The probate process comes at a time when people are still trying to deal with the emotional loss of a loved one. Not at their best, family members are often at a loss to be able to understand the legal details that require their attention, to know why the estate is required to go through the process or to know where to turn for help.
My job as your probate attorney is to simplify and manage the probate process for people throughout Phoenix and the surrounding areas in Maricopa County. Before trying to handle this process on your own, ask yourself whether you really need this kind of problem right now. If you decide that you don't I encourage you to call or email me so that I can provide sound legal advice, whether it be a formal or informal probate proceeding.
Arizona's Probate Process
The probate court's role is to supervise the distribution of a person's assets in accordance with his or her will or the laws of Arizona. If the decedent had a valid will in place or if the property was held in joint tenancy with a spouse, your family may not have to be mired in probate matters. In cases where it is just a matter of collecting, dividing and distributing the Estate pursuant to a will, the Court follows an informal probate process. During the informal probate the Court issues orders the day of filing that grants the personal representative the powers to transfer and liquidate the decedents assets and distribute those Estate assets pursuant to the will. The Court has no involvement other than to issue the orders to the personal representative and issue an order closing the Estate when the provisions of the will have been satisfied. If the estate holder had no will, however, the property will be placed in probate to determine how the assets should be disbursed. This process involves a Petition for Formal Probate where the Court is actively involved in the administration of the Estate.
Let me simplify your life during this difficult transition. I can handle every type of probate matter, including:
• Estate administration
• Power of Attorney (General, Durable, Health Care Directives)
Probate and Estate Administration Overview
Estate administration refers to the process of probating the estate of a decedent, which generally includes collecting, inventorying and appraising assets; paying and collecting debts; filing and paying estate taxes; and distributing any remaining assets to beneficiaries. An experienced probate and estate administration attorney can help simplify this complicated process. If you need help in the administration of an estate, you can call Royer Law Office for sound legal advice and representation.
Probate The estate is the total amount of property owned by the decedent at his or her death. Once a person dies, the estate is submitted to the probate court. If there is a will, the probate court will determine if the will is valid and then oversee the administration of the estate by the personal representative (the person appointed in the will by the decedent to oversee the estate). If there is no will or the will is determined to be invalid, the probate court will appoint an administrator and the decedent's property will be distributed according to Arizona State laws of inheritance.
Personal Representatives Duties
The personal representative is the person named by the decedent in the will to administer the estate. The personal representative has many important functions to complete, including:
• Gathering and doing and inventory of all assets of the estate
• Appraising the assets
• Collecting any payments or debts owed to the estate
• Paying any debts owed by the estate
• Filing and paying local, state and federal taxes
• Distributing assets to the beneficiaries as stipulated in the will
The personal representative owes fiduciary duties to anyone who has an interest in the estate. This means that the personal representative owes a duty of loyalty and must act in the best interests of the estate. For example, if the personal representative mismanages estate assets and causes the estate to lose value, he or she can be held liable for these actions and may have to repay the estate the amount of the lost value.
Preserving Estate Assets
An important but sometimes neglected responsibility in administering an estate is to look for opportunities to preserve assets for distribution. Reducing estate taxes is one way that an estate can retain more of its wealth for the decedent's heirs. Some of the ways to accomplish this are:
• Consider whether administration expenses and casualty losses should be reported on the estate tax return or on the estate's income tax return
• Consider whether there are income tax savings opportunities on the decedent's final return (such as whether or not a joint income tax return should be filed with the surviving spouse)
• Consider whether assets should be valued at the date of the decedent's death or six months later (or, if assets have been distributed prior to six months after the decedent's death, the date of the disposition of the assets)
Probate and Non-Probate Assets
Probate assets are subject to court administration. Probate can be an expensive and long process, and beneficiaries may have to wait anywhere from six months to two years to receive the property left to them in the will. Probate assets include assets owned only by the decedent that do not have a named beneficiary.
Non-probate assets do not have to go through probate. These assets are typically distributed more quickly to the appropriate beneficiaries since a probate proceeding is not required. Non-probate assets generally include:
• Property owned in joint tenancy or tenancy by entirety with rights of survivorship
• Payment on Death (POD) bank accounts
• Transfer on Death (TOD) securities
• Beneficiary Deed on real property
• Life insurance policies that designate a beneficiary other than the decedent's estate
• IRAs, 401(k)s, and other retirement plans that name a beneficiary other than the decedent's estate
Revocable Living Trusts
Revocable living trusts are similar in form and substance to wills. These instruments allow the creator (the testator) to transfer the title of ownership of property to the trust. During life, the testator can remain in control of his or her assets, with the ability to sell, buy or transfer property as he or she wants. The trust also can be changed or terminated at any time by the testator.
Upon death, the property in the trust does not become part of the probate estate because title to the property is owned by the trust, not the decedent. The trustee designated in the revocable living trust will then be in charge of administering the trust and distributing property to the beneficiaries in accordance with the terms of the instrument.
Many people use revocable living trusts as a way to limit the amount of property subject to probate. Revocable living trusts are often advertised as a way to avoid probate all together, but often they are coupled with a will that disposes of any property not specifically named in the trust.
Guiding an estate through the probate process and effectively administering that estate requires a keen understanding of Arizona probate laws. If you need help administering an estate, please contact Royer Law Office.
THE PROBATE PROCESS
Probate is the court process used to determine the validity of a will and oversee the payment of creditors and distribution of estate assets. Even if there is no valid will at the time of death, the estate will still go through the probate procedure. Since probate is regulated by Arizona State law, there are specific procedures proscribed by Arizona statutes for carrying out the process.
