Probate

Many people have heard the term “probate” but wonder what it actually means. Probate is the court-supervised process of distributing assets after a person has passed away. Unfortunately, it is often frustrating, time-consuming, needlessly expensive and open to the public. How long does the probate process take? It depends on the size and complexity of the estate, the schedule of the local probate court, and whether there are any disputes involving family members and/or creditors. In Arizona, most probates take about a year, but some can drag on for considerably longer.

At Cholewka Law, we have the experience and mastery of Arizona probate law to expedite the process and resolve any problems as quickly as possible. We also understand what you are going through during this difficult time, and will make the process as stress-free as we can.

Perhaps you are wondering what is involved in probating an estate? While every estate is unique, a “typical” probate requires all of the following:

• Filing a petition with the probate court
• Notice to heirs named in the Will or, if there is no Will, to statutory heirs
• Petition to appoint a personal representative (if there is a Will) or an Administrator
• Inventory and appraisal of all estate assets
• Payment of estate debt to creditors
• Sale of estate assets
• Payment of estate taxes
• Final distribution of assets to heirs

Much of our practice is dedicated to helping individuals and families avoid probate entirely. However, if you are faced with the prospect of dealing with the Arizona probate court, we can guide you through the process compassionately and efficiently.

What is Probate

Probate is a court-managed process where your assets are managed, potentially liquidated, and distributed. The time it takes to settle this issue depends on the size and complexity of the estate along with other factors. The probate process can be costly, stressful, and time-consuming.

Probate in Arizona: Everything You Need to Know

A lot of angst seems to surround the word “probate,” due mainly to general unfamiliarity with its meaning. Simply put, probate is the legal process that takes place upon a person’s death, much of which is avoided if the decedent took proper steps during his or her estate planning. This process involves:

• Proving the validity of the decedent’s will
• Identifying and inventorying the decedent’s property
• Carrying out an appraisal of the decedent’s property
• Paying outstanding debts and taxes from the decedent’s assets
• Distributing remaining assets as per the will’s instructions, or following Arizona law if the decedent passed without leaving a will

An estate going through probate typically requires the involvement of an attorney to complete paperwork. The estate pays these fees prior to the distribution of assets. Again, proper estate planning can help your family avoid the probate process when you die.

What Happens During Probate?

In Arizona, the probate process begins when the person named to act as personal representative files the will (if one exists) and petition with the probate court. He or she is named the personal representative (PR) unless the court deems there is ample reason for this person not to serve. If there is no PR named, the court refers to state law to appoint one. In Arizona, the spouse is the first in line for this role.

From here, the court determines the will’s validity and provides the appointed PR with an official document called “Letters of Personal Representative,” which provides the legal authority for the PR to manage the estate. Once the PR has this, he or she notifies both creditors and beneficiaries. Notices to beneficiaries must happen within 30 days of death. For creditors, the PR publishes notice of death in local papers, and must mail formal notice to known creditors. Claims by creditors must generally be made within 120 days.

Next, the PR inventories the estate’s assets. Part of this appointment also requires asset management and protection until the PR distributes them to the beneficiaries, which happens after creditors have been paid. Once assets are distributed, the PR files a closing statement with the court.

Ways to Avoid Probate

Beneficiary Deeds are recorded documents that transfer the title of real property to whomever the decedent named as beneficiary. Recording the death certificate and affidavit of survivorship legally transfers the title, protecting said property from the probate process.

Joint Ownership “with right of survivorship” grants the surviving owner sole ownership upon the other owner’s death. Arizona recognizes two types of joint ownership:

1. Community Property with Right of Survivorship: In a community property state such as Arizona, both married parties jointly own all property acquired during marriage, except in instances where legal measures were taken to keep certain properties separate. If a married couple holds this type of joint ownership, the death of one spouse automatically confers sole ownership to the surviving spouse.
2. Joint Tenancy with Right of Survivorship: This option applies to any two people owning equal shares in a property, regardless of marital status, making it ideal for cohabitating, unmarried couples. If one owner dies, the property immediately transfers to the surviving owner without going through probate.

Living Trusts are arguably the best solution to avoid probate, but these do require the time and services of an attorney experienced in estate planning. Essentially, your attorney helps you create a trust document, transferring ownership and title of your assets into the trust and naming someone as trustee upon your death. During your lifetime, you serve as trustee. Upon your death, the person nominated as successor trustee transfers assets to the beneficiaries named in the trust, avoiding the probate process.

