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A.R.S. § 14-7505

Checks Drawn by and Payable to a Fiduciary

Verified April 4, 202657th Legislature, 1st Regular Session

When a fiduciary writes a check to themselves, the person who later receives it does not need to investigate. Arizona law protects that person unless they know about a breach or act in bad faith.

Title 14, TRUST ADMINISTRATION

azleg.gov

Self-Directed Checks and Fiduciary Authority

Some fiduciary transactions involve checks that move through the fiduciary's own hands. A trustee might write a check from a trust account to themselves. They may also receive a check from a third party and pass it along.

These self-directed moves can look unusual, but they are often proper. For example, a trustee may need to pay themselves back for trust-related expenses. A personal representative may need to redirect estate funds to cover a specific bill.

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, payable to the fiduciary personally, or payable to a third person and by him transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in transferring the instrument.

A.R.S. § 14-7505

Good Faith Is the Standard

The person who receives the check is protected as long as they act in good faith. They do not need to look into the fiduciary's authority or motives.

The only exception is actual knowledge of a breach. If someone knows enough facts that accepting the check amounts to bad faith, they lose protection. This means the statute balances smooth transactions with real accountability.

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, payable to the fiduciary personally, or payable to a third person and by him transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in transferring 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.

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.

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