a portion of their inheritance may be used to cover your debts if necessary.
To establish the distribution of your assets or get more information on related estate planning topics, contact an attorney for help. An attorney can help you create a will or trusts that help secure your assets.