Four Ways to Avoid Probate in Arizona
By Zachary Mushkatel on March 29, 2017
Probate refers to the legal process of identifying property, assets and liabilities after a person’s death and transferring those assets to the decedent’s heirs and beneficiaries.
Generally, all assets that you own in your name alone and you have not designated a beneficiary for will go through the Arizona probate system. Any property you own in another state will be subject to that state’s jurisdiction and that state’s probate system.
Many people mistakenly believe that their family will avoid probate if they have a Last Will and Testament. However, a Last Will and Testament provides the instructions for the distribution of assets during the administration of a Probate. While an informal probate administration is typically a smooth process during which the parties do not appear before a Judge, some people prefer to take steps during their lifetime to avoid the necessity for probate.
If you think you may be interested in avoiding probate, consider these four (4) options that may permit your family to avoid probate following your passing:
- Establish a Trust
The American Bar Association (ABA) recommends that people use revocable or living trusts in order to avoid probate and reap potential tax benefits. Trusts provide people with a flexible way to initiate the transfer of property and assets prior to death. The creator of a Trust still maintains full ownership of their assets during their lifetime, but establishes a path for their assets to be distributed without Court involvement upon their passing.
To establish a trust, you must name an order for trustee succession and the plan for distribution of the assets upon your death. We recommend that in addition to naming the initial trustee, which is typically the creator of the trust, you also name at least two (2) successors to continue to manage the trust in the event you become unable to do so.
Following the creation of a trust, you will need to fund your assets to the trust. While there are a few key exceptions to this rule, including qualified retirement plans, a trust will not avoid probate unless it is fully funded.
- Title Property with Rights of Survivorship
You can also avoid probate by using a form of ownership with rights of survivorship when you title or acquire property. There are two (2) forms of ownership with rights of survivorship: 1) Joint Tenants with Right of Survivorship; and 2) Community Property with Rights of Survivorship. Joint Tenants is available to all individuals, whether or not they are related to one another, and can include more than two (2) people. Community Property is limited to married couples.
When property is held with rights of survivorship, each party owns an equal and undivided present right or interest in the property, whether that property is a home or a bank account. Upon the death of one of the joint owners, his or her share will automatically pass to the surviving party and the property should not be subject to probate.
- Make Accounts Payable on Death or Transfer of Death
A further option is adding a “Payable on Death” (POD) or Transfer on Death (TOD) designation on various assets including but not limited to bank accounts, brokerage accounts, real property, and vehicles. Adding a POD or TOD designation is sometimes referred to as a beneficiary designation. In order to add a beneficiary designation to a financial account held at a bank or brokerage house you need to visit your financial institution and complete a POD/TOD designation form. Each financial institution will have its own separate form.
On the POD/TOD designation form, you designate your beneficiary or beneficiaries and what share, or percentage, you want each beneficiary to receive. In most cases you will be able to name secondary beneficiaries in the event your primary beneficiary predeceases you. You can name an individual, multiple individuals, your trust, a company, or a charitable organization as your beneficiary. The named beneficiary will be legally entitled to access the asset within the account upon your death and the asset should not be subject to a probate.
With regard to vehicles, the Arizona Motor Vehicle Division has a Beneficiary Designation Form. In order to effectuate a beneficiary designation for your vehicle, you simply complete and staple the form to your original Vehicle Title. If completed properly, the Beneficiary Designation Form will transfer title to your designated beneficiary upon your death.
Finally, Arizona permits the recording of Beneficiary Deeds which allows for the transfers of title to real property upon the death of the owner. Due to complications that can arise out of the preparation and recording of a Deed, it is recommended that you speak with a qualified estate planning attorney to determine if a Beneficiary Deed is the best course of action for you and your family.
- Provisions for Small Estates
Even if you cannot completely avoid probate, you can make the process less costly and more efficient by taking advantage of Arizona’s small estate procedures. Specifically, Arizona allows for various procedures in the event the total value of your estate is less than certain statutorily set values. Such values include: equity in real property less than $100,000.00; total value of personal property (including bank accounts and vehicles) less than $75,000.00; and a total value of all assets, after all reasonable funeral expenses, final medical expenses and the costs of a probate administration, is less than $37,000.00.
Even with the small estate procedures, it is important to make your final wishes regarding the distribution of your assets are set forth in a Last Will and Testament. Without a valid Last Will and Testament, the distribution of assets under the small estate procedures will be determined by the Arizona intestate statutes.
Our Estate Planning Lawyers Can Help You Today
Regardless of the size of your estate, our estate planning and estate litigation attorneys are here to help. We have extensive knowledge and experience in dealing with matters in the probate court and the laws that govern these proceedings.
Drafting Wills in Arizona that will stand up in court requires diligence and skill. Our attorneys and staff take the time to truly listen to what is important to our clients. We use our legal skills to help to protect our clients’ rights and interests, and to take those steps necessary to ensure the client’s wishes are carried out.
Zachary Mushkatel is an Arizona native who earned his undergraduate degree from the University of Arizona in 2001 and his law degree from the University of Minnesota Law School in 2004. After serving as a public defender, he entered into private practice and, ultimately, joined forces with Mathis Becker to form the law firm known today as Mushkatel, Robbins & Becker, PLLC. In addition to criminal law, Mushkatel practices civil litigation, with a focus on estate litigation and personal injury cases. He also serves on the Board of Directors for the Surprise Regional Chamber of Commerce and Sun Valley Lodge, and he is an executive officer and member of the Board of Directors for the West Maricopa County Bar Association.