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Interest or No Interest – Interesting Issue in Arizona Probate Claims

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Settlement of claims of minor | Scottsdale, AZ Personal Injury Attorney | Berk Law Group, PCUnder Arizona law, at the time of appointment, the personal representative of an estate must provide notice to creditors, known and unknown. For unknown creditors, the personal representative must publish a notice to creditors in a newspaper of general circulation in the county where the decedent lived. For known creditors, the personal representative must give notice by mail or other delivery.

Creditors of the estate then have four months after publication or sixty days after the mailing or other delivery of the notice, whichever is later, to present their claims. A.R.S. § 14-3801. Claims may then be allowed or disallowed by the estate.  If disallowed, the creditor can then file a lawsuit to have the Court determine the validity of the claim.

Absent a judgment in another court providing otherwise, “allowed claims bear interest at the legal rate for the period commencing sixty days after the time for original presentation of the claim has expired…” A.R.S. § 14-3806(E).  That provision does not differentiate between claims for definite and indefinite amounts.   Thus, the probate code is inconsistent with Arizona’s general rule that “prejudgment interest is generally not awardable on unliquidated claims.” Metzler v. BCI Coca-Cola Bottling Co. The Arizona Court of Appeals has now tackled this inconsistency and held that all allowed claims against an estate bear interest.

A liquidated claim is a claim for a sum certain, like the balance due on a promissory note.  On the other hand, an unliquidated claim is one that is not for a sum certain, like a claim for emotional distress or pain and suffering.

In its recent decision in Estate of Chalker, the Arizona Court of Appeals held that the Arizona probate code mandates interest on all allowed creditor claims, even if for an unliquidated sum. In this case, the Petitioners were attorneys who represented the decedent in a divorce action in 1994. The decedent owed Petitioners approximately $273,000 in fees and costs.  In 1999, Petitioners and decedent entered into a new fee agreement that entitled Petitioners to be paid 50 percent of the decedent’s Fidelity Investment accounts once the accounts were recovered by the estate.

Upon decedent’s passing and the personal representative providing notice, Petitioners filed a timely claim against the Estate. Ultimately, the superior court decided that the 1999 fee agreement did not entitle Petitioners to 50 percent of the Fidelity Investment accounts that were recovered. The superior court held that Petitioners were only entitled to an award in quantum meruit for the fair value of services rendered, but that no interest was to be paid on those awards.  Thus, the Court allowed the claim, but refused to add interest on the amount due. Petitioners appealed the ruling.

In reversing the superior court’s decision to deny interest on the amount due, the Court of Appeals, citing A.R.S. § 14-3806(E), reasoned that the plain language of the statute required that allowed claims bear interest. The Court agreed with the Petitioner’s argument that, because the superior court ultimately awarded Petitioner’s fees in quantum meruit (the claim was allowed), the claim must be “paid in the same manner as presently due and absolute claims of the same class” by “bear[ing] interest at the legal rate.”

The Court further reasoned that the statute does not differentiate between liquidated or unliquidated claims. Thus, while the Court acknowledged Arizona’s general rule that is inconsistent with awarding prejudgment interest on unliquidated claims, the Court held that it must apply the given statutory language in the Arizona probate code.  As a result of this decision, all allowed creditor claims, whether liquidated or unliquidated, bear interest.

If you have a question about creditors claims in an Arizona probate matter or this recent Court of Appeals decision, or need help administering an estate, please contact us.

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When Helping Yourself Doesn’t Help

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Will and estate planning - Berk Law Group, P.C.The Arizona probate process is strictly governed by laws enacted by the legislature and by rules adopted by the Arizona Supreme Court. Individuals are not prohibited from entering into this technical area, but there are many pitfalls out there.

The Arizona Court of Appeals recently decided a case that illuminates the perils of self-help. In the Matter of the Estate of Norma Jean McConnell, her son filed several documents with the court that he had created himself, demanding to be appointed as the personal representative to administer her estate under her last will and testament.

The Judge could have dismissed the proceeding because the son had not filed the will with the Court as required, had not been appointed as personal representative and he was incarcerated, so it was unlikely that he could fulfill the duties of personal representative. However, the Judge, in an attempt to be helpful, appointed the Maricopa County Public Fiduciary’s office to investigate and file a report.

Maricopa County maintains an office, the public fiduciary, whose job it is to look after the neediest of the population who have no one else to turn to. Where appropriate, the Court may appoint the public fiduciary to serve.

In the McConnell case, the public fiduciary’s investigation found that Norma owned no real estate in the County; her abandoned assets had been turned over to the Arizona Department of Revenue (unclaimed property), but it was valued less than $75,000; no other assets were located; and, the assets that were found could be claimed by a Small Estate Affidavit of Collection, without the need for a probate.  The court then denied son’s demand that he be appointed as Personal Representative.

He appealed the case.  The decision there upheld the lower court rulings. Without the will being filed, the son could not be appointed to administer the will. Further, his incarceration prevented him from performing the duties required by statute.

