What is Probate?
Probate is a legal process that happens after you die. It include proving in court that your will is valid, identifying and inventorying your property, have that property appraised, paying debts and taxes, and then distributing the remaining assets* to your heirs.
* Assets can include: real estate, bank accounts, certificates of deposit, stocks and bonds, membership interests in a business (like an LLC), investment accounts (like T. Rowe Price, Schwab or Etrade), retirement accounts (IRAs, 401(k)s, pension plans, profit sharing plans, retirement plans), life insurance plans, and vehicles and boats.
Probate has come to mean estate administration after death. In short, if you die without an estate plan — like a will or trust — then the State of Arizona will make these decisions on behalf of you and your heirs. The state isn’t likely to make the same decision you would have about the division of your assets. In addition, probate takes no less than four months and could be longer. It can also be an extremely costly procedure.
Property ownership is normally transferred when the title is signed over to someone else. However, once you die, you are no longer able to do that, therefore, the court authorizes another individual — a personal representative — to sign transfers of title on your behalf. A representative should probably be an experience estate attorney, however, according to Arizona Law, a representative need only take an online training course before they can be appointed.
It is the personal representative’s responsibility to locate and collect estate assets, pay the debts of the estate, including taxes, deal in good faith with the beneficiaries and distribute the estate assets as call for by the will (or the court).
In Arizona, many types of assets don’t go through the probate process. For instance, assets that are held in a living trust, property held in joint tenancy, life insurance, bank accounts, community property with right of survivorship, property held in joint tenancy, retirement accounts and contracts, to name just a few.
In addition, if there amount of real property located within Arizona does not exceed $100,000 (after liens like mortgages), and at least 6 months have passed since the death the real property can be transferred by affidavit. If the personal property in the estate is worth $75,000 or less, it too can be collected by affidavit. Probate generally takes about 5 months, longer for estates that are more complicated or contested estates.
Finally, your heirs can avoid probate if you set up a trust.
Many people believe that a trust is the way to avoid probate. While is it true that assets transfer to beneficiaries without passing through probate, the trust still requires an administrator (similar to a personal representative) called a trustee. The designated trustee must fulfill many of the same duties of a personal representative, including fulfilling fiduciary duties and administering the details of the trust.
Greg Poulos has years of experience acting in the capacity of a personal representative as well as helping clients to appoint an honorable trustee to administer your estate. Please call if you have questions or require assistance.