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Community Property Liability Exists Even After Probate Ends

Posted on : July 12, 2016, By:  Christopher Hildebrand
Community Property Liability Exists Even After Probate Ends

Community Property Liability Exists Even After Probate Ends

Can a creditor sue a spouse for the community debt of a deceased husband after the statute for filing in probate has passed?

In Samaritan Health System v. Caldwell, 957 P. 2d 1373 (1998), the Court of Appeals considered this issue.

Facts of the Case

Mr. Caldwell and Mrs. Caldwell lived in Arizona. One day, Mr. Caldwell became ill and died in a hospital. When he was admitted to the hospital, he signed a financial agreement form, agreeing to be responsible for payment of the bill.

He also signed a Durable Power of Attorney appointing his Wife as his attorney-in-fact. She executed the financial agreement necessary for her husband’s treatment at Good Samaritan as “POA.” She did this to indicate that she was acting as power of attorney, not in her individual capacity.

Almost two years after Husband died, Samaritan Health System sued Mrs. Caldwell for Mr. Caldwell’s unpaid medical bills. The trial court ruled that Samaritan could sue. It could not collect more than her one-half interest in the couple’ community property. Her separate property was not liable since she had signed the financial agreement only as a power of attorney.

The trial court then entered a formal judgment against Mrs. Caldwell in the amount of $157,283.82. Both Mrs. Caldwell and Samaritan appeal.

Community Property

Suing a Spouse for a Decedents Medical Bills.

Suing a Spouse for a Decedents Medical Bills.

The Court of Appeals said that the medical debt was a community debt. These laws, it said, apply to existing marriage and specify how property should be used to satisfy community debts.

However, the Court said that the law also applies after a divorce. In case of divorce, community debts remain the joint obligations of both spouses. A creditor is free to file a lawsuit either spouse for the debt.

Samaritan argued that the same result should obtain when the marriage has ended from the death of one spouse. The Court of Appeals agreed and chose not to follow the case of Union Bank v. Pfeffer. [502 P. 2d 535 (1972)] That case held that community property transferred to one spouse for non-divorce reasons cannot be reached for community debt.

Here, the Court ruled that Samaritan could go after all of the community property that had belonged to Mrs. Caldwell and her Husband.

Limitations Period to Make Claim

Mrs. Caldwell also argued that Samaritan, as a creditor, had two years after Thomas’s death to open probate. If it had done so, it could have made a claim against the estate under Arizona law.

She claims that because it did not do so, it cannot now go after community property. The Court of Appeals disagreed. It said that the probate procedure outlined in the statutes was not the exclusive remedy for a creditor.

Conclusion

The Court of Appeals ruled that Samaritan could proceed against Mrs. Caldwell for the community debt. All of the community property of the marriage was subject to the debt. Samaritan could not, however, reach her separate property.

Jennifer, thank you for being my attorney. I could not have been more pleased with the outcome of my family court hearing. Everything you have done for me throughout this case reflects in the final ruling of the judge. You helped me keep my head together and taught me a lot about myself as a person. I learned so much about my life from observing and listening to you. I will take all the advice you gave me to continue taking responsibility for my choices, continue to put the kids' needs first, and always stay truthful. Your diligence, dedication, and persistence in my case made what seemed impossible, possible. You are a wonderful person and an amazing attorney and I am stronger and more confident because of you.
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I just want to again thank the Firm for working with me all that it has. I could not have done anything without everyone's assistance. You, Chris and Stacey have been and continue to provide me with compassion and hard work towards my case. Also a very special thanks to Kip for taking my case in the beginning. Also continued support from him and his dedication to providing me with his expertise in this matter.
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After interviewing several law firms, I came across Jennifer Shick, and her firm, who I hired to represent me for my Family Court case. Jennifer has extensive knowledge of the law and is determined to bring the truth to every issue involved within the case. Throughout my case, Jennifer was prepared meticulously as well as went above and beyond all of my expectations. Even when the other party tried to differ from the truth, lie to the Judge, and turn situations around, Jennifer remained attentive and provided substantial evidence to show the judge the facts as well as the proof to support what was the best interests of my children. Additionally, Jennifer helped me endure many difficult experiences, situations and inspired me to remain positive throughout the entirety of my case. Her kindness, compassion, and professionalism helped me through very difficult times and made the process feel a thousand times lighter on my shoulders. She truly has my children and my best interest at heart and I trust her perspective as well as her honesty on each and every aspect of my case. She lessened the burden on my shoulders and even when I felt like the case was not going to go in my favor, Jennifer was open-minded and reassured me that the Judge would, in fact, see the truth, which he did and the case went in my favor. After nine months of court, everything finally came together. I cannot declare how much Jennifer has been an outstanding attorney. She addressed each and every issue with diligence, she cares about her clients and their families. Jennifer genuinely cares about her clients and her dedication to the details of the case was remarkable. Overall, I am extremely pleased with Jennifer’s services and I am truly thankful that I was so blessed to have her represent my children and me. I highly recommend Jennifer as one of the best attorneys in Arizona and if the situation ever arises, I will definitely have her represent my children and me again.
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I was a client of Attorney Kevin Park for the dissolution of a divorce in 2016. And since I had never had the need to hire an attorney before for any purpose, I was somewhat apprehensive of the process. But the very calm and professional demeanor of Mr. Park eased my fears. He adeptly answered all my questions and I clearly knew the process and what to expect. And the skilled manner he communicated with opposing counsel was perfect. When it came down to negotiating with my spouse’s counsel, I knew I had selected the best attorney for my situation. What I noticed and appreciated was that he was using just the right amount of pressure with opposing counsel as was necessary. If you find yourself in this situation, you will want a seasoned professional like Mr. Park on your side. I'm very grateful that he was my attorney and not the opposition!
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Kevin Park of Arizona Estate Planning Attorneys was just what I needed for my divorce. He was very approachable and personable. He was quick to recognize what I needed and provided it quickly and efficiently. I hope to never need a divorce lawyer again, but if I know anyone else who does, I will definitely recommend Kevin.
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I feel that Tracey Van Wickler is certainly one of the best family lawyers around. She is logical, intelligent, and truly cares. Tracey always does what is in the clients best interest, does it well, timely and with integrity. She is good at keeping her clients informed as to what is going on and clear in her communication both written and verbally. I have recommended Tracey to other people and will continue to recommend her. I recommended Tracey to someone who was having issues with their ex-wife and his response was, “I know how good she is because I went up against her and she ate me for lunch”. This same person was so impressed with her, he even recommended her to someone else, WOW, that is impressive! I am exceptionally happy with her attention to detail, her ability to explain things in ways that are easy to understand, as well as her ability to keep everyone focused on the most important things. I would recommend Tracey to anyone who may be in need of her services.
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