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:
- 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.
- 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.
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.