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.
As you can see, avoiding probate in Arizona is not difficult with a little planning. If any of the above solutions appeal to you, get in touch with a qualified legal team with years of experience when it comes to Arizona probate.