Divorced and deceased in Arizona, will the survivor be chased down by creditors?

As promised, on to more Reader questions:

Bernie wrote:

My daughter is divorced (2009) and lives in Scottsdale, AZ. On June 18, 2010 her ex-husband, who lived in Mesa, AZ, died suddenly and unexpectedly from a heart attack at age 50. She is now seeking guidance with respect to the fiscal ramifications of the death, in particular how to avoid inheriting her ex-husband’s debts.

My daughter’s ex-husband has a considerable amount of credit card debt. (est. $35,000) and has no assets other than an automobile that is valued at less than $3000. Her ex-spouse at the time of death was unemployed and has been for most of the past three years. It is likely that he wasn’t making anymonthly payments to creditors for at least the past year.

My daughter has approximately $20,000 in credit card debt and she owes approximately $15,000 on an automobile loan. She has always made regular, on-time payments on credit card accounts and the car loan, and her credit rating is excellent. Her only financial asset is money that is in her teacher retirement account; she doesn’t own any property. My daughter has been steadily employed since graduating from college in 1992 and she currently works as a XXXXX in Arizona, earning approximately a gross of $50,000 per annum.

My daughter was married in Massachusetts in 1998 and moved to Arizona in 2005 so that her ex-husband could find employment. From 2005 to 2007 her ex-husband was employed selling appliances, mainly to home builders. He lost his job three years ago as a result of the slowdown in the housing market.

My daughter and her ex-husband have maintained separate credit card accounts since before they were married in 1992. That is, her name has never appeared on any of his accounts and his name was never on any of her accounts.

In 2008 my daughter and her husband agreed to separate and their divorced was final in 2009. In the divorce decree they mutually agreed to an equal disposition of personal assets and assumption of full responsibility for debts that were in their respective names; meaning each took responsibility for credit card debt in their name.

Community Property — We are aware that Arizona is a community property state; we understand what that means, and consequently we are very concerned about how the community property designation complicates matters. In addition, we also understand that the level of joint liability for new debt ceased with the divorce.

The big question is, how can my daughter be protected from her ex-husband’s potential creditors?
My daughter’s ex-husband did not have a will. The funeral arrangements and the dissolution of personal items is being been handled by the deceased brother who resides in Massachusetts. The brother is also going to notify all creditors of the death.

It is unclear what protections my daughter might enjoy and how to respond in the event she is chased down by her ex-husband’s creditors. We are looking for guidance and possibly legal assistance to protect my daughter’s resources. Can you please give me a preliminary prognosis, or let me know if you need additional information before you can offer an opinion?

Bernie, thanks for your question. The fact is, it’s a stretch for me to believe that creditors would come after your daughter for his past personal debts. The potential litigation costs and possibilty that the creditor wouldn’t collect are too high in my opinion to believe that they would try and chase your daughter down for his personal credit defaults.  That doesn’t mean they won’t however. In the event they do, then I would retain an attorney in Arizona to help, but until then, in my opinion, you’re simply wasting money on retainer that you likely won’t need or use. I hope this helps!

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