Despite the wide availability information, the Arizona probate process continues to confuse many people. This may be due to there being a great deal of inaccurate information, much of it shared by well-meaning but misinformed family and friends.
Probate has become synonymous with expensive and stressful. People don’t like the costs and time associated with the process, and many express frustration at the public nature of probate. Attempting to avoid Arizona probate is probably the top reason people choose to work with an estate planning attorney.
The team at Cholewka Law regularly answers client questions regarding probate in Arizona, so we’re providing this FAQ. Of course, feel free to contact us with any questions.
What is Arizona probate?
Probate means to “establish the validity of a will.”
Through probate, the court determines:
- That the deceased’s will is valid
- Who will act as personal representative
- The value of and assets that comprise the probate estate
- The amount owed in debts and taxes to be paid by the estate
- The distribution of remaining probate property, either by the terms of the will, or by state default rules in the event the deceased left no will
I have a will. Do my beneficiaries still have to go through Arizona probate?
Possibly one of the biggest, most persistent estate planning myths is that a will helps you avoid probate. Obviously, since one of the goals of probate is proving the validity of a will, this is not true.
There are ways to avoid probate, but merely having a will is not one of them. Any assets that are titled in the name of a trust or pass to someone by an effective beneficiary form avoid the probate process. These assets comprise your non-probate estate. Any remaining assets comprise your probate estate.
Are there any probate exceptions?
Many states offer exceptions for “small estates,” determined by the amount of the probate estate. In Arizona, this amount is $75,000 for personal property, and real property with less than $100,000 in equity. However, the complicated guidelines around the real property affidavit often make probate the better option.
What is Arizona’s probate process?
The probate process in Arizona typically takes anywhere from 9 months to 2 years, and requires filing legal documents in court, and may require appearances in court. Payment of court and attorneys’ fees comes from your probate estate, before paying any debts or taxes, and before distributing any assets to your heirs.
If you have a will and name a personal representative (called executor in some states), that person represents your estate through the probate process. If you died intestate (without a will), and a probate is opened, the court appoints a representative for your estate following state law.
The personal representative attests to the validity of your will and files necessary paperwork. This includes a listing of your debts and inventory. Next, official notice of your death is sent to relatives and creditors.
Throughout the probate process, your personal representative is responsible for finding, securing, and managing your assets. If your will includes numerous cash bequests but is light on liquid funds, the personal representative may have to sell probate estate properties to produce the required money to fulfill those bequests.
Heirs may petition the court to release funds during the probate process. Upon completion of probate, your personal representative pays monies owed to taxes and creditors and if there are any remaining probates assets, transfers to your named beneficiaries named in your will or to your heirs-at-law if you do not have a will.
Is probate ever a good thing?
Though most people look at probate as something to avoid at all costs, there are a couple of benefits to the process.
First, probate provides a finite period during which creditors may make claims against an estate. This protects your heirs from dealing with creditors demanding payment years later, after late fees and interest rates ratchet up a debt. This is especially valuable for estates heavily in debt, as the probate process manages creditor communications. It also creates judicial finality, meaning that, once the court successfully completes the probate process, heirs do not have to endure further legal proceedings.
Is there any property that doesn’t go through Arizona probate?
Yes, certain property avoids probate. This includes jointly held property including bank accounts. Property named in a trust avoids probate as well. Property that passes by an effective beneficiary form also avoids probate. We look in detail at methods for avoiding probate in the following sections.
Is there any way to avoid probate in Arizona?
With proper planning, you may indeed avoid probate entirely. There are six main tools available to you:
- Living trusts
- Beneficiary deeds
- Joint ownership
- Payable on death (POD) and Transfer on death (POD) designations
- Property transfer to affidavit
- Gifts
What is a living trust?
With the help of an attorney, drafting a living trust is probably the best solution for avoiding probate. This is a legal document, similar to a will, in which you transfer ownership and title of assets to the trust and name your beneficiaries. You also name a successor trustee, someone to distribute the assets after your death. During your lifetime, you are the trustee.
What is a beneficiary deed?
A beneficiary deed allows you to transfer a real property title to a named beneficiary. It avoids probate because, upon your death, legal title transfers to your beneficiary. Your beneficiary must record, however, your death certificate and an Affidavit of Survivorship in the county in which the property is located.
What is joint ownership?
Arizona recognizes two types of ownership with rights of survivorship: community property with right of survivorship and joint tenancy with right of survivorship. Acquiring title with rights of survivorship does require paperwork, but the property avoids probate upon the death of the first owner.
Only legally married couples can hold property as community property with rights of survivorship.
Joint tenancy with right of survivorship applies to any couple who owns property together, regardless of marital status, so long as each person owns an equal share in said property.
What are payable on death and transfer on death designations?
You may add a payable on death (POD) designation to certain bank accounts, including savings accounts and certificates of deposit. You name the beneficiary, who does not have access to your accounts during your lifetime, but who may withdraw the funds upon your death, without going through probate.
Arizona also permits transfer on death (TOD) designations for a variety of properties, including vehicles, stocks, and real estate. As with POD, TOD beneficiaries have no rights to the property during your lifetime, but take ownership upon your death, without the property going through the probate process.
