Debts Between Family Members and Inheritance
Family lending is common. A parent loans money to a child for a car, a home repair, or a rough patch. When the parent dies without a will, the question arises: does that unpaid loan reduce the borrower's share of the estate?
A debt owed to a decedent is not charged against the intestate share of any person except the debtor. If the debtor fails to survive the decedent, the debt is not taken into account in computing the intestate share of the debtor's descendants.
A.R.S. § 14-2110Arizona's answer is straightforward. The debt is only counted against the person who owes it. Other heirs are not affected. Their shares remain intact regardless of what a sibling or relative may have borrowed.
What Happens When the Debtor Dies First
If the person who owed the debt passes away before the decedent, the debt effectively disappears from the inheritance calculation. The debtor's children or other descendants are not penalized for an obligation their parent never repaid.
This rule keeps things clean. It prevents one generation's financial arrangement from cascading into the next generation's inheritance. The estate is divided based on the relationships that exist at the time of death, not on old debts that outlived the borrower.
For families dealing with informal loans between relatives, this statute draws a clear line. If you want debts to be accounted for differently, a written estate plan is the right way to address it. Relying on intestacy rules alone may not match your intentions.
