Probate is a legal process allowing the court to supervise the process of handling the affairs of someone who has died. It can be formal or informal.
The probate process varies in each state, and the details and procedures vary by judicial district within the state. Probate is designed to ensure that bills are paid and assets are delivered to the appropriate beneficiary or heir.
If there is a will. The probate assets are to be distributed to the named beneficiaries according to the will.
If there is no will. A person who dies without a will is said to have died “intestate”. In this case, probate assets are distributed to the heirs in an order determined by statute (A.R.S. §14-2103). Under Arizona law, for instance, if a person is married and has no children, the spouse inherits all. If a person is unmarried and has children, the children inherit equally. Other situations are set out in the statute.
Formal probate includes a hearing in front of a judge or commissioner.
Informal probate involves filing numerous papers with the court which become public record.
Most probate procedures in Arizona are informal, requiring no formal hearing.
Probate must be filed for all estates which contain probate assets, which are defined by state law, usually determined by the residence of the person who died. In addition, probate frequently must be filed in each state where the deceased held title to real property. So, if an Arizona resident dies while owning property in her own name in California, a probate action must be filed in both Arizona and California.
Real Property (homes, condominiums, land, etc.) located in AZ which has a total net value of more than $100,000, after deducting for the amount still due on the mortgage.
Property titled in joint tenancy with right of survivorship (JTWROS) is not included if the other joint tenant is still living. Property with a recorded beneficiary deed is also not included in the probate estate.
Personal Property, including furniture, jewelry, artworks, cars, bank accounts, stocks, bonds, etc., with a total value of more than $75,000.
Assets frequently NOT part of the probate estate include:
- A 401k, IRA, Roth, etc. which has a beneficiary listed with the company holding the account.
- Investment accounts which have a beneficiary listed with the company holding the account.
- A bank account held jointly, if the other joint owner is still living.
- Life insurance policy with a named beneficiary.
- Proceeds of a pension plan which has a named beneficiary.
How Does Probate Work?
If the estate has assets valued above the exclusions listed above, a probate must be filed. All forms and notices for the probate process in Maricopa County are available for sale at the courthouses, or on-line for free, and come with or without instructions. If you are planning to handle the probate forms yourself, click here to go to the Maricopa County Superior Court Online Self Service Center.
The forms are divided into several packets roughly approximating the steps needed to complete the process. The first set of forms are filed with the Clerk of Court. In Phoenix, this may be done at the courthouse located at 125 W Washington. One of the forms in Packet 1, is called “Letters”. If the will is accepted by the Clerk of Court, and the forms are properly completed, this form will be returned to the Personal Representative, stating that this person is qualified to handle the estate. These “Letters” are given to banks, etc., authorizing the bank, Motor Vehicle Department, or other entity to release the funds or assets to the Personal Representative.
You must complete the training program for personal representative online. The training module will take 15-30 minutes to complete. To access the training module please click on this link: http://www.azcourts.gov/educationservices/COJETClassroom/ProbatePersonalRepresentative.aspx
If the person died with a will, the ORIGINAL will must be surrendered to the court with the first set of forms. If no will can be found after a thorough search, that fact must be stated on the forms.
These forms generally deal with the following:
- Application to the court for appointment as Personal Representative
- Notices to appropriate persons such as relatives and beneficiaries that a Probate has been opened and a Personal Representative was appointed
- Proof that these forms were delivered to the appropriate persons
- Proof that a notice to creditors was published in a newspaper
- A listing of all assets and liabilities of the estate
- Proof that the liabilities have been paid and the beneficiaries have received the assets to which they are entitled.
After the first set of forms are filed with the court, the person who has now been appointed by the court as the Personal Representative has several duties during the period known as administration of the estate. These include:
- Gathering all assets and ensuring their safety (such as prohibiting entry to a home where assets might be damaged or stolen)
- Paying appropriate bills
- Notifying beneficiaries and relatives that a probate has been opened and a Personal Representative has been appointed
- Notifying appropriate governmental bodies (such as Social Security Administration, Medicare, and Bureau of Veteran’s Affairs)
- Arranging for publication of a notice to creditors
- Notifying each known creditor
- And, finally, delivering the assets to the appropriate beneficiaries
During this time more forms are to be filed with the court, such as proof that notice has been given to the beneficiaries, proof that notice has been published, etc.
The entire process can be accomplished in several ways.
- Without the assistance of a lawyer. The Personal Representative completes all duties and files all necessary forms with the court.
- With some “coaching” by a lawyer. In this case, most of the work is done by the Personal Representative, who occasionally gets assistance and/or advice from a lawyer. Legal fees may be paid from the assets of the estate.
- With a lawyer completing all forms and filing them with the court. The Personal Representative handles the assets and process of notifying creditors, paying bills, distributing the assets, etc.
- With a law firm which does everything, including cleaning out the decedent’s home, selling, distributing, and/or disposing of all assets as appropriate. This particular scenario is somewhat rare, and can be very expensive.
What Happens if There are Assets Below the Probate Amounts?
