Introduction
In order to address the 5 risks of skipping a probate attorney we’ll address 5 of the most commonly asked questions regarding probate in Arizona.
Why Do I Need a Probate Attorney?
The first step in the probate process is to ask the court to appoint a personal representative for the deceased person’s estate. Other states call this person the executor or executrix. Personal representative is often shortened to just PR. The PR has a list of duty that he or she must perform on behalf of the estate. Failure to properly execute these duties properly could lead to several negative consequences, including:
- waste of the estate assets, which will reduce the inheritance for the heirs;
- delay in processing and closing the estate;
- missing valid creditor claims that may make the personal representative personally responsible for the debts;
- incorrectly distributing the assets to the heirs, again leading to personal liability for the representative.
A probate attorney can help avoid these problems and many more. The services typically provided by a probate attorney include:
- Prepare and file the petition for appointment of personal representative and probate of the will, if available, and the other associated documents;
- Represent the PR in the appointment hearing if necessary;
- Prepare and send all notices of the appointment and other notices to heirs and creditors;
- Assist the PR in preparing an inventory of probate and non-probate assets;
- Assist the PR in discovering estate liabilities and advise the PR on handling liabilities;
- Assist the PR in the preparation of an accounting of the estate, if necessary;
- Advise the PR as to proper distribution of the estate assets;
- Prepare and file the documents to distribute the estate assets and close estate; and
- Counsel and advise on any related questions or matters arising out of the administration of the estate.
When properly done, these services can reduce the overall cost of the probate process and lead to a larger estate available for distribution to the heirs. The attorney will also help the PR avoid any personal liability for mismanaging the estate.
My Parent Died in Arizona and We Live in Another State. Where do we Hire an Attorney?
Probates are usually opened in the state where the deceased lived and died. It largely doesn’t matter where the kids or other heirs live. Because most attorneys are only licensed in a single state, you will want to contact an attorney in that state to start the process. The local attorney will be familiar with the probate laws and should be able to guide you through the estate administration process. So if your parent died in Arizona, then you will need an Arizona probate attorney to help you open a probate in Arizona.
On the other hand, the personal representative (i.e. executor) of the estate does not need to live in the same state as the now deceased person. In many cases, the representative may need to travel to the person’s last residence to organize the physical assets and prepare them for distribution, but much of the rest of the process can be done from afar.
Ancillary Probates
Probate proceedings in other jurisdictions may be needed if the deceased owned real estate in multiple states or countries. Most jurisdictions will look to the state where the person died for the initial proceedings. After the initial probate is open, then ancillary probates may be opened in the other jurisdiction. Ancillary proceedings are typically more streamlined because the main probate should handle most of the issues that arise with the estate.
For example, if mom died in Arizona and owned a farm in Texas, then we would first open a probate in Arizona. Next, we would work in an attorney in Texas to open the appropriate ancillary proceeding in Texas to sell or distribute the farm to the heirs. If the situation is reversed, then we would open a probate in Texas first and then look to start the Arizona proceedings.
The Difference Between Probate With and Without a Will
There is not a big difference between probate with and without a will. Everything listed in the article titled “The Probate Process in Arizona” applies to both except where noted. The following could be added to the previous article for clarification
Why Do I Need a Will?
A last will and testament gives instructions for whom should receive your estate when you die and set any terms or conditions on the distribution. When people hear the word estate, they envision lots of money and land; but when I use it and as it is used in probate law, it usually just refers to a person’s property, regardless of value. And so regardless of the size of your estate, having a will is important.
A will also allows you to appoint a personal representative (i.e. executor) to manage your final affairs. It can also name a guardian for your minor children and appoint people to manage funds for minor or disable heirs. Wills can even contain provisions to establish and fund trusts for heirs. These trusts are called testamentary trusts because they only exist after the death of the person.
What Happens if I die Without a Will?
If you die without a will, you are said to have died intestate, and Arizona law provides default rules for distributing your estate. The default distribution is not really surprising to most people. If you are married and all children belong to both of you, then the surviving spouse gets it all. If some children are not common to both, then the estate is split among the surviving spouse and all kids. If there is no surviving spouse, then the estate is distributed to the kids or next closest relatives.
There are also laws that say who has priority to be appointed as the personal representative of the estate and as guardian for any minor children. Arizona law would prevent minors from receiving the inheritance until they are 18, but then the “adult” heir will have full access to the funds. A guardian and conservator would also need to be appointed for any disabled adult heirs, and this could cost several thousands of dollars.
It is important to have a will that accurately reflects your current wishes for your estate and its distribution to your heirs. Without one, your estate will be subject to the default Arizona laws that may not be what you want and may increase the expense (and reduce the share) for your family.
