Avoiding Probate in Arizona

Probate is the court process where your assets pass to your family after your death. Probate can be expensive and time-consuming, which is why some people prefer to take steps during their lifetime to avoid the necessity of putting their family through this process.

Unfortunately, many people mistakenly believe that their family will avoid probate if they have a Last Will and Testament. However, a Last Will and Testament provide instructions for the distribution of assets during the administration of a probate, it does not necessarily avoid the probate process. Another factor that many people overlook is that probate is a court process. This means that all submitted documents are part of the public record, which can be disconcerting to those that want to keep their personal matters private.

There are a number of legal tools available that you can use today to limit the extent that probate will be necessary to administer your assets in the future.

What are the different ways to avoid probate?

The following four legal tools can help you avoid probate:

1. Establish a Trust:
   A common way to avoid probate is to establish a revocable trust. A trust allows people to initiate the transfer of their property and assets prior to death in a more flexible method. The creator of a trust (“Trustee”) still maintains full ownership of their assets during their lifetime. The trust allows the Trustee to plan for their assets to be distributed without court involvement after their passing. In order to establish a trust, you must provide an order for trustee succession and a plan for the distribution of your assets upon your death. In addition to naming the initial trustee, which is typically the creator of the trust, you should also name at least two successors to continue to manage the trust in the event that you become unable to do so. After you have created your trust, you will need to make sure that your assets have been transferred to the trust. Keep in mind, a trust will not avoid probate unless it is fully funded. Although, there are a few exceptions to this general rule (Ex: qualified retirement plans)Keep in mind, creating and funding a trust can take time, so it’s best not to delay your planning. It may take up to six months to create all the necessary trust documents and transfer your assets into the trust.
2. Make Accounts Payable Upon Death:
   Another way to avoid probate is to add Payable on Death (POD) or Transfer on Death (TOD) designations to various assets. Sometimes this type of designation is also referred to as a beneficiary designation. If you complete a beneficiary designation on all of your financial accounts, your accounts will avoid probate because they will be considered private contracts between you and the financial institutions. Beneficiary designations can be added to real property, bank accounts, life insurance policies, brokerage accounts (401K and IRA), and vehicles. Typically, each financial institution will have its own designation forms for you to fill out, which will allow you to designate your beneficiary (or beneficiaries) and what share, or percentage, you want each beneficiary to receive. When an account is beneficiary designated, it will remain in your name during your lifetime, and the beneficiaries will have no control over the assets until you die. However, it can be automatically and immediately transferred to the named beneficiary upon receipt of a certified copy of the death certificate.
3. Utilize Small Estate Court:
   Under Arizona law, there is a modified version of probate procedure which is available to estates owning real property less than $100,000 or personal property worth less than $75,000.An heir of the estate may claim this benefit by filling out a small estate affidavit. What is an affidavit? A small estate affidavit is a procedure available under Arizona estate law that allows heirs and beneficiaries to bypass the probate process. The process is typically carried out by the surviving spouse and/or children but can be initiated by anyone claiming to be a legitimate heir at law, whether the decedent had a will or died intestate. The person carrying out the small-estate affidavit procedure (Petitioner), begins by verifying that they are entitled to the personal and/or real property from the deceased. If the deceased left a will, the petitioner must obtain a copy. The petitioner must also verify whether the court has previously appointed a personal representative for the estate and, if so, determine the status of that process. Lastly, the petitioner must also verify whether the net value of the deceased’s property (minus any debts) qualifies as a small estate. If the value of the personal property or real property exceeds the statutory amounts, then probate is necessary.If the small estate affidavit involves personal property (like accounts, insurance, etc.), the affidavit just needs to be signed and notarized. There is no need for any court involvement. However, if the small estate affidavit involves real estate, it will need to be recorded with the County Recorder.
4. Title Property with Rights of Survivorship:
   You can also avoid probate by ensuring that you use the correct form of ownership when you acquire or title property. For example, if you own a home or other real estate, you can title the deed in a way to avoid probate. You would want to make sure any property is acquired and titled using a form of ownership with rights of survivorship. Arizona recognizes two forms of joint ownership that have rights of survivorship:
   • Joint Tenants with Right of Survivorship- When one owner dies, that owner’s share automatically rolls over to the other joint tenants. Joint ownership allows two or more joint owners to have an equal share of the property.
   • Community Property with Rights of Survivorship- Is limited to married couples only. The deceased spouse’s shares automatically pass to the surviving spouse.

Is there a difference between big estates and small estates?

Every person should have a basic estate plan in place, regardless of their income or the size of their estate. Some estates may be larger than others, but all estates can benefit from the legal protections available under state and federal laws.

If you have a larger estate, you may benefit from utilizing trusts, which can be beneficial for tax planning, business planning, charitable giving, planning for minor children, and for preserving your assets. As mentioned above, if you have a smaller estate your family may benefit from being able to utilize Arizona’s Small Estate Court proceedings to avoid probate. A properly qualified estate planning lawyer can help guide you through the process and explain which estate planning tools are right for your financial situation and can tailor your estate planning to fit your specific circumstances.

Estate planning is for anyone who wishes to protect their family and assets. In the absence of an estate plan, your estate will be distributed according to Arizona’s laws of intestacy. A properly drafted estate plan will replace the terms of the State’s estate plan with your own, thereby ensuring that your family’s financial future is protected.

Contact Us

Our estate planning and probate lawyers are here to help. We have extensive knowledge and experience in dealing with matters at probate court and the laws that govern these proceedings.

Our attorneys and staff take the time to truly listen to what is important to you. We will make sure to draft your estate planning documents so they stand up in court. We use our legal skills to help to protect your rights and interests, and we will take all necessary steps to make sure your wishes are carried out.

Contact Brown & Hobkirk, PLLC today for help with all of your estate planning needs.