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A.R.S. § 14-7504

Fiduciary Checks Payable to Third Parties

Verified April 4, 2026 • 57th Legislature, 1st Regular Session

When a fiduciary writes a check from a trust or estate account, the payee does not need to verify proper authority. Arizona law protects the payee unless they know the fiduciary is breaching their duty.

Title 14, TRUST ADMINISTRATION

azleg.gov

Paying Bills and Expenses From a Trust or Estate

Trustees and personal representatives write checks to pay bills and distribute funds. This statute focuses on the payee's position. A fiduciary may draw a check to a third party from a trust or estate account. That payee is generally safe from later claims.

The payee is not bound to inquire whether the fiduciary is committing a breach of his obligation as a fiduciary in drawing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith.

A.R.S. § 14-7504

The Personal Debt Exception

The protection has a clear limit. Say the fiduciary uses a trust check to pay a personal debt. If the creditor knows this, that creditor can be held liable to the principal.

For families managing a trust or settling an estate, this rule provides peace of mind. Vendors can accept checks from a fiduciary account without worry. At the same time, anyone who knowingly helps misuse those funds faces liability.

If a check or other bill of exchange is drawn by a fiduciary as such, or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, the payee is not bound to inquire whether the fiduciary is committing a breach of his obligation as a fiduciary in drawing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith. If, however, such instrument is payable to a personal creditor of the fiduciary and delivered to the creditor in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor or is drawn and delivered in any transaction known by the payee to be for the personal benefit of the fiduciary, the creditor or other payee is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the instrument.
View on azleg.gov

This page provides general legal information about Arizona statutes and is not legal advice. For guidance on how this law applies to your situation, speak with a qualified attorney.

Related Questions

How do I choose the right trustee for my estate?

Selecting a trustee means choosing someone who can manage the trust, handle investments, file taxes, and distribute assets fairly. Consider individual trustees from family members or friends, or banks or trust companies for neutrality. Always name a backup in the trust document.

What does a trustee actually do?

A trustee manages trust assets according to the trust creator's instructions. While you are alive, you are typically your own trustee. After you pass, your successor trustee distributes assets as directed.

What is a living trust in Arizona and how does it work?

A living trust in Arizona lets you transfer assets into a trust you control during your lifetime. When you pass, a successor trustee distributes assets privately, without probate.

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