Estates That Need Probate and Those That Don’t
Non-probate assets transfer to the heirs (more properly called beneficiaries in this case) without going through the courts and the probate process. Furthermore, the transfer and who receives the property is generally not subject to the provisions of the last will and testament. For most non-probate transfers, the beneficiaries usually just need to present a death certificate to the proper person or entity to receive the property. Non-probate property falls into a couple of categories:
- Trust Property. Property owned by a trust is subject to the terms of the trust agreement, including who manages the property (the trustee) and who receives the property or the benefits of the property (the beneficiaries). This is a common estate planning tool and very effective presuming the deceased person actually assigned the ownership of the property to the trust; otherwise, a probate may be needed to transfer the property to the trust.
- Jointly Owned Property. When property is jointly owned and one owner dies, the deceased owner’s share evaporates, and the other owners then just own a bigger share of the property. This is very common with real estate, cars, and bank accounts, particularly with married couples.
- Community Property with Rights of Survivorship. In Arizona, real property can be titled in this way if the joint owners are married. The results are the same as joint ownership as described above, but there is tax benefit for the surviving spouse when the first spouse passes.
- Life Insurance. Most life insurance policies name beneficiaries who will receive the proceeds upon the death of an individual. Typically the beneficiaries are the spouse and kids of the person or a funeral home who will use the funds for burial. If no beneficiary is named, then the proceeds are usually paid to the deceased person, and they are subject to probate.
- Accounts with Death Beneficiaries. You can name beneficiaries on bank accounts, brokerage accounts, and retirement accounts (401Ks & IRAs), and the result is very similar to life insurance. When the account owner dies, the beneficiaries receive the funds by presenting the owner’s death certificate to the bank. Paid on Death (POD) and Transfer on Death (TOD) are the common terms for this arrangement.
- Real Estate with a Beneficiary Deed. Arizona law allows a property owner to execute and record a deed that will transfer a piece of real property to named beneficiaries upon the death of the owner. While the owner is still alive, the owner can still do what he likes with the property, including renting and selling it. If the property is sold before death, then the beneficiary deed becomes meaningless.
- Life Estate Deed. A life estate deed is similar to a beneficiary deed except it actually transfers an ownership interest in the property to the beneficiaries when it is executed and not when the owner dies. Therefore, the owner is no longer completely free to do what he likes with the property; the beneficiaries have a say too.
- Vehicle with Transfer upon Death Form. Arizona law also allows an owner to fill out a form naming a beneficiary for a vehicle. The form is not recorded anyway, but the original form must be present to the MVD with a death certificate to transfer title
- Everything Else. For a single person, all property that does not fall into the above categories is considered part of the person’s probate estate. Because Arizona is a community property state, a married person’s probate assets include all separately owned property and one-half of the community property that does not fall into the above categories. (The other half of the community property belongs to the surviving spouse.)
A qualified probate attorney can help you analyze what assets are subject to probate and whether a probate is actually needed.
When Is an Estate Too Small for Probate?
You can always start the probate for an estate regardless of its value. On the other hand, if you want to avoid probate, then you may be able to do so if the value of estate property is small enough.
The first question is what property is counted. See above. Again, this is a critical inquiry, and a probate attorney can help you make sure that you get the right answers.
Once you know what assets are subject to probate, you divide them into two groups: personal property and real property. If all the personal property is worth less than $75,000, and all the real property is worth less than $100,000, then no probate is needed. The assets can be transferred to the heirs or devisees, if there is a will, by filling out an affidavit. The process is slightly different for the two categories of property. A.R.S. § 14-3971
How do I transfer personal property from a small estate?
According to ARS §14-3971, you must first wait at least 30 days from the date of the person’s death. Next, you fill out and sign an affidavit that states that the personal property of the estate is worth less than $75,000 and the signor or signors are entitled to receive the property from the estate. You then present the affidavit to whoever holds the title to the property (like the bank for cash accounts or the motor vehicles department for cars), and that entity should transfer the title to the property to the proper people.
The process is relatively simple, and most financial institutions are familiar with the process.
How Do I Transfer Real Property From a Small Estate?
The process is very similar, but there are some added twists. First, you must wait at least 6 months from the date of the person’s death, not 30 days. Next, you fill out and sign an affidavit that is similar to the one for personal property. But instead of presenting the affidavit to the deed holder, you must file the affidavit with the county superior court and pay the normal filing fee, which is usually around $250. Then, you get a certified copy of the affidavit from the court and record it with the county recorder’s office. This will transfer the real property to the heirs.
The process is a bit more complicated than the process for personal property, and costs more due to the fees with the court and recorder’s office. The 6-month waiting period is sometimes problematic because the heirs may not want to wait that long before they sell the property, or paying mortgage bills, home insurance, and maintenance may be an issue. I have seen families file for probate because they do not want to wait or there are other problems with the house that can be resolved quicker through the probate process.
Should I Ever Probate a Small Estate?
I just addressed one reason to file a probate despite meeting the definition of a small estate. These options are also not available if the personal property exceeds $75,000, if the real property exceeds $100,000, if there is a dispute about whom should receive the property (will contest), if there are unpaid creditors, or if someone else has already filed a probate. In these cases, you must file a probate for 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.
Call our Probate team at (480)467-4365 to discuss your case today.