Introduction
The primary purpose of probate is to transfer a decedent’s assets to their beneficiaries or legal heirs. When an estate doesn’t have any assets—or when the estate’s assets are positioned to transfer to beneficiaries outside of probate—then probate may not be necessary. In this case, the only notable benefit to completing probate would be to formally close the decedent’s estate.
Assets That Are Subject to Probate
Assets that are titled individually in the decedent’s name and don’t have a designated beneficiary or rights of survivorship become “locked” upon the owner’s death. Unless probate is opened and a personal representative to the estate is appointed by a judge, the assets will remain locked in the decedent’s name indefinitely.
Assets that are typically subject to probate include:
- Individual bank and brokerage accounts
- Individually-titled real estate
- Real estate held as tenants in common
- Personal property (vehicles, art, collectibles, jewelry, etc.)
To access probate assets, the estate’s personal representative will need Letters Testamentary from the probate court (aka Letters). The Letters will provide the authorization to liquidate and gather these assets to an estate checking/savings account, but the personal representative won’t be able to distribute them to the estate’s beneficiaries until the estate’s liabilities are settled. Once the estate’s debts, taxes, and bills are paid, the personal representative can distribute the residual assets according to the decedent’s will. If the decedent didn’t leave a will, the estate is considered “intestate,” and the residual assets will be distributed to the estate’s legal heirs according to the state’s intestate succession laws.
Assets That Are Not Subject to Probate
With proper estate planning, most assets can be positioned to transfer to beneficiaries outside of probate. Assets that aren’t subject to probate are commonly referred to as “non-probate” assets, and typically include a designated beneficiary or rights of survivorship. Some common examples of non-probate assets include:
- Bank and brokerage accounts with a payable-on-death or transfer-on-death beneficiary
- Retirement accounts (IRA, 401k, etc.)
- Life insurance policies
- Living trusts
To initiate the transfer of non-probate assets with a designated beneficiary, the personal representative or beneficiary will need to submit a copy of the death certificate to the financial institution with custody of the asset(s). Non-probate assets with rights of survivorship naturally transition to the joint owner upon the decedent’s death.
Closing the Estate
When an estate doesn’t have any assets that are subject to probate, it may still be wise to probate and close the estate if the decedent had significant liabilities. If an estate isn’t probated and closed, creditors have up to 2 – 3 years to submit a claim against the estate. Even if there aren’t enough assets to cover the liabilities, this can still be a hassle for the decedent’s surviving family members. Additionally, an aggressive creditor may choose to petition for probate on their own (which they can do as an interested party). Again, there may not be any assets to pay the creditor’s claim, but there will likely be additional court costs and attorney fees if that happens.
In contrast, opening probate starts the clock for creditors to submit their claims and shortens the statute of limitations. When the estate’s personal representative posts the first notice of probate in the local newspaper (the first of three), creditors are allowed at least four months to submit a claim against the estate. After four months, the personal representative is free to settle the claims, distribute the residual assets, and close the estate. Once the estate is closed, creditors won’t be able to submit any more claims against the estate.
Obligation to Submit the Will
If the decedent left a will, the party in possession of the will has a legal obligation to file the original will with the county court. He or she is under no obligation to submit a petition to open probate (though that’s typically submitted with the will), but submitting the will is mandatory. If the party in possession of the will fails to submit it to the county court within a reasonable amount of time (usually 30 days, though some states allow up to 90 days), he or she may be held personally liable for damages incurred by beneficiaries who are financially harmed by the delay in receiving their bequeathed assets. If the court finds that the party in possession of the will intentionally withheld the will for personal financial gain, he or she may be subject to criminal charges, too.
Formal vs. Informal Probate
When probate is necessary, the complexity of the probate proceedings will hinge on whether or not there are any objections to the will or the activities of the personal representative. When all of the interested parties are in agreement and there aren’t any objections, Arizona probate law allows the personal representative to handle the entire probate process outside of court, without any court supervision or requisite permissions. This is known as informal probate, and the informal, unsupervised process can wrap up in as little as 5 – 6 months.
When there are objections to the will or to the activities of the personal representative, formal probate is required. If the objections are easily resolved, formal probate may still continue with minimal court supervision and can wrap up in as little as 8 months. However, if the objections are substantial, formal supervised probate can easily take a year or longer to conclude.
The Probate Process
Whether the probate proceedings are formal or informal, the general process is the same:
- Validate the will – the court will quickly check to make sure the will is properly drafted and signed in accordance with state laws. If there are any discrepancies, or if an interested party offers evidence that the will is fraudulent, the court can invalidate part or all of the will.
- Appoint the personal representative – if the will nominates an executor, the court will usually honor the decedent’s wishes and appoint that person to be personal representative. Absent a will, any interested party can petition to serve as the personal representative.
- Notify the interested parties – the personal representative is required to provide notice of probate to all interested parties, file proof of notice with the court, and post an ad in the local newspaper to alert any unknown creditors to the proceedings.
- Gather the assets – armed with Letters Testamentary from the court, the personal representative will be able to open an estate checking/savings account and gather all of the probate assets. Illiquid assets like real estate, vehicles, art, jewelry, and collectibles will likely need to be professionally appraised to determine their fair market value.
- Settle the liabilities – before the personal representative can distribute probate assets, he or she will need to pay the estate’s debts, taxes, bills, and court costs. If the estate is insolvent and there aren’t enough assets to cover the liabilities, the court will determine which creditors have priority for payment.
- Distribute the assets – after all of the liabilities are settled, the personal representative will be free to distribute any residual assets to the estate’s beneficiaries and legal heirs
- Close the estate – when all is said and done, the probate judge will close the estate.
Do You Need Help with Probate Matters?
As you can see, AZ probate laws can be complex. It requires a number of steps and without the right approach, it’s easy to get lost in the details.
At JacksonWhite, we can make probate a clear, easy-to-understand process. If you’d like help with probate matters, call the talented team at JacksonWhite Law today.
We can help explain your legal options and direct you to the probate solution that works for you and your loved ones.
Call Our Probate Team at (480)467-4365 to discuss your case today.