Payable on Death (POD) and Transferrable on Death (TOD) Designations create yet another way to avoid probate. Certain types of bank accounts, such as brokerage, checking and savings accounts, allow you to name a POD or TOD beneficiary who is unable to access the money during your lifetime, but can withdraw funds directly from the bank upon your death, bypassing probate. A TOD form exists for vehicles titled in Arizona.

Probate Shortcuts

If for some reason you are unable to avoid probate altogether, there are two shortcuts that minimize the probate process for smaller estates.

The small estate affidavit allows beneficiaries to claim their inheritance by completing the requisite form, attaching a copy of the death certificate (see the Arizona Department of Health Services website to learn how to do this), and presenting these documents to whatever entity holds the asset.

Arizona’s guidelines governing use of a small estate affidavit to claim personal property are:

• The estate’s personal property value must be less than $75,000
• There is a 30-day waiting period from time of death
• The estate may not be involved in formal probate

Arizona’s guidelines governing use of a small estate affidavit to claim real estate are:

• The real estate’s value must be less than $100,000
• There is a six-month waiting period from the time of death
• There is no court-appointed personal representative
• Payment of secured debts and funeral expenses is complete
• There is no estate tax due

The Three Types of Probate

Informal probate is used when there are no challenges or legal issues that must be decided by a judge. There are typically no hearings in a informal probate. The PR administers the estate with minimal supervision. This is the simplest probate type.

Formal probate comes into play when the court must resolve an estate’s legal issues, such as a will contest or to determine the validity of a will. There are court hearings in formal probate.

In a supervised probate, the court oversees each step of the process. In this instance, the court-appointed personal representative must receive court approval prior to any action, including paying creditors and distributing assets to beneficiaries. Supervised probate may be requested by any entity with an interest in the estate. This request is granted whenever the court agrees this entity’s interests need protection.

Who Benefits Most from Estate Planning?

Estate planning benefits both you and your beneficiaries. First, you have the peace of mind knowing your assets will be distributed according to your personal wishes, not according to the line of succession determined by Arizona. You name the person you trust to oversee this process, as well, rather than allowing the court to make that decision.

Probate rarely benefits your beneficiaries. In addition to the time cost, all expenses incurred during the probate process are paid through the estate. If you prefer those funds go to your beneficiaries, estate planning is vital.

5 Ways to Avoid Probate in Arizona

One of the most common questions legal firms in Arizona hear is, “How can I avoid probate?” The word probate has struck fear in the hearts of people for generations because it is associated with expense and stress. The main issues people have with probate are:

• The perceived high cost
• The time spent probating the estate’s assets
• The proceedings involve information that is widely available in the public domain

Although probate in Arizona has the potential to be a messy and costly situation, the vast majority of cases are straightforward legal processes. If you wish to avoid probate altogether, you will be pleased to know it is easy if you plan your affairs ahead of time. Below, we look at five ways to avoid probate.

1. Living Trusts

This is arguably the best solution, but it does require time, planning, and the services of an experienced estate-planning attorney. This method can be used to avoid probate if the property is transferred to the living trust before you die. In simple terms, you create a trust document (which is similar to a will) and name someone as the trustee after your death.

Then, you transfer the ownership and title of your assets into the trust while you are still alive; you will be the trustee at this stage. At this point, the terms of your trust control your assets. After you die, your nominated trustee can transfer your assets to the trust beneficiaries thus sidestepping the probate process.

2. Beneficiary Deeds

A beneficiary deed is a recorded document that transfer the title of your real property upon your death to someone you have named as your beneficiary. This protects real property from the probate process. After your death certificate has been recorded, this authorizes the title transfer by operation of law, which ensures the probate process is avoided.

3. Joint Ownership

In order to use this method, you must have joint ownership of property with someone else and have the “right of survivorship.” In this case, the surviving owner takes over the property when the second owner passes away. Although there will be paperwork to prove the title is held by the surviving owner solely, you yet again avoid the probate process when you die (but not when the second person dies.)

In the state of Arizona, there are two types of joint ownership:

• Community Property with Right of Survivorship: Arizona is a “community property” state; all property acquired during marriage is jointly owned by both parties, unless they have taken legal measures to ensure property is kept separate. If you or your spouse holds the above form of joint ownership, the surviving spouse automatically gains sole ownership when the other one dies.
• Joint Tenancy with Right of Survivorship: In this case, the property immediately transfers to the surviving owners when one among the group dies, with no probate required. This is a good option for couples (regardless of their marital status) when they own property together. Each joint tenant must own an equal share by state law.

