Wills, Trusts & Probate

Probate & Estate Administration

Most, if not all of you have probably heard about probate. However, not many people truly understand what probate is, or why we even have probate. This article will highlight some basic information on the probate process.

What is Probate?

Probate is the legal process used to transfer assets that were owned by someone who is deceased. Many asse4ts, such as your home and car, have a title that needs to be transferred. If the owner is deceased they obviously can not sign the title. Probate is the court process used to appoint someone to sign title documents and transfer property on behalf of the deceased person.

What Occurs During Probate?

To open a probate, a person files an Application for Appointment as personal representative with the Court. That application requests that the Court: (i) accept the decedent’s original Will for probate (if there is a Will), and (ii) appoint a personal representative to administer the decedent’s estate. The prospective personal representative must also file other initial documents to start the probate process.

The Court will generally appoint the person named as personal representative in the Will as the decedent’s personal representative unless the person is not qualified, declines, is unable or is challenged by an interested party. The Court will usually appoint a personal representative without a formal hearing.

If the Probate Court is satisfied that all requirements have been met and all information has been supplied, it will open the probate and issue a document known as “Letters Testamentary” by which the Court appoints the personal representative of the estate. The personal representative may give copies of the Letters Testamentary to people and entities to show that a probate was opened and that the personal representative has the authority to act on behalf of the estate.

The executor then makes an inventory of the estate’s assets, locates creditors, pays bills, files tax returns, and manages the estate assets. When all of the duties of the executor are completed, but not earlier than four months after the probate is opened, another petition is filed with the Court asking that the estate be distributed to the devisees or heirs. If this petition is granted, the probate is completed by distributing the assets to the devisees or heirs and filing final tax returns.

What are Probate Assets?

Probate proceedings involve only assets commonly referred to as “probate assets.” Probate courts do not have jurisdiction over and cannot administer assets that are not probate assets. Probate assets include all real property and personal property, including intangible personal property:

1. in which the decedent had an interest at the time of death, and
2. that are not transferred by operation of law or by contract to a person or entity.

The decedent must have had an interest in the property at the time of death or the property is not a probate asset.

If I have a Small Estate is there a shorter Probate Process?

Yes. In Arizona probate may not be required to obtain property or change title to the decedent’s property. These circumstances are (i) the decedent’s employer owes wages, salary or other compensation to the decedent of less than $5,000 and the decedent’s spouse seeks the money, (ii) the value of the personal property of the estate less liens and encumbrances is less than $50,000, and (iii) the value of the real property of the estate located in Arizona less liens and encumbrances thereon is less than $75,000. This small estate probate exemption cannot be used until thirty days after the decedent’s death, except in the case of the spouse of a decent who seeks the deceased’s compensation.

What Happens to Creditors in Probate?

Under the normal probate process the personal representative will pay all of the decedent’s creditors from the assets of the estate. However, certain assets are exempt from creditor’s claims, that is you do not have to sell those assets to pay the creditors. In Arizona some of those exemptions are up to $18,000 in the decedent’s homestead; up to $70000 of Household furniture, Automobiles, Furnishings, Appliances, and Personal effects. The surviving spouse and children can also use a reasonable amount of the estate to support themselves during the administration of the estate for up to one year. The exemptions are provided by statute and prior to making any determinations on exemptions you should review the law or consult with an attorney.

Can I avoid Probate?

As the Probate court only has jurisdiction over probate assets, probate is not necessary if you do not own any probate assets at the time of your death. This can be partly accomplished by owning property jointly with rights of survivorship, or by using beneficiary designations on property. The most common way to avoid probate is to use a Living Trust to own your assets during your life. Contact our office to find out more.

What Exactly Is Estate Planning And When Do We Even Need It?

Estate planning is looking at your asset and debt situation in conjunction with your family or other people you want to leave your estate to upon death. I think there are a couple of different tiers of estate planning. On the upper-end of estate planning, it can involve financial planning, succession planning for businesses, or asset protection, which is usually applied to individuals with many considerations they wish to protect. The other tier of estate planning would be basic planning with a will or a trust, powers of attorney to cover legal, financial, and healthcare matters. So our firm focuses on this tier. Read More

How Do I Ensure My Assets Will Be Protected And Passed Onto My Rightful Heirs Or Spouse When I Die?

For asset protection, it’s going to require something called an Asset Protection Trust. Ensuring that your assets go where you want them to go is the nature of “Estate Planning.” Regardless of how much you have when you begin planning, you’re going to have what you have when you die. Still, whether it’s personal possessions, money, maybe your house, vehicles, those need to go somewhere. If you don’t make plans, there are statutes in the law that will decide, but it’s very possible that they’re not going to give them away in the way you had hoped. Read More

How Often Should We Be Reviewing Or Updating Our Estate Planning Documents?

Unfortunately, I think some attorneys will advise the “better safe than sorry” approach. I feel that some attorneys oversell this as a way to drum up business and encourage people to review these every year or something like that. More typically, I encourage every five years, and that’s probably not a bad rule of thumb because life situations may have happened in the interim. Maybe somebody you named as a personal representative or a trustee passed away, or you’ve had a falling out with them, and that’s no longer who you would want. Read More

What Is Going To Happen To Our Assets Or Belongings When We Die If We Haven’t Put A Proper Estate Plan In Place Or Even A Will?

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. Read More

What Are Some Potential Disruptions Or Probate Contests That Can Occur And What’s The Best Way To Deal With Those To Resolve Them Without Litigation?

In terms of potential disruptions, you might have claims from either heirs or non-heirs making some claim that assets are being distributed unfairly or not in the best interest of the deceased. Maybe they’re alleging that the person was old and feeble and didn’t have mental competence or was coerced into saying what they said in their will, or they feel that there was fraud involved. Maybe they could allege that the document is fraudulent. There are all sorts of things that could happen there in a challenge to the court in probate, and these things can happen with the trust as well. I feel that the probate process tends to find itself in litigation more, and why is that? Because you have to give notice to all sorts of people in the probate process, whether they were named in the will or not named in the will. So even heirs, if they were left out, let’s say you’re disinheriting a child, for example, they still have to get a notice about the probate. They’re going to get these court documents, and it can stir the pot, and those things don’t typically happen with the trust. Only the beneficiaries named in the trust will receive a notice. Read More