Introduction
When someone passes away without a will, they die “intestate,” and the distribution of their estate is subject to the state’s intestacy laws. Intestate succession will vary from case to case, depending on the decedent’s family situation. In Arizona, intestate succession laws give preference to the decedent’s spouse and children. If the decedent does not have a spouse or children, the decedent’s parents, siblings, and extended family may be entitled to portions of the estate. In rare cases where there are no family members who step forward to claim the estate’s assets, the state can step in and claim the assets.
Following is a brief overview of 7 common family situations, and how intestate succession would affect the distribution of a decedent’s assets through probate.
If you are married, and you do not have children
If you are married without children, your spouse will receive your entire estate. In any case where all of a decedent’s assets are transferred to the spouse, the decedent’s estate is exempt from any applicable estate taxes. When the surviving spouse dies, the estate will be subject to a joint estate tax if the assets are worth more than $22.4 million (as of 2018).
If you are married, and you have children with only your current spouse
As long as all of your children are with your current spouse, your spouse will receive the entire estate. Again, no estate taxes are due until the surviving spouse passes away (if applicable).
If you are married, and you have children from a former spouse or partner
In this situation, your current spouse is entitled to 50% of the estate. Any children from a separate relationship would split the remaining 50% of your estate. For this and all subsequent situations, your estate will be subject to individual estate taxes if the assets are worth more than $11.2 million.
If you are single, and you have children
Absent a spouse, your children will receive your estate. Note that in any case where a minor child receives an inheritance, the court will need to appoint a conservator to administer the assets on their behalf until they turn 18.
If you are single, and you do not have children
This is where intestate succession can get tricky. If you are not married and you do not have any descendants, your assets will be distributed in the following order:
- Your parents
- If no surviving parents, your siblings (with representation)
- If no surviving parents, siblings, nieces or nephews, your grandparents (with representation)
- If no surviving immediate or extended family, the state can claim your assets
The term “representation” means that a rightful heir’s descendants can claim an inheritance if the heir is deceased. For example, let’s say a decedent’s only sibling is declared the rightful heir to the estate through intestate succession. If the sibling is deceased, their children (the decedent’s nieces and nephews) can claim their deceased parent’s share of the inheritance. Similarly, if there are no surviving parents, siblings, nieces, nephews, or grandparents, then other descendants of the grandparents (the decedent’s uncles, aunts, and cousins) can claim a portion of the estate.
If you have a significant other, and you do not have children
Partners, boyfriends, and girlfriends do not have any legal claim to an estate. Under Arizona’s intestate succession laws, the estate would pass to the decedent’s immediate or extended family (as discussed previously).
If you have a significant other, and you have children
In this case, your children would receive your estate. Again, minor children would require a court-appointed conservatorship to administer the funds to them until they turn 18.
How to initiate intestacy probate proceedings
If you are an interested party to the estate, you can start the probate process by submitting a petition for probate with the court in the county where the decedent lived or owned property. In the petition, you’ll be asked to provide an estimate of the estate’s assets and a list of family members’ names and addresses, so they can be notified. If the other family members don’t object, you can request that the court appoint you to be the estate’s personal representative who handles the estate throughout the probate process. If the other family members object to your serving as personal representative, or if the judge does not believe you are qualified for the responsibility, the court can appoint a neutral third-party special administrator to handle the case.
What constitutes an estate?
The state of Arizona has a community property law that differentiates between separate property and community property. Any assets that an individual accumulates before marriage, after a divorce, or after legal separation, are considered separate property. Assets that are accumulated during the marriage are shared evenly, with each spouse owning a 50% share. Separate property that is comingled with community property to the point that the assets cannot be distinguished also become community property. When a spouse passes away, their estate consists of their separate property, and their share of the community property.
Estate taxes
Individual estates worth more than $11.2 million and joint estates worth more than $22.4 million will be subject to estate taxes. Depending on the final value of the estate, the tax can range from 18% to as high as 40%. When an individual transfers assets to their spouse, those assets are exempt from the individual estate tax, and will instead be subject to the joint estate tax when the surviving spouse passes away. Considering that only 0.1% of Americans make enough to qualify for estate taxes, the vast majority of estates don’t need to worry about estate taxes.
Are there any assets that are exempt from intestacy proceedings?
Any assets that have a contractual beneficiary are exempt from probate. That means whether or not the decedent had a will doesn’t matter—these assets will pass directly to the beneficiary listed on the account outside of probate court. Such assets include:
- Bank and brokerage accounts with a payable-on-death or transfer-on-death beneficiary
- Property owned in joint tenancy or as tenants in the entirety
- Life insurance policies
- Retirement accounts
- Trusts
While the owner is alive, they’ll just need to make sure their intended heirs are listed as the beneficiaries on these accounts. When the owner dies, the financial institution holding the assets will transfer the assets to the beneficiary once they receive a copy of the death certificate.
Call our Arizona Estate Planning team at (480)467-4325 to discuss your case today.