If the only probatable asset of an estate is a bank account with $10,000, for instance, probate is not required. The appropriate person (such as the person named as the Personal Representative in the decedent’s will), may claim the asset by completing a “Transfer of Estate by Affidavit” and taking it to the bank. In Maricopa County, this form may be downloaded from the Maricopa County Superior Court website.
On the form, the person wishing to take possession of the property must swear that he or she is the appropriate person to claim the property, that more than 30 days have passed since the person died, and that the entire personal property probate estate is worth less than $50,000. The bank will then transfer title to the asset, or give the appropriate person the asset. The same process can be used to re-title a car. A similar process is used to re-title real estate worth less than $75,000.
How Do I Avoid Probate for My Heirs?
It is usually fairly easy to avoid probate in Arizona. Doing one or more of the following supercedes any designations in a will, and takes the asset out of the probate estate.
1. Naming a Beneficiary. This can be done on certain assets by completing a form with the institution that holds the asset, such as a bank or life insurance company. Such assets include:
- retirement accounts
- life insurance
- and bank accounts
For bank accounts and investments, these beneficiary designations are usually called transfer on death, or pay on death (TOD or POD) accounts.
2. Holding Title to Property, such as a Bank Account, in Joint Tenancy. This may or may not be appropriate depending on the circumstances. With joint tenancy, the other person named on the title is an owner, rather than just a beneficiary of that asset. So the joint tenant has authority to use the asset just as the original owner can.
3. Recording a beneficiary deed. The deed states that real property (such as a house) belongs to the original owner, but is to be delivered to the beneficiary upon the death of the original owner. This method is preferred if the original owner is the only person liable on the mortgage.
4. Establishing a trust. A trust functions somewhat like a corporation. You re-title your assets into the name of the trust (then owned by the Bonnie Trust, for example, instead of just owned by Bonnie). Because the trust doesn’t die when you do, there is no probate estate.
This can be particularly useful when you want to name several beneficiaries in different amounts, or want money to be held and used for someone’s benefit without that person having control of the entire amount. Putting your assets in a revocable trust does not change the way you deal with your assets, and you can still buy, sell and use the assets as you would have before the transfer.
Common Myths About Estates and Probate
1. If I don’t have a will, the state will get my assets.This is almost never true. There is a list of people to inherit when a person dies intestate, or without a will. This list prioritizes who is entitled to inherit and includes spouse, children, parents, siblings, grandchildren, etc. The list, however, may not include the people you would want to inherit, and does not include anyone who is not related to you.
2. If I have a will, my estate does not have to go to probate.The property that is covered by the will is actually the property that is probated.
3. If I have a will, I don’t need to name beneficiaries on my life insurance or other such assets.Assets that don’t have a beneficiary designation are part of the probate estate and will eventually go to the beneficiaries named in the will, but must go through the probate process first, and are subject to the liabilities (debts) of the estate. Life insurance with a named beneficiary goes directly to the named beneficiary and is usually not part of the probate estate.
4. If I name beneficiaries on all my assets, I don’t need a will.Wills have several functions in addition to naming beneficiaries for known assets. A will can state whether or not you want to be an organ donor. It names the person you want to make burial or cremation decisions for you. A will also names who you would want to receive assets that you don’t have until shortly before or soon after your death, such as a personal injury settlement that comes to you or your estate because of your death.
5. If I am married, I don’t need a will. Again, a will has several functions in addition to naming a primary beneficiary. Also, if you have children from a prior marriage, those children are entitled to a portion of your estate if you die “intestate”.
Affidavit – A sworn statement relating certain facts, such as a statement that the probate estate of a decedent is less than a certain amount.
Ancillary Probate – A shortened version of probate done in an additional state. For instance, if an Arizona resident dies with a probatable estate in Arizona and owning property in Colorado, Arizona would be the primary probate. An ancillary probate would be filed to handle the property in Colorado.
Beneficiary – A person named to receive property after the death of another
Co-Tenancy – Also called Tenants-in-Common, this describes the ownership of two (or more) persons of a piece of property. Each owner owns a piece of the asset and does not have an automatic right to receive the decedent’s share upon his or her death. In the absence of other documentation, each person is presumed to own one-half of the asset.
Decedent – A person who has died
Executor – Term previously used to identify the Personal Representative
Heir – A person named by statute to receive property after the death of another who died intestate
Intestate – Without a will
Joint Tenancy With Right of Survivorship (JTWROS) – Two (or more) owners of property, either of whom would receive sole title to the property after the death of the other. Each person is presumed to own the entire piece of property or asset.
Personal Representative – The person appointed by a will and/or the court to administer the estate of someone who has died. Equivalent to an Executor.
Probate – The process of general court supervision of the closing of an estate
Probate Estate – The part of an estate that is subject to the probate process. Defined generally as the assets that do not have a beneficiary designation or joint owner.
Revocable Trust – A trust owned by an individual or married couple that may be changed or revoked during the lifetime(s) of the owner(s).
Secondary Beneficiary – A person named to receive assets if the Primary Beneficiary is not living at the time of the decedent’s death.
Will – A formal document prepared by an individual stating his or her wishes upon his or her death. Usually includes names of beneficiaries, who is to handle the estate (Personal Representative), who is to have the authority to make burial and/or organ donation decisions, etc.