What is property transfer by affidavit?
Property transfer by affidavit is part of the small estate probate exception. Thirty days after your death, heirs may execute an affidavit for personal property on an estate valued under $75,000. If the value of equity in real estate is less than $100,000, heirs may file a property transfer by affidavit after 6 months.
How do gifts help avoid Arizona probate?
The probate process only applies to property that you own. This means that any property you give away during your lifetime is not subject to probate. One of the main reasons people turn to this is in the rare instances where the amount of their estate exceeds federal estate tax limits (less than 1/2 a percent of all Americans need to worry about federal estate taxes).
If your goal is avoiding the estate tax, you may gift up to $14,000 per individual, per year, without paying the gift tax penalty.
If a will doesn’t protect me from Arizona probate, why should I have one?
Even though a will doesn’t keep your estate from going through probate, it still fulfills a very real estate-planning need. With a will, you can:
- Determine who receives your assets after your passing
- Name a guardian for your minor children
- Name a person or organization you trust to manage your estate after your death
- Arrange for the sale of real estate and other assets without court intervention
- Make charitable contributions of your estate
If you die without a will (called dying intestate), Arizona courts determine who receives your property upon your passing, as well as who will manage your estate. The court also determines who will raise your children, as well as other legal questions that may not reflect your wishes.
What does Arizona require to make a will?
Arizona law includes four basic requirements of anyone making a will:
- The testator (person making the will) must be at least 18 years old
- The testator must be of sound mind when he or she signs the will
- The will’s execution must meet Arizona’s rules and regulations
- Depending on whether the will is handwritten, it may require witnesses
What happens if I die without making a will?
If you die without a will, Arizona probate court determines what happens to your property. The state follows a specific order of inheritance:
- Your spouse, if you are married and if all your children (if any) are also your spouse’s children
- Your children
- Your living parent or parents
- Your sibling(s)
The court continues through nieces, nephews, aunts, uncles, and cousins until it finds someone to inherit your estate.
Who needs a will?
Anyone with property or children should ideally have a will. This is especially true if you have minor children so that you may name a guardian. Hiring an attorney experienced in Arizona probate and estate planning laws helps ensure the validity of your will.
Can my will name a guardian for my children?
Yes, your will is the only document to legally name a guardian for your child or children in Arizona. If the child’s other biological parent is living, however, the court will grant rights to that parent unless he or she has been deemed unfit.
Are there any rules that dictate how I leave my property in my will?
Yes and no. Arizona law allows you to distribute property according to your wishes. However, there are spousal rights in some cases, especially in regards community property. In addition, unless you specifically disinherit your children in your will, they may also have claim to certain properties. This is one of the reasons it’s important to work with an attorney when drafting your will.
Finally, beneficiaries receive nothing until tax obligations and creditors have been paid.
May I make changes to my will?
Yes, so long as you remain of sound mind, you may make changes to your will. To avoid charges of tampering after your death, minor alterations should be made via a will amendment, called a codicil. For significant changes, creating a new will is preferable.
What is a personal representative?
Your personal representative, also known as an executor, is the person you name in your will as being responsible for ensuring your wishes are met. If you do not make a will, or fail to name a personal representative, the court appoints one.
What does the personal representative have to do?
In addition to ensuring the decedent’s final wishes are met, the personal representative is responsible for the probate process. He or she notifies the appropriate parties regarding the decedent’s death and receives any claims made against the estate. If the claim is valid, the personal representative pays it. If it is invalid, the personal representative disputes it.
The personal representative also creates an inventory of all property in the estate, including a valuation of said property. From there, the personal representative manages the property until probate ends. At this point, he or she distributes assets as per instructions in the will and according to law. If necessary, the personal representative sells property belonging to the estate.
May I have more than one personal representative?
You may, but that doesn’t mean that you should. Often, naming multiple personal representatives presents difficulties, as they don’t always agree on how to handle your estate. Remember, some properties may need to be sold in order to pay off creditors or handle cash bequests.
A wiser option is naming a single personal representative, with an alternate (or two) listed in the event the named personal representative is unable or unwilling to fulfill the role.
Do I have to choose a personal representative from Arizona?
No, a personal representative can live anywhere in the United States. Although they may not have to appear in court, they do need to be able to secure all of your probate assets and may need to travel to Arizona to accomplish that.
Does joint tenancy let me avoid drafting a will?
Though joint tenancy allows you to avoid probate on the property held jointly, it does not negate the need for a will. You still need to name a personal representative, as well as a guardian for any minor children.
Does there have to be a family reading of the will?
No. The executor typically provides notice to all heirs via mail. From there, the family may choose to have the will read aloud during a gathering, but there is no requirement to do so. Once the will goes through probate, it becomes a public document. This means that anyone may access or read it, not just the heirs named in the will or the decedent’s attorney.
Is it possible to contest a will?
Yes, this is part of the reason for the probate process. To do so, you must have valid legal grounds and file t appropriate paperwork with the court. Grounds include duress, fraud, undue influence, and incapacity.
Resources
American Bar Association Probate