If you die without a proper plan in place, that’s called intestacy or dying intestate. And then, depending on your residence, they will turn to the state laws where you passed, and if you were living here in Arizona, there’s a family tree in the law essentially, and they will look at that family tree which goes as follows: “Did you have a surviving spouse? If yes, the general rule is then all of your assets will go to your surviving spouse. If you don’t have a surviving spouse, do you have surviving children? If yes, then the general rule is everything’s going to go them equally. If you do not have a spouse or children, then they look for parents. If not, then they look for siblings, and so on, then they’ll look for aunts and uncles and nephews and nieces.
The other question is the law would have no idea who you trust and would want to have the responsibility of being your personal representative. That means somebody needs to step forward to become that personal representative. But if you’re single and have no spouse and no children, then it’s kind of a gamble as to who that might be. I’ve read cases of very wealthy people that have died with no will and no trust, and it does not usually go the way they would have intended. Guardianship is another crucial thing. If you have minor children, a will is a standard and time-tested method of naming guardians to raise your children so that you don’t have a family fight about that on the two sides of the family. If you wanted to leave something to charity or other people who are not the heirs at law, you’d have to create a will to tell us that you wanted to benefit this organization or that individual.
What Exactly Is Probate And When Is It Triggered In Arizona?
Generally, if you die intestate or with a will, your estate will go to probate. And that surprises a lot of people. Many people think that only if you die intestate does your estate go to probate, but you can avoid it if you have a will. That’s not true. Either without a will or with a will, the only way to avoid probate is if you don’t have any “probate-able” assets upon death or very minimal probate-able assets. So what do I mean by that? Well, first of all, retirement accounts. Retirement accounts are non-probate assets so long as you name beneficiaries in your IRA and 401(k), for example. If the investment firm can identify them and distribute the assets, that will not go through probate.
If you have just a bank account or non-retirement investments and you create a transfer on death, or pay on death like a beneficiary, and then that all works out according to plan, that would be non-probate also. If you have real property and you hold that as a joint tenant, first of all, like with a spouse or community property with a spouse, and you die and your spouse survives, that’s going to go to them. Joint tenancy could be with a non-spouse, and it could be with a family member or just another person. So that would be a non-probate. Or if you own real property and you leave a beneficiary deed, that would be a non-probate.
If you cross your T’s and dot your I’s with all your assets and then any other little things out there, small bank account and so forth, if in total and in the aggregate those add up to less than $75,000, then we’ll be okay. We can deal with those without going to probate, and so whether you’re intestate or with a will, you’ve now accomplished avoiding probate.
On the other hand, a trust, I think, is more reliable because it’s significant. You know the procedures and regulations, along with the knowledge to keep your assets in that trust. And I think that that’s more reliable than the other method.
Probate is typically a six to nine-month public process, and many people don’t realize that. Also, if you like your privacy, you might want to get a trust because that’s private. Nobody has the right to know what’s going on in a trust except for the people involved and the beneficiaries.
We charge a retainer of $2,500 for probate. There’s no guarantee that we’re going to complete it for that. It depends on how complex or straightforward the process is. What can make a probate process difficult? Blended families can often do that just because of more disputes and more people involved, which causes hiccups. A complicated asset and debt situation, if you have lots of small family businesses, LLCs, things like that that have to be evaluated or sorted out in terms of where it’s going. If you own real property in multiple jurisdictions, different counties, or states, we’re probably going to have to open probate in every one of those counties or states. That gets very expensive and time-consuming.
We also have to publish notice and everything to creditors. That’s why it takes some time, and if there are creditors involved, we have to deal with all of those things. So creditors have to be dealt with in a trust, but it’s a more complicated paperwork and accounting situation with probate. Then finally, when we get done accounting for all the assets, paying off all the debts, we’ve identified all the heirs that are going to get something, we report all of that to the court, and the court signs off on it, and we make a final distribution.
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