Although everyone has access to court-approved forms and instructions for filing a probate case by stopping by the closest court facility or going online for self-help forms, sometimes it is best to consult an experienced Arizona probate lawyer. Each document has certain statutory requirements. Various deadlines apply. Not every estate is subject to a probate proceeding. As in this case, in Arizona, where non-real estate assets total less than $75,000, and other requirements are satisfied, there is a quick and easy way, a small estate affidavit, to transfer the assets to the beneficiaries without the need to open probate or to have a personal representative appointed.

Estate administration and litigation is what we do at Berk Law Group. Sometimes the best help is not your “self” but someone who knows what to do. If you have any questions or need any assistance in a small or large estate, please don’t hesitate to contact us.

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Can I have a witness?

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Mesa, AZ Probate Dispute | Probate Dispute Attorney | Berk Law Group, PCArizona’s Revised Statutes (A.R.S.) set out the standards that must be met in order to create a last will and testament. Options include a handwritten or holographic will and a properly witnessed prepared will.

A.R.S. § 14-2502(A)(3) requires that, in the second case, a will be signed by the testator (maker of the will) and be “[s]igned by at least two people, each of whom signed within a reasonable time after that person witnessed either the signing of the will or the testator’s acknowledgment of that signature or acknowledgment of the will.” But who is a proper witness?

Most Arizona attorneys will ensure a proper execution occurs by having two witnesses present along with a notary public. This results in what is called a “self-proving” will. But what happens if there is only one witness signature along with a notary? This is the background in a recent Arizona Court of Appeals decision entitled “In re Estate of Bradley.”

After Ms. Bradley died, her son, who was not named as a beneficiary in her will, complained that the will was not valid because it lacked the signature of two witness. If the will was not valid, the son would stand to inherit.

At a hearing on the petition to probate the will, both the person who signed as witness and the Notary Public testified that they were present and witnessed Ms. Bradley sign the will. The son argued that because the notary was there to “notarize” she did not count as a “witness.” The Court of Appeals disagreed. The Arizona statute does not place any such limitation on who is a proper witness, just that two individuals are either present to see or are told by the signer that she signed. That is what happened here and the court accepted the notary as the second witness.

Proper execution of any legal document is important.   Improper execution of a will or trust is one of the reasons people end up in court. Proper review and overview by an attorney can often prevent expensive and time-consuming litigation. The attorneys at Berk Law Group can review your documents for proper execution and avoid costly headaches later.  And, if you end up court, our attorneys can help you try to resolve the matter as efficiently as possible.  Please contact us if you have any questions.

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2016 Arizona Probate and Elder Law Legislation Updates

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AZ houseDuring the 2016 State of Arizona Fifty-second Legislature Second Regular Session, the House of Representatives has proposed three bills and the Senate has proposed one bill with proposed amendments to Arizona’s elder laws.  The proposed revisions involve powers of attorney, claims for financial exploitation under Arizona’s Adult Protective Services Act, A.R.S. 46-451 etc. and guardianships.

Powers of Attorney

A.R.S. § 14-5501 sets forth, among other things, the requirements to create a valid durable power of attorney in Arizona.  Basically, a “durable” power of attorney is one that either (a) stays in effect notwithstanding that the principal (the one granting the power) becomes incapacitated or disabled or (b) becomes effective when and if the principal becomes incapacitated or disabled.

Pursuant to A.R.S. § 14-5501(B), the intent to create a durable power of attorney may be expressed by the following or similar language in the power of attorney: [Read more…]

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Attorney Kent Berk Featured on Money Radio 1510

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Scottsdale Money Radio | Kent BerkLast week one of our very own was featured on Money Radio 1510AM – Phoenix to discuss several topics, including elder abuse and financial exploitation.

Click here to listen to the full interview.

[Read more…]

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Whitney Houston’s and Daughter’s Estates Embroiled in Disputes

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Whitney HoustonThe death of Whitney Houston was a devastating loss to the music and acting communities, and the world. The talented singer was found dead in February of 2012. Trouble regarding the singer’s estate began brewing almost immediately. Her ex-husband, Bobby Brown, and Houston’s family were not getting along. Brown left Houston’s funeral. Concerns circulated that Brown would use the couple’s daughter, Bobbi Kristina, in order to gain access to Houston’s estate. It is speculated that Whitney Houston’s estate is valued between $12 million and $20 million.

Unfortunately, Bobbi Kristina was struggling with her own battle with substance abuse at the time of her mother’s death. Family members worried that if Houston left her assets to Bobbi Kristina, Bobbi Kristina would not be responsible enough to handle it all, or that father Bobby Brown would attempt to gain conservatorship over Bobbi Kristina in an effort to get his hands on the money. In fact, according to James Alexander of the Express, shortly after Houston’s death, Bobby Brown did express interest in obtaining conservatorship of his daughter if she did not clean up and change her life.
[Read more…]

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