Protecting Your Estate from Creditors in Arizona

How to Safeguard Your Assets With a Smart Estate Plan

When you’ve spent years building wealth and providing for your family, the last thing you want is to see those hard-earned assets drained by creditors. In Arizona, proactive estate planning is one of the most effective ways to shield your estate from unnecessary loss—both during your lifetime and after you're gone.

At The Law Firm of Brown & Jensen, our lawyers help clients across Mesa, Tucson, Scottsdale, and throughout Arizona take strategic steps to protect what matters most. With careful planning, you can keep your estate secure and preserve your legacy for future generations.

Why Creditor Protection Matters in Estate Planning

Arizona is a community property state, which generally means that most assets acquired during a marriage are considered jointly owned. But when it comes to creditor claims—especially after death—certain assets can still be exposed. If you die with unpaid debts, creditors can attempt to collect from your estate during the probate process.

Without protection in place, your loved ones could lose significant portions of their inheritance. That’s why it’s critical to create a well-structured plan that clearly separates protected assets from those that remain vulnerable.

Common Sources of Creditor Claims

Creditors can come from a variety of places—and they don’t always wait until after death to go after your estate. Some common examples include:

• Medical bills and long-term care expenses
• Credit card debt
• Personal or business loans
• Lawsuit judgments
• Tax liabilities

While some of these debts may seem unavoidable, a smart estate plan can help reduce your estate’s exposure to collection efforts.

Using Trusts to Protect Your Assets

One of the most powerful tools for creditor protection is a properly structured trust. Unlike a simple will, a trust allows you to transfer ownership of your assets into a separate legal entity, which can limit access by creditors.

Types of trusts commonly used for protection include:

• Revocable Living Trusts: These offer probate avoidance and privacy but do not provide creditor protection while you're alive. However, after your death, properly drafted provisions can restrict access to beneficiaries’ inheritances if they face creditor issues.
• Irrevocable Trusts: These offer stronger protection because once assets are transferred into an irrevocable trust, you no longer legally own them. This means creditors typically cannot reach those assets.
• Spendthrift Trusts: These are designed specifically to protect a beneficiary’s inheritance from being seized by creditors. The trustee maintains control, distributing funds at their discretion.

Creating a trust that holds up under scrutiny requires precision and foresight. Our estate planning attorneys can help you identify which type of trust best fits your situation and goals.

Other Strategies to Limit Creditor Access

In addition to trusts, there are several other steps you can take to shield your estate:

• Proper Titling of Assets: Assets held as tenants by the entirety or as joint tenancy with right of survivorship may be more difficult for creditors to access.
• Gifting During Life: Strategic gifting can reduce the size of your estate—but must be done carefully to avoid fraudulent transfer issues.
• Use of Business Entities: If you own a business or investment property, structuring it under an LLC can help separate personal assets from business liability.
• Homestead Exemption: Arizona offers a homestead exemption that protects up to $250,000 of equity in your primary residence from unsecured creditors.
• Retirement Accounts and Life Insurance: Many qualified plans and life insurance proceeds are protected from creditors under both federal and state laws.

Each of these strategies requires a tailored approach based on your total assets, debt exposure, and family circumstances.

Protecting Beneficiaries from Their Own Creditors

Your estate isn’t the only thing that can be targeted—your beneficiaries can also be at risk if they inherit large sums of money outright. For example, if your child is going through a divorce, has outstanding debts, or is facing litigation, their inheritance may be fair game.

This is where discretionary or spendthrift provisions in your estate plan can make a huge difference. These tools ensure that assets remain in a controlled environment and are distributed responsibly over time.

Why Work With an Arizona Estate Planning Attorney?

The laws around creditor protection in estate planning are complex—and missteps can have serious consequences. At The Law Firm of Brown & Jensen, our lawyers know how Arizona’s estate and probate laws work, and we build plans that stand the test of time.

Whether you’re starting from scratch or revisiting an existing plan, we’ll help you structure your estate in a way that minimizes risk and maximizes protection for you and your family.

Talk to an Arizona Estate Planning Lawyer Today

Don’t wait until it’s too late to protect your estate. With offices in Mesa, Tucson, Scottsdale, and across the state, we’re ready to help you create a plan that keeps your legacy intact—no matter what the future holds.

Schedule your free consultation with The Law Firm of Brown & Jensen and put a shield around everything you’ve worked hard to build. Contact us today to learn more.

"I needed assistance in setting up various trusts, doing wills, etc., and Shad helped me every step of the way. He answered all my questions (sometimes two or three times) and was very patient with me. He responds very quickly if I have a question and send him an e-mail not only about the entities I had set up but a financial question not related to my estate." ─ Brian, ⭐⭐⭐⭐⭐