If you are the personal representative of an estate, contact an experienced probate attorney at Royer Law Office, PC to help you identify and carry out your estate administration duties. Probating the Estate
Despite the variations in various state laws, probating the estate generally includes the following functions:
• Petitioning the court to probate the will (either Informal Probate or Formal probate)
• Sending notice to creditors, beneficiaries and any other interested parties •
Collecting, inventorying and appraising all estate assets
• Collecting any payments, debts and income due to the estate
• Paying any debts owed, and filing and paying local, state and federal taxes
• Distributing any remaining assets to beneficiaries in accordance with the terms of the will
• Closing out the estate administration and filing closing statements with the Probate Court Small Estates
Arizona has a fast-track or simplified probate process for smaller estates that meet certain qualifications. Normally, this process doesn't require probating the estate before the probate court, but before an administrator, which can cut down on the time and cost of probate. Additionally Arizona has an Informal Probate Process that requires very minimal Court supervision and intervention.
Disadvantages of Probate
Time and expense: Probating an estate can be time-consuming, taking anywhere from 6 months to 2 years to complete. Contests to the validity of the will can increase the duration of the process. Probate also can be expensive, with any probate costs and fees coming out of the estate's funds.
Lack of privacy: Probate matters are part of the public record, meaning anyone can find out the size, contents, and beneficiaries of the estate. This lack of privacy can cause tension between family members.
If someone dies without a will or the probate court determines the will of the decedent is invalid, that person is said to have died intestate. Arizona like all States has a set of default inheritance rules that apply in the absence of a will or other estate plan. These rules generally distribute property to the surviving spouse and children first, and then parents and other close family members. The only way to prevent the default rules from determining the distribution of assets is to have a valid will or trust in place before death.
The Role of the Personal Representative
A personal representative is the person named by the creator of the will (the testator) to carry out the terms and provisions of his or her will. In addition to locating documents left by the testator (i.e., wills, trusts, deeds, etc.) and notifying Social Security, pension providers, annuity providers and other entities of the death, the personal representative has numerous other legal responsibilities, including:
• Initiating the probate of the will
• Collecting and inventorying the testator's assets
• Collecting debts owed to the estate
• Paying claims against the estate
• Distributing assets to the beneficiaries of the will
• Closing the estate These responsibilities can be daunting and time-consuming. If you have been named the personal representative of an estate, contact Royer Law Office to discuss your role and the Arizona estate administration process.
It is the duty of the personal representative to open up the estate and to begin probate proceedings. Typically, a personal representative who is not an attorney will hire a lawyer to represent the estate during the probate process, to provide the required notices to interested parties and potential creditors, to obtain required documents (such as the death certificate and an original copy of the will), to deal with will contests, and to close the estate. Attorney costs for representing the estate, like personal representative fees, are charged against the estate.
Inventory of Assets
The personal representative is also responsible for completing an inventory of the assets of the estate. All probate assets must be collected and inventoried. Also, it may be necessary to have certain assets of the estate (such as jewelry or collectibles) appraised.
Collecting Debts and Payments Owed to the Estate
The personal representative should check with the decedent's former employer to determine whether there is any unpaid salary or benefits owed to the estate. The personal representative must also identify outstanding debts owed to the estate and pursue collection of those debts. Expenses involved in the collection of the debts (e.g., hiring a collection agency to collect debts) are charged to the estate.
Paying Claims Against the Estate
Once the will is determined to be valid by the probate court, the personal representative may begin to pay debts, bills and claims against the estate. While paying creditor claims is a task that can be handled by a non-attorney personal representative, paying taxes on behalf of the estate and of the decedent are often best left to an attorney hired for the probate and administration process.
Distributing Assets to Beneficiaries and Closing the Estate
Once all the creditor claims against the estate have been settled, the personal representative can then distribute the remainder of the estate to beneficiaries in accordance with the terms of the will. When all of the creditors have been paid and the remainder of the estate has been distributed to the beneficiaries, the estate can be closed and the personal representative can be released from any further duties on behalf of the estate. A court will close the estate upon receiving:
• Copies of notices to concerned parties
• Copies of payments to creditors of the estate
• Evidence that remaining assets of the estate have been distributed
Any person over the age of 18 can be named as a personal representative of a will, provided that the person has not been convicted of a felony, and often times a family member or close friend is chosen to serve. However, settling an estate, even a simple one, involves numerous details and technical requirements that are often best left to an attorney. If you have been appointed as a personal representative of an estate, contact an attorney experienced in probate and estate administration at Royer Law Office in Phoenix, Arizona to ensure a thorough and professional handling of the probate process.
Assets disposed of outside the probate process are part of the non-probate estate. Since a probate proceeding is not required, these assets are distributed more quickly to the appropriate beneficiaries. Many people seek out these assets and ownership models in order to save their loved ones from the difficulties associated with going through probate. If you are interested in managing your finances and your property so that your family does not have to go through probate, contact Royer Law Office in Phoenix, Arizona.
Certain types of assets are part of the non-probate estate because of their contractual nature. These types of assets include:
• Life insurance proceeds: A life insurance policy is a contract with an insurance company that specifically states who will be paid after your death. Since payment of the life insurance proceeds to the named beneficiary is in the contract, there is no need for the life insurance policy to go through probate.
• IRAs, 401(k)s, and other tax-deferred retirement plan proceeds: IRAs, 401(k)s, and other tax-deferred retirement plan proceeds pass directly to the beneficiaries designated in the plans. Similar to a life insurance policy, the payment of the retirement fund to the named beneficiary is agreed upon in advance, and, like