When someone passes away without a will, they die “intestate.” Their assets will transfer to their heirs through probate court according to the laws of intestate succession. Unfortunately, intestacy proceedings don’t leave the decedent’s family and friends with much say over who gets what.
Before we dive into the specifics of intestacy laws in Arizona, it helps to understand what assets are considered part of the decedent’s estate, and which assets can potentially transfer to heirs without going through probate.
Arizona Community Property Law
If the decedent was single, their estate consists of all of their assets. If the decedent was married, then their assets are subject to the state of Arizona’s community property laws. Basically, any assets acquired before the marriage, and any assets acquired after a divorce or legal separation, are considered individual property. All property that is acquired during the marriage is considered community property and is shared equally by both parties, each holding a 50% interest. Therefore, when a married person dies in Arizona, their estate consists of their individual assets plus 50% of their community property.
The exception to this rule is that if a spouse comingles their individual assets with their joint assets to the point that they cannot be distinguished, those assets become community property. Of course, prenuptial agreements can also dictate which assets are individual vs. community property.
Assets That Are Not Subject to Probate
To simplify the estate settlement process, there are a number of assets that can pass to a decedent’s beneficiaries without having to go through probate. These assets have contractual beneficiaries built into the account, and the financial institution holding the assets will automatically transfer them to the beneficiaries as soon as they receive the decedent’s death certificate. As such, these assets will not be affected by intestacy probate proceedings. Some common non-probate assets include:
- Bank and brokerage accounts with a payable-on-death or transfer-on-death beneficiary
- Life insurance policies
- Retirement accounts
- Real property held in joint tenancy or as tenants by the entirety
If the decedent has a will, the contracted beneficiary on non-probate assets always trumps the will’s instructions. However, contradictions between the two will often lead to people contesting the will’s validity, which significantly slows down the probate process.
Arizona Probate Law
The state of Arizona is one of 18 states that have adopted the Uniform Probate Code(UPC). As such, probate proceedings are subject to the UPC along with applicable regulations in ARS Title 14 – Trusts, Estates, and Protective Proceedings.
To open probate proceedings, a family member or friend will need to file a petition with the county court. If the family members are in agreement, the court can appoint one of them to serve as the estate’s executor or personal representative. If there is discord amongst the family members, the judge can appoint a third-party special administrator to manage the estate.
During the probate proceedings, the court will need to accomplish a few important tasks:
- Notify all interested parties (family, creditors, business associates, etc.) of the probate proceedings, by personal service and by posting an ad with the local newspaper
- Gather and take an inventory of the decedent’s assets
- Pay the decedent’s debts, bills, and final taxes
- Distribute the remaining assets to the decedent’s legal heirs
- Close the estate
Probate proceedings are generally the same whether or not the decedent had a will. The only difference would be the distinction of who are considered the decedent’s rightful heirs, and how much the heirs are entitled to. As mentioned previously, that will depend entirely on the decedent’s family situation. Following are a few common scenarios, with a brief discussion of how Arizona’s intestacy laws would dictate the transfer of assets in these situations:
- The decedent was married and had no children – the spouse would receive all of the decedent’s assets
- The decedent was married and only had children with their current spouse – the spouse would receive all of the decedent’s assets
- The decedent was married and had children with former spouses or partners – in this scenario, the decedent’s current spouse would receive 50% of the estate, and the decedent’s children from other relationships would split the remaining 50%
- The decedent was not married and had children – the entire estate would pass to the children, who would split the inheritance equally
- The decedent was not married and had no children – the estate would pass to the decedent’s parents. If the parents are deceased, the assets would transfer to the decedent’s siblings (or nieces and nephews if the sibling is deceased). If the decedent does not have any living parents, siblings, nieces, or nephews, extended family members such as grandparents, aunts, and uncles can lay claim to the estate. In rare cases where there are no surviving family members, the state can claim the assets
- The decedent had an unmarried partner and had children – the assets would pass to the decedent’s children. The unmarried partner would unfortunately have no claim on the estate
- The decedent had an unmarried partner and had no children – similarly, the unmarried partner would have no claim on the estate. The decedent’s assets would pass to their parents, siblings, nieces, nephews, and extended family (in the order described previously)
Note that in cases where assets are transferred to the decedent’s children, the court will need to establish a conservatorship to administer the funds. Minors cannot own property, so they would not be able to receive access to their full inheritance until they turn 18.
Do All Wills Have to be Probated?
Small estates with less than $75,000 in personal property and less than $100,000 in real property are exempt from probate. A family member will just need to submit a petition that outlines the decedent’s liabilities, assets, and distribution instructions. The probate court will approve this unless an interested party contests the will.
Estates that don’t qualify for the small estate exemption will need to probate the decedent’s will, but as long as nobody contests the will the probate proceedings will proceed informally. With informal probate, the court will not need to supervise the probate process. The personal representative will be free to handle their responsibilities privately, and the court will approve everything in the end when the estate is ready to be closed.
If the decedent’s liabilities outweigh their assets, the estate is considered insolvent. Unfortunately, insolvent estates will not have any remaining assets to distribute to the decedent’s heirs, regardless of whether or not they left a will.
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.