Introduction
Probate is the court proceeding in which a representative of the deceased is appointed to handle the deceased’s estate. Along with distributing assets, this representative is charged with paying off the estate’s debts.
Although probate can be stressful and expensive however, not all estates need to go through this process. If the estate is small enough, probate can often be avoided entirely. However, most other estates will need to go through either informal, formal, or supervised probate depending on the specifics of the situation.
In this article we will cover:
- Estates Not Requiring Probate in Arizona
- Types of Probate
- Avoiding Probate in Arizona
- Getting Help with the Probate Process
Estates Not Requiring Probate in Arizona
Arizona law doesn’t require all estates to go through probate. Certain assets can be automatically transferred to a beneficiary without the probate court’s involvement. Here are some types of property that don’t require probate:
- Real estate held in community property or owned as Joint Tenants with a Right of Survivorship
- Life insurance policies with a beneficiary
- IRAs, 401ks, and retirement accounts with a beneficiary
- Annuities with a beneficiary
- Bank accounts with Payable on Death (POD) or Transfer on Death (TOD) clause
- Assets in a living trust
- Houses and bank accounts in joint tenancy
- Assets and real estate registered as transfer-on-death (TOD)
For lower-value estates (less than $75,000 in personal property or $100,000 in real property), the inheritor can often avoid going through probate. However, the inheritor will need to write a short document declaring that they are entitled to a certain asset. This document is called an affidavit and must be signed under oath.
Arizona doesn’t have an inheritance tax or estate tax, so property can be passed to loved ones without the inheritor getting hit with a hefty bill.
Types of Probate
In the event that an estate contains assets and property not listed above, it will likely need to go through probate. Below are the three probate proceedings that a court may order:
Informal Probate
The shortest and least invasive option, informal probate can be completed with little court involvement. Unlike other types of probate, which require parties to visit the court and appear before a judge, informal probate is an administrative process.
This form of probate is most appropriate for cases in which the decedent wrote a will and no one is questioning its validity. However, if the identity of heirs is known, you may still be able to proceed with an informal probate in cases when no will is available.
Formal Probate
A more involved proceeding, formal probate is typically reserved for cases in which there’s controversy about the validity of a will, the choice of estate representative, or the identification of beneficiaries. Additionally, an estate may go through formal probate if an asset requires additional court supervision. Most formal probate cases appear before a judge and are completed in a few court appearances.
Supervised Probate
When an estate goes through supervised probate, the entire inheritance process is overseen by a judge. Parties can expect to appear in court during these proceedings, which include opening the estate, appointing representatives, approving lawyers, and hearing from creditors and other interested parties.
It’s worth noting that any party with an interest in the estate can require a supervised probate. On the other hand, the court may require them to protect a creditor or investor with a stake in the case.
Once the court has ruled on a probate case, and creditors have been paid, the representative of the estate is free to distribute assets to beneficiaries.
Avoiding Probate in Arizona
Probate can be long and drawn out, and many Arizona residents take steps to avoid having their estates go through this process. Additionally, probate proceedings can come with a high cost. Depending on the complexity of the case, individuals involved in probate cases may end up paying for both court fees and attorney fees.
In the long run, you can expect to spend up to 5 percent of the estate’s value on the probate process, with costs rising based on the number of parties set to inherit.
Additionally, families may want to skip probate proceeds for privacy reasons. By taking steps to stay out of probate, you can keep personal financial matters confidential while avoiding a long court battle in which your family lacks access to money and resources.
So, how do you avoid having your estate go through probate? As an Arizona resident, there are steps you can take to skip the probate process while preserving your loved ones’ financial security. One of the best ways to avoid probate is to create a living trust for assets such as real estate, bank accounts, cars, retirement funds, and more.
You can work with an attorney to write a trust document. Like a will, this document names a trustee to handle the estate upon your passing. You can name yourself as the trustee for the remainder of your life. Doing this enables property to pass to your chosen beneficiaries without the need for costly probate proceedings.
Additionally, you can alter the titles on your house and other forms of real estate to help keep it out of probate. The state of Arizona recognizes two types of joint ownership with rights of survivorship. Under Joint Tenancy with Right of Survivorship, two or more parties own equal shares of a property.
Upon one owner’s death, their shares automatically pass to the other owners.
Another option is Community Property With Right of Survivorship, wherein the deceased’s shares of property automatically transfer to a surviving spouse. Note that this option is only available to property owners who are married. Setting up real estate property under these statuses can help you avoid probate issues down the line.
Getting Help With the Probate Process
If you were appointed to handle a loved one’s probate case, you can trust our the JacksonWhite Probate Law team to guide you through process. We also have a fantastic Estate Planning team that can help you get your estate in order.
Call our Probate team at (480)467-4365 to discuss your case today.