4. Payable on Death (POD) and Transfer on Death (TOD) Designations

It is possible to add a POD designation to certain bank accounts, such as certificates of deposit and savings accounts. This is very useful because, while your beneficiary cannot touch the money while you are still alive, once you die, he or she can take the money directly from the bank without the need for probate.

In Arizona, you can use TOD to leave your beneficiaries stocks, real estate, and vehicles.

• Financial Account, Stocks and Bonds: Register an account in TOD and your beneficiary automatically inherits the account when you die; he/she can then deal with the brokerage company directly.
• Real Estate: TOD deeds are also called beneficiary deeds (explained above).
• Vehicles: As in the above examples, TOD registration of your vehicle allows your beneficiary to claim the vehicle without probate proceedings after your death

5. Property Transfer by Affidavit

You can use an affidavit procedure to transfer small estates in Arizona. However, it cannot be used for personal property until at least 30 days after the death of the decedent; for real property, this timeframe increases to six months.

It is only possible to use this procedure if the value of all personal property is no more than $75,000, or if the value of all real estate is no more than $100,000.

Probate is Not Necessarily a Bad Thing

For various reasons, most people are under the impression that probate is a process that should be avoided at all costs. A recent article explains the process of probate, and why it is not always a bad thing.

An estate will typically go through probate when the decedent has assets owned in his or her name alone, or has debt in his or her name alone. Probate is the process that takes place after a person dies and their will is submitted to the court. Through probate, the person appointed as executor of the estate will first settle any creditor claims against the estate, then distribute the remaining assets to the beneficiaries. The court will supervise the entire process of settling the estate.

Contrary to popular belief, there are some benefits to probate. First, probate gives your creditors a very short time period for which to make any claims against your estate. This means that, theoretically, creditors can be cut off in a specified period of time after the death of the decedent. Second, probate provides judicial finality. After the probate judge has determined that the process was completed correctly, heirs are cut off from pursuing further legal proceedings.

5 reasons why you Shouldn’t DIY Probate in Arizona

Arizona is one of 18 states that have adopted the Uniform Probate Code (UPC), meaning that probate could be a rather quick and informal process. Unfortunately, the settling of a will often comes with at least one bump in the road, whether it is a relative contesting what is in the will or an unexpected creditor looking to stake a claim. Due to the potential pitfalls of DIY probate, it just makes good sense to hire an attorney with experience in probate proceedings in Arizona.

1. Unrealized Savings

The motivation behind DIY probate is obviously to save money. There is a prevailing myth that probate lawyers cost a small fortune; in reality, since we work for what the court deems to be a “reasonable” fee and not a percentage of your estate, the overall savings do not amount to anything near what you originally believed.

2. Established Procedures Set Forth by the Court

Unfortunately, marathon sessions of courtroom drama on television are not adequate preparation for Arizona court procedures. Probate is overseen by a court with very precise requirements and rules. A minor error, even one you simply did not know about, could hold up probate for months.

3. Confusing Legal Documentation

Probate proceedings often require a ton of paperwork, and it is the personal representative’s responsibility to prepare and file all of these legal documents. Without legal assistance, crucial paperwork could be missing, potentially derailing the entire process.

4. Neglected Legal Notices

According to the laws of probate in the state of Arizona, the personal representative is also responsible for giving certain notices to creditors and other individuals before set deadlines. If the representative fails in these duties, he/she is deemed liable for damages. It is common for DIY representatives to make mistakes simply because they lack probate experience.

5. Potential Breach of Fiduciary Duties

Section 14-3712 of the Arizona Revised Statutes clearly states that the personal representative will be held responsible for any loss or damage caused by the breach of his/her fiduciary duties. Unfortunately, very few DIY representatives know all of their fiduciary duties; without that knowledge, how can they possibly fulfill their legal obligations? In simple terms, no matter how pure your intentions, what you do not know could hurt you.

Arizona Probate FAQ’s

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 is the court-supervised process of distributing assets after a person has passed away.

• Do my beneficiaries still have to go through Arizona probate if I have a will?

  There are ways to avoid probate, but merely having a will is not one of them.

• 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.

• Is probate ever a good thing?

  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.

• Is there any way to avoid Arizona probate?

  With proper planning, you may indeed avoid probate entirely.

• What is joint ownership?

  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 is a payable 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.

• What is a transfer on death designations?

  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 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. 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.

• 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.

• 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.