Depending on the type of property your will may not affect all of the property you own!
Probate is the process of paying a decedent’s debts, identifying beneficiaries to a decedent’s property and distributing the decedent’s property according to the decedent’s will. In Arizona, probate can be formal or informal and is governed by Arizona Revised Statutes § 14-3301 and § 14-3401. Generally, when a person dies, their property is distributed pursuant to the terms of their will. In some cases, if there is no will, the property passes by intestacy. It is possible that property could also be held in a trust, and thus not part of a probate estate either. However, there are certain circumstances where property will pass via operation of law. Which means that property is not part of the estate of the decedent.
One method of accomplishing this is to designate beneficiaries on financial accounts. By naming a beneficiary, the account automatically transfers to the named beneficiary without the need to probate the will. Some examples of accounts that allow for such a designation are checking accounts, savings accounts, money market accounts and certificates of deposit. Since the beneficiary automatically inherits the account at the time the decedent passes away, a probate is not needed in order to transfer ownership of the property. One common means to accomplish this is to designate an account as POD, or payable on death. These accounts are simple and inexpensive to set up. They are also easy to administer. Upon the decedent’s death the beneficiary typically only has to produce an ID and a death certificate to collect on the account. Not all accounts can be designated POD however.
Accounts can also be held jointly. This means holding a joint account in the name the account holder and any beneficiary. Retirement accounts such as IRA and/or 401(k) accounts. Can also have a named beneficiary. Finally, property can be simply gifted away during the lifetime of the decedent. While effective, one limitations is the amount that can be gifted per year for tax purposes.
In addition to personal property, real property can also pass by operation of law. This can be due to a marital community or also by prior estate planning as well. One example is if property is held as Joint Tenants With Right of Survivorship. If property is designated as Joint Tenants With Right of Survivorship, when one owner dies, the property is automatically transferred to the other owner by operation of law. In this case, there is no need for a probate. Another example is if a beneficiary deed is given. If the owner gives a beneficiary deed to the designated beneficiary, the property transfers automatically to the beneficiary by operation of law. Again, no probate is needed. Finally, if the value of the property is below a certain amount, property can be transferred via affidavit. For more on this read our prior blog on probating a small estate.
As outlined above, there are many ways that property can be transferred to a beneficiary outside of a will. Prior articles have also discussed using a trust as another means to accomplish this. Estate planning can take many forms and there are many options depending upon the nature of the estate and the desires of the person making that estate. A knowledgeable estate planning attorney will be able to guide you through this process. Platt & Westby, P.C. has offices in Phoenix, Arrowhead, Litchfield Park, Scottsdale and Gilbert Arizona. If you have questions about estate planning contact our office by calling 602-277-4441 or www.plattwestby.com for a free consultation with one of our experienced attorney.