When someone dies without a last will and testament, the decedent’s estate is considered “intestate,” and the estate will be distributed according to the state’s intestate succession laws. In Arizona, intestate succession is governed by ARS Title 14 Chapter 2 Article 1. The process of settling the decedent’s estate, paying debts and transferring assets to beneficiaries is known as probate. In Arizona, the probate process is governed by the Uniform Probate Code.

If your spouse, parent, or other loved one passes away without a will, you will need to see to it that the probate process is initiated and administered in order to transfer the deceased’s assets to their heirs. You are under no obligation to do this, but without probate, some assets may be unable to transfer to you or other beneficiaries, and will be frozen in the deceased’s name. There are five steps to initiate and administer the probate process:

  1. Petition the court to open probate and appoint an executor
  2. Notify interested parties
  3. Collect the decedent’s assets
  4. Settle the decedent’s liabilities
  5. Distribute the residual estate

Open Probate and Appoint an Executor

The process begins with filing a petition with the probate court in the county where the decedent lived or owned property. The petition requests that the court appoint someone to serve as the estate’s executor or personal representative.

Usually the surviving spouse or an adult child fulfills this role, but the court can appoint a neutral third-party administrator if there are disputes within the family. Once appointed by the court, the executor will be given Letters Testamentary, which authorize the executor to act on behalf of the estate through the probate process. You will need this to take control of your spouse’s separately-held accounts and property.

Note that if the deceased owns property in another state, you will need to probate those assets with those respective counties. Your county of residence will be unable to transfer ownership of those assets as it is outside of their jurisdiction.

Notify Interested Parties

When probate is opened, the court will instruct the executor to notify any interested parties that the proceedings have begun. Known parties such as family members and creditors should be notified in writing. A notice should also be posted in the local paper, offering any unknown creditors or otherwise interested parties the opportunity to submit a claim on the estate.

It’s important to do this because the formal notification establishes a deadline for interested parties to submit a claim. After a certain period of time (usually around four months pending any extensions granted by the court), claims submitted to the court will be considered past the statute of limitations and therefore invalid. Without proper notification, interested parties may have up to two years to submit a claim.

Collect the Decedent’s Assets

Once the interested parties have been notified, and while you’re waiting for claims on the decedent’s estate by creditors, itemize all of the decedent’s assets. This includes financial accounts, real property, cars, and personal possessions. Be sure to differentiate between probate and non-probate assets, as certain assets can transfer to a new owner without going through probate. These non-probate assets include:

  • Real property held in joint tenancy or as tenants by the entirety
  • Real or personal property held in a trust
  • Retirement accounts (e.g. 401k, IRA)
  • Life insurance policies
  • Brokerage or bank accounts held in joint tenancy
  • Bank or brokerage accounts with a transfer-on-death (TOD) or payable-on-death (POD) beneficiary

Of these assets, joint accounts or property will pass to the joint owner, and accounts with beneficiaries will pay out directly to the beneficiary. Most financial institutions require a copy of the death certificate to transfer the assets.

Any assets owned solely by the decedent are subject to probate, and can only transfer to a new owner through probate court. These assets include:

  • Individual bank accounts in the decedent’s name
  • Brokerage accounts or life insurance policies that list the decedent or the estate as the beneficiary
  • Real property titled in the decedent’s name or held as tenants-in-common (TIC)
  • Personal property (cars, jewelry, furniture, collectibles, etc.)
  • Business interests (a personal stake in a partnership, corporation, or LLC)

Settle the Decedent’s Individual Liabilities

At this point, the decedent’s spouse is usually responsible for settling the decedent’s individual debts and bills, but may be passed on to other heirs in the absence of a spouse. Any jointly-held liabilities will carry forward in the spouses name until their passing, at which point their heirs will settle any final liabilities. Regarding of the decedent’s individual liabilities that need to be settled now, observe the following order to prioritize which parties are paid first:

  1. Administration expenses (e.g. legal fees incurred during probate)
  2. Funeral expenses
  3. Debts
  4. Taxes
  5. All other claims

Distribute the Residual Estate

Once the decedent’s individual liabilities are settled, it’s time to distribute the remaining assets. Since the decedent passed away without a will, this portion of probate will be supervised by a judge, and will proceed according to the state’s intestate succession laws.

Arizona is a “community property” state, meaning all individual assets held before marriage belong solely to that spouse, and any wealth or possessions acquired after the marriage are jointly owned. Individual assets from before the marriage can be characterized as joint assets if they are comingled with joint assets to the point that it’s impossible to differentiate between the two.

Spouses: If you haven’t already done so, go ahead and process the transfer of any remaining non-probate assets. Qualifying joint accounts will become individual accounts under your name, and accounts or property with registered beneficiaries will pass to those heirs. The remaining assets, known as the residual estate, will transfer as follows.

If the Decedent and Spouse Do Not Have Children

All community property will go to the surviving spouse. Any separate or individual property will be split between the surviving spouse, the decedent’s parents, and potentially the decedent’s siblings. The probate judge will allocate each party’s share of the estate accordingly.

If Decedent and Spouse Have Children Together

The decedent’s entire estate will transfer to the surviving spouse. This is intended to benefit the spouse and dependent children, though the surviving spouse isn’t under any obligation to transfer assets into the children’s names, or to establish a trust for their benefit.

If the Decedent Has Any Children From Another Spouse or Partner

Half of the decedent’s estate will pass to the surviving spouse, and the other half will pass to the decedent’s children from other relationships. If there are multiple children, the judge will split the children’s shares of the inheritance equally.

For long-term peace of mind, contact us to set up a consultation today. We look forward to helping with your will and other estate planning needs.

 

Call Arizona Estate Attorney Dave Weed at (480)467-4325 to discuss your case today.

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