Disclaimer

This is educational information only and not legal advice. I am not a lawyer. For help with a specific probate matter in Arizona, consult a licensed Arizona attorney.

Detailed answer — steps to ensure accurate recording

1. Identify all third-party claims and payments early

Third-party items include creditor claims, insurance proceeds, benefit payments (Social Security, veterans benefits), refunds or reimbursements, and third-party liens or subrogation claims (for example, health insurers or Medicaid seeking reimbursement). Create a running register (claims ledger) that lists the source, date, amount, reason for the payment, and any invoice or claim number.

2. Give required notices and follow Arizona statutory procedures

Arizona law requires certain notices and procedures for creditors and claims against an estate. Follow the probate court’s required notice process and timetable and consult the Arizona probate statutes (Title 14) for creditor and claims rules. See Arizona Revised Statutes, Title 14 (Probate) for the governing provisions: https://www.azleg.gov/arsDetail/?title=14. Also review the Arizona Courts probate information and local court rules: https://www.azcourts.gov/probate.

3. Verify each claim or payment with supporting documentation

For any third-party payment or claim, obtain and keep:

• Original invoices, statements, or demand letters.
• Proof of payment (bank statements, canceled checks, electronic payment receipts).
• Correspondence showing the basis of the claim or payment (insurance adjuster letters, provider billing, explanation of benefits).
• Written authorization or release when beneficiaries, insurers, or creditors agree to a settlement.

Do not rely on verbal statements alone. Scanned copies are acceptable for the estate file but keep originals when possible.

4. Record payments and claims in the estate accounting and inventory

Arizona probate proceedings commonly require an inventory and accounting. Enter each third-party claim or payment in both the estate inventory (assets) and the accounting (receipts and disbursements). For each entry record:

• Date received or presented.
• Source/claimant name and contact details.
• Amount and currency.
• Associated estate asset or liability it affects.
• Document reference numbers and where the supporting paperwork is filed.

Keep a cross-reference system so every ledger entry points to the underlying document.

5. File formal claims or responses with the court when required

If a creditor or third party files a claim or if you need court approval to pay a claim or accept funds, file the appropriate pleadings (proof of claim, petition to authorize payment, petition for instructions, or application to settle a claim). Follow local probate court rules for form, timing, and service. In contested situations, the probate court often resolves allowance, priority, or reasonableness of the claim.

6. Seek court orders before paying disputed or large claims

If a claim is disputed or large relative to estate assets, ask the court to allow payment or settle the claim by petition. Getting a court order reduces personal liability for the personal representative and helps ensure the distribution plan will be approved in the final accounting.

7. Obtain releases and reconcile lien or subrogation claims

When paying insurers, health-care providers, or government payers that assert subrogation or reimbursement rights (for example, Medicaid), obtain a written release or a settlement agreement showing the claim is resolved. If government benefits or Medicaid may have a lien or claim, address those statutory requirements before distributing funds to heirs to avoid clawbacks.

8. Maintain clear bank and bookkeeping records

Use an estate bank account for all estate receipts and disbursements. Keep deposit records, bank statements, reconciliations, and copies of checks. Reconcile your claims ledger to the bank statements monthly. This makes the court accounting straightforward and reduces creditor disputes.

9. Prepare accurate court accounting and supporting exhibits

When submitting the estate accounting (interim or final), attach exhibits that show the sums received from third parties and how they were handled. Typical exhibits include a) a claims ledger, b) copies of major receipts (insurance checks, settlements), c) claim acknowledgements or releases, and d) proof of service for notices sent to known creditors and interested parties. Label each exhibit clearly and cross-reference ledger lines to exhibit pages.

10. Keep beneficiaries and interested parties informed

Provide beneficiaries with required notices and reasonable updates about material third-party claims and payments. Transparent communication reduces surprise objections at the final accounting.

Handling common scenarios (examples)

Insurance settlement received for a decedent’s vehicle

1) Deposit the check to the estate account with clear notation. 2) Save the check stub, the insurer’s settlement letter, and any repair or valuation estimates. 3) Record the receipt in the inventory and accounting. 4) If the claim affects secured creditors (like a lienholder), record payment or lien satisfaction documents with the court.

Health-care provider asserts subrogation

1) Obtain itemized billing and the provider’s legal basis for reimbursement. 2) Negotiate in writing or seek court approval to settle. 3) Get a signed release from the provider before distribution.

Third party deposits funds for debts of the decedent

Treat the funds as estate receipts. Record the source, reason, and supporting documents. If the payer requires that funds be applied to a specific claim, document that instruction and get beneficiary or creditor concurrence where appropriate.

When to consult an Arizona probate attorney

Consider consulting an attorney if:

• Claims are contested or large relative to estate value.
• Government payers (Medicaid, Medicare) assert liens or repayment rights.
• Multiple creditors or claimants dispute priority of payment.
• The personal representative faces personal liability exposure.

An attorney can draft petitions, negotiate settlements, obtain court approvals, and prepare the final accounting to comply with Arizona probate rules. See Arizona Revised Statutes, Title 14 for the probate framework: https://www.azleg.gov/arsDetail/?title=14.

Helpful Hints

• Open a dedicated estate bank account immediately and use it for all estate transactions.
• Create and maintain a chronological claims ledger that cross-references each supporting document.
• Keep originals of key documents—insurance checks, releases, settlement agreements—and scanned backups.
• Follow court notice procedures precisely; missing a statutory notice can create liability.
• Before distributing assets, ensure all known creditor claims and governmental liens are addressed or court approval is obtained.
• Obtain written releases from third parties after settlement to prevent future claims against beneficiaries.
• Reconcile your accounting to bank statements and invoices before filing final accounting.
• When in doubt about statute requirements or deadlines, consult the Arizona probate statutes and local court rules—or an Arizona probate attorney.