The Estate’s Responsibilities to Creditors and the Basics of Transferring the Estate

Dealing with and planning for death is never an easy thing. However, it is important to plan ahead and understand the basics of transferring the estate. When considering your estate or the estate of a loved one, a few important things you should know include:

I. The State Law that Governs Wills and the Transfer of the Estate
First, it is important to understand which state law applies. Generally, the state law that applies is the state where the decedent legally executed the will or, if there was no will, the state where the decedent was domiciled at the time of death. Accordingly, Arizona law applies when there is a valid will that was created in Arizona or when the decedent dies without a will while domiciled in Arizona. The term ‘decedent’ refers to the person who died. ‘Domicile’ is determined according to the location of the decedent’s residence, where the decedent paid taxes, received mail, where he/she was registered to vote, etc.

II. The Administration of the Estate
It is also to understand the basics surrounding the administration of the estate. In Arizona, the court will either appoint a Personal Representative, or will recognize the one named as such in the will. The Personal Representative’s responsibilities include accounting for and protecting all assets in the estate, notifying creditors, and distributing the estate. The Personal Representative may receive ‘reasonable compensation’ in AZ, but it is not a percentage of the estate according to the will or state law.

III. The Order of Priority
Another important concept to understand is the order of priority in distributing the estate. Priority exists for times when the amount of the estate is insufficient to distribute to satisfy all expenses, debts, and intents from the will. The order of priority is generally as follows:

Administration of the Estate - These include administration fees, attorney fees, and any other fees necessary for the safeguard and distribution of the estate.

Statutory Allowances - When the amount in the estate is insufficient to pay out all the allowances, Arizona laws create priority among the statutory allowances. The only thing that has priority over these allowances and exemptions are the expenses to administer the estate. If there is no money remaining after one of the items, the others will not receive anything. The allowance include a Homestead Allowance of eighteen thousand dollars, a Family allowance limited to twelve thousand dollars-either paid in a lump sum or by monthly installments over a 12-month period, and an Exempt Property Allowance of seven thousand dollars.

Creditors - These are the creditors of the decedent, subject to A.R.S. §§14-3801, 14-6102, and §14-6103.

Heirs and Devisees - These are the people who are inheriting property from the decedent according to the will or state laws.

IV. The Estate’s Responsibilities to Creditors
It is also important to understand the Estate’s Responsibilities to Creditors. Upon the death of the decedent, the decedent’s debts are still valid and due to the creditors according to the order of priority already discussed. According to Arizona Revised Statutes § 14-3801, the personal representative must notify all known creditors of the decedent’s death, the appointment of the personal representative, and how to collect on the debt owed. For Unknown Creditors, the personal representative must publish notice once a week for three successive weeks in a newspaper of general circulation in the county announcing the appointment. The creditors must then present a claim within four months of the first published notice.

Seek Counsel from an Experienced Attorney

Dealing with and planning for death is never an easy thing. However, it is important to understand and plan for the disposition of property to loved ones upon such an event. Our attorneys at Gunderson, Denton, and Peterson PC can assist you with your estate planning needs.

Published By:

Gunderson, Denton & Peterson, P.C.
Brad Denton
Mesa Arizona Estate Planning Attorneys
1930 N. Arboleda, Suite 201
Mesa, Arizona 85213
Office: 480-655-7440
Fax: 480-655-7099
Re-Publsihed from: The Estate’s Responsibilities to Creditors and the Basics of Transferring the Estate

Related Post:

What Do Franchisors Have To Disclose To Franchisees?

Mesa Arizona Business Attorney Article On Franchise Disclosure

Franchise Law Disclosure Requirements

The requirements of the Federal Trade Commission’s Franchise Rule

The franchise industry is large and growing larger. The U.S. Census Bureau recently collected franchising data for certain industries and found that in those industries 10.5% of businesses were franchises and $1.3 trillion of the $7.7 trillion total sales were from franchises.[i] There is a lot of money in the franchise market, and it can be very lucrative for an individual with a successful business to franchise that business. However, in order to comply with the law and ensure long-term profitability, a franchisor needs to abide by the franchise rules and regulations set forth by the Federal Trade Commission - specifically the Franchise rule. The Federal Trade Commission has brought cases against hundreds of companies based on the Franchise Rules. A Franchise Lawyer in Chandler Arizona can help navigate the complex rules.

A key part of the Federal Trade Commission’s Franchise Rule is the Franchise Disclosure Document (FDD). The FDD is a legal document given to potential franchisees by the franchisor to disclose information on many areas of the franchise business. Use of the FDD was mandated by recent changes to the Franchise Rule, and it replaces the previously used Uniformed Offering Franchising Circular (UFOC). A franchisor is required to provide this document at least 14 days before a sale is made, as his Arizona franchise lawyer can tell him. The Federal Trade Commission’s regulations require certain specific information to be included in the FDD. The Franchise Rule contains 23 Items that must be included in the FDD. The following is a brief description of six of the Items:

-Item 2: Business Experience - The FDD must have the business experience over the previous five years of key individuals in the franchisor’s business. Key individuals usually include the franchisor's directors, trustees, general partners, and principal officers.

-Item 5: Initial Fees - Any money that must be paid by the franchisee to the franchisor before the franchisee’s business opens must be disclosed. If the fee is not set, the possible range of the fee or a formula to determine the fee must be given.

-Item 12: Territory - The Franchisor’s FDD must specify whether the franchise is for a specific geographic location. The Franchise Rule contains specific language that must be included if the franchisor is not granting an exclusive territory. If the territory is exclusive, remedies must be given in case there is an intrusion into that territory, as stated in the franchise agreement negotiated by the Arizona business franchise lawyer. Any restrictions on the franchisor from soliciting or accepting orders from consumers inside the franchisee's territory must be specified.

-Item 17: Renewal, Termination, Transfer, and Dispute Resolution - A table must be added to the FDD that outlines the franchise relationship. A brief description of required contract provisions must be included in the table.

- Item 21: Financial Statements - The franchisor must include a balance sheet and statements of operations, stockholders equity, and cash flows. These statements should be audited by an independent auditor and be completed according to GAAP (generally accepted accounting principles). There are specific exceptions for start-up franchisors, but even then audited financial statements should be provided as soon as practicable.

- Item 23: Receipts - The Franchisor’s FDD must have two copies of a detachable acknowledgement of receipt. The Franchise Rule contains specific language that must be used in the acknowledgement of receipt.

This is just a small sample of what must be included in the FDD. As can be seen, franchise law and the requirements for the Franchise Disclosure Document are evolving and complex. Having an experienced Mesa franchise lawyer is essential if you are franchising your business or looking to buy a franchise. Attorneys at Gunderson, Denton & Peterson, PC are experienced in working with franchisors and franchisees on their franchising issues. Attorneys from the firm are available to meet with you to review and analyze the Franchise Disclosure Document or address any other franchise or business issue.

[i] www.census.gov/newsroom/releases/archives/economic_census/cb10-141.html

Published By:
Gunderson, Denton & Peterson, P.C.
By Brad Denton
1930 N. Arboleda, Suite 201
Mesa, Arizona 85213
Office: 480-655-7440
Fax: 480-655-7099
Re-Published from: What Do Franchisors Have To Disclose To Franchisees?

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