No Will? If you pass away without a will, Arizona State Law will determine where your property goes.
Depending on the type of property your will may not affect all of the property you own!
If you don’t have a plan, or a well drafted plan, the state you live in could be making decisions for you.
Avoiding probate on your bank accounts through beneficiary deeds, small estate affidavits , trusts, gifts and 401Ks.
Probate is a legal proceeding in which a deceased person’s property is distributed to his or her heirs. As part of the process a personal representative is appointed to follow through with disposing of any assets owned by the deceased person. Probate can be either informal, meaning there is an original will available and there are not challenges to that will, or it can be formal. Although probates can definitely be complex, even in handling an informal, uncontested probate, it is still a smart idea to hire a lawyer.
Probate starts by filing a petition with the court. The petition is filed on behalf of the person nominated to be appointed personal representative in the deceased persons will. If nobody is named, or there is no will, or everybody named is unable or not qualified to serve, the personal representative is chosen pursuant to statute. The court will then determine the validity of the will and issue letters. The personal representative must notify all the people taking under the will and must also notify all the creditors (this is discussed in more detail below). After the letters are issued and the notices are given, the personal representative must collect all the assets, prepare an inventory, pay any claims and make distributions. After this is complete the personal representative can file paperwork with the court to close the estate.
Probating a small estate in Arizona is done by using a Small Estate Affidavit. Small Estate Affidavits are allowed pursuant to Arizona Revised Statute § 14-3973. The general rule for whether an estate can proceed by Affidavit is if a deceased person owned does not own more than $100,000 of real property (such as equity in a house), or more than $75,000 of personal property (including money), then a probate is not required to transfer the assets to the heirs. If the estate does not meet these minimums, it may be possible to use a Small Estate Affidavit to transfer the property.
For real property, an Affidavit of Succession to Real Property is prepared. As stated above, the equity in the property must be less than $100,000. To determine the value of the property for estate purposes the current years assessed tax value is used, not the Fair Market Value. This can be significant because often times the assessed value for tax purposes is much different than the fair market value. If this value, less any mortgage or encumbrances on the property is less than $100,000, transfer may be done by affidavit. Keep in mind, always check with the lender prior to making this transfer as they may require a probate to refinance.
The affidavit must first be filed with the probate court in the county where the property is located. Along with the affidavit a certified copy of the death certificate must also be filed. Finally, an original will should also be filed, if it exists. Once these documents have been submitted to the probate court, a second, certified copy, of the affidavit must be recorded with the county recorder’s office in the same county.
The steps that need to be taken following the death of a relative depend largely on how the death occurred. The death could be expected or unexpected, occur at home or in a hospice, or could be completely accidental. If the death occurred in a hospice, typically end of life plans have most likely already been discussed. For purposes of this article the assumption will be that the death was unexpected, occurred in the home and no end of life plans had been discussed.
Immediately upon discovering the death of a relative the first thing that should be done is to call the paramedics. A legal pronunciation of death needs to be made by either a paramedic or a physician. If the deceased has do-not-resuscitate orders these should be provided to the paramedics when they arrive on the scene. Once a legal pronunciation has been made, the body should be transported to a mortuary or crematorium. Often times, hospitals will provide this information, or it may already be specified in the decedent’s will, if one exists. An increasingly popular option has also been decedent’s donating their body to science. Often times these companies will provide a small card with this information and the company who is taking the body will arrange for the transportation and other expenses. Some other things to consider may be notifying other close family and friends, notifying any primary care physician, notify any employer or union regarding benefits or life insurance and in many cases in may be necessary to provide for the care of any pets the decedent took care of.
Government is widely criticized. But Government does some things right. One of the things Arizona has done right is to streamline the handling of a small estate.
What is a small estate in Arizona? Under Arizona law, a small estate is one that has up to $75,000.00 worth of personal property and up to $100,000.00 worth of real estate equity. In determining the amount of real estate equity in an estate property, ARS 14-3971 provides that the value is to be determined by using the full cash value on the assessment rolls for the year of death less any liens and encumbrances against the property. Many Arizona estates fall within these parameters.
What is the benefit of qualifying as a small estate? The benefit is that a probate can be avoided. Probate is the traditional procedure for winding up the affairs of a deceased person, paying debts and transferring assets to heirs and beneficiaries. Administration of a probate estate can take many months and thousands of dollars in legal fees and costs. If an Arizona estate qualifies as a small estate, its assets can be transferred by an affidavit instead of a probate. The affidavit procedure can be done in days instead of months and the cost is much less than a probate. The result of the lower administrative costs is that more of the estate assets can be preserved for estate heirs and beneficiaries.
One of the more difficult decisions you will make is to file for bankruptcy protection. Well, now that you have made that decision and you are making the tough choices to put your economic life back in order, you suddenly find out that your long-lost relative died and left you a sum of money. What do you do now? Do you get to keep the money? Must you turn it over to the bankruptcy trustee? The answer to these questions depends on several things.
First, the date you became entitled to the inheritance is important. For bankruptcy purposes, you become entitled to the inheritance on the date the decedent passes away. Second, you get different treatment depending on which chapter of the bankruptcy code you filed under.
Chapter 7 – If you filed under chapter 7, the basic rule is that any inheritance you become entitled to in the first 180 days after you file your bankruptcy petition with the court becomes part of the bankruptcy estate. This is true for most assets passing to you via a Will, intestate probate proceedings, or assets passing via a Payable on Death (POD) or Transfer on Death (TOD) designation. As a result, the inheritance, minus any exempt portions, would have to be turned over to the bankruptcy trustee to administer on behalf of the creditors you are seeking to discharge. If you become entitled to an inheritance after the 180 day mark, you will get to retain the proceeds.
A new law went into effect in July, 2010 permitting vehicles to be transferred after the owner’s death without the necessity of probate. This new law permits the owner of the vehicle to name a beneficiary to receive the vehicle upon the owner’s passing in much the same way that a person would name a beneficiary to their life insurance policy or 401K, or leave real estate via a beneficiary deed. By doing so, the beneficiary avoids the need for…