ALTA Estate Services, LLC
News Article Post
March 28, 2022
What is Probate?
Probate is a term for a legal process in which a will is reviewed to determine whether it is valid and authentic. Probate also refers to the general administering of a deceased person’s will or the estate of a deceased person without a will.
Types of Probate in Arizona
Formal Probate in Arizona
Formal probate is necessary when there is controversy surrounding the validity of a will, choice of a personal representative, or where there must be an identification of heirs. Typically, formal probate is overseen by a judge and requires multiple hearings before the court. Formal probates might be the most appropriate where there is an irregularity in the will, heirs who are minors, or there are objections as to who should be designated as personal representatives of the decedent’s estate.
Informal Probate in Arizona
Informal probate in Arizona typically requires minimal court supervision and limited visits to the courthouse. A Judge in this type of probate will not oversee most actions by the personal representative. There are limitations on who can file for informal probate. Specifically, the decedent’s spouse, adult child, parent, siblings, heirs, nominated personal representative in the decedent’s will, or even a creditor if 45 days have passed since the decedent’s death, are able to file for this type of probate. Additionally, to file for informal probate there must be no objections to the will, personal representative, or their actions.
The third type of probate is Supervised. Here, the court oversees the entirety of the administration process. It may be necessary if specified in the will, or if needed to protect an heir, creditor, or another interested party.
Takeaways from Probate
Probate is required in Arizona unless, as further explained below, the decedent has a trust or listed beneficiaries for all assets. Probate may be bypassed for estates with personal property valued at less than $75,000 and real property under $100,000. In this case, it is known as a small estate. The probate process can be very draining on your loved ones. Probate for a simple estate with few issues can take anywhere from nine months to a year. However, if there is a will contest or large estate, it can take two years or longer. In addition, there are also many fees and expenses associated with probating an estate. Costs to consider include filing fees, probate bond fees, attorney and personal representative fees, and reimbursement fees. You can avoid the time delays, the added stress on family, and costs associated with probate if you plan carefully. Careful planning involves creating an effective estate plan. For example, a living trust allows you to avoid probate because the title of the property would in the name of the trust.
Can You Avoid Probate?
There are many legal actions you can take now to transfer ownership of your assets so that they avoid probate in Arizona. Below are a few to consider:
I have a will. Why would I want a living trust? Contrary to what you’ve probably heard, a will may not be the best plan for you and your family primarily because a will does not avoid probate when you die. A will must be verified by the probate court before it can be enforced. Fortunately, there is a simple and proven alternative to a will: The revocable living trust. A living trust avoids probate and allows you to keep control of your assets while living–even if you become incapacitated–and after you die.
With a living trust, you can avoid all probate delays and related costs – both financial and emotional, eliminate or reduce taxes, and have complete flexibility – the trust can be changed or canceled at any time. In addition, a living trust allows you to maintain control of your assets, even at times of incompetency and after your death. Living trusts also promote the quick distribution of assets to beneficiaries. Save time, money, and future heartache for your loved ones, trusts are inexpensive, easy to set up, and easy to maintain. If you own titled assets and want your loved ones to avoid the problems of court interference at your death or incapacity, you should consider a living trust. You may also want to encourage other family members to have one, so you won’t have to deal with the courts at their incapacity or death. Visit Understanding Living Trusts, to learn more about this effective estate planning tool.
Currently, most couples hold property in either (a) Joint Tenancy with Right of Survivorship to avoid probate or (b) Community Property with Rights of Survivorship to avoid probate and for the tax advantages to avoid Capital Gains Taxes on the sale of assets following the death of one spouse. There are only nine Community Property with Rights of Survivorship states, Arizona is one of these states. See Alternatives to Joint Tenancy for more information on joint ownership.
Payable-on-death (POD) and Transferrable on Death (TOD) Designations
Another option is adding a “Payable on Death” (POD) or Transfer on Death (TOD) designation on assets including bank accounts, brokerage accounts, and vehicles. This process, sometimes referred to as a beneficiary designation, allows for an easier transfer of ownership upon the death of the transferor. In most cases, on all POD and TOD designation forms, you can name an individual, multiple individuals, your living trust, or even a charitable organization as your beneficiary. The beneficiary you name on this form will then be legally entitled to access the asset within the account upon your death and the asset should not be subject to probate.
To add a beneficiary designation to a financial account held at a bank or brokerage house you need to consult with your financial institution and complete a POD/TOD designation form. Each institution typically has its own separate form where you designate a beneficiary or beneficiaries and what share or percentage that you want each to receive. Regarding your vehicles, the Arizona Motor Vehicle Division has a (ADOT) Beneficiary Designation Form that allows you to designate who receives title to the vehicle. The form instructs you to complete and staple the form to your original Vehicle Title. If done properly, the Beneficiary Designation Form will transfer title to your designated beneficiary upon your death.
Who Benefits from Estate Planning?
To understand the full benefits of estate planning, it is important to first look at how each document uniquely contributes to an effective estate plan. An effective estate plan uses a collection of documents and teamwork to protect assets and personal property. An effective estate plan explains and carries your intentions of how to pass control down to successors in the event of your absence. An estate plan usually includes a will, a financial power of attorney, medical power of attorney (with HIPAA consent), a living will, a living trust, and professionals who understand the importance of teamwork. When establishing your living trust, medical power of attorney, and other legal planning documents, it is important to remember that the strategies you make in creating these documents are just as important as creating the documents in the first place. See Strategic Estate Planning for more information on how to apply expert methods to achieve your goals.
To ensure children are cared for in the manner that you intend, you will want to name guardians if both parents die before the kids turn 18. This is where a will in the estate plan comes in. Without a will that names guardians in the case that both parents either die or become mentally incapacitated and unable to provide care, the courts will step in and decide who will raise your children.
Estate planning can protect your loved ones from the Internal Revenue Service (IRS). A primary goal of estate planning is transferring assets to heirs with an eye toward minimizing possible tax burdens for them. There are ways to decrease the income tax that beneficiaries might have to pay. Without an effective estate plan, the amount that your heirs will owe could be quite a lot.
Everyone has heard about the horror stories when someone with money dies and the war between family members begins. A sibling or heir may think they deserve more than another, or one may think they should oversee financial circumstances while the other thinks that person is unfit for the job. Oftentimes these discrepancies end up in court, with family members fighting against each other. Estate planning is also about stopping fights before they start. With an effective estate plan, you will designate who controls your finances and assets if you become mentally incapacitated or if you die. Estate planning also helps you plan for unexpected situations and develop individualized plans for times of crisis. As we touched on earlier, a crucial part of planning involves forming a team with knowledgeable and caring professionals. With an effective estate plan, in times of crisis, your family should only have to remember one thing, pick up the phone and call the professionals. See Emergency Hotline to read more about how you can start building your estate plan team.
For more information on your estate planning strategy and a Free Consultation, please contact us or by calling (520) 797-1400.
Feel free to call Mark Fishbein with ALTA Estate Services, LLC office at (520) 797-1400 to learn more about Probate in Arizona, proper and complete estate planning, including the Emergency Telephone Hotline Program afforded to you and your family members at no charge during times of crisis and the other benefits of estate planning described above. Mark Fishbein, Tucson AZ.
The text above is for general informational purposes only, and should not be considered as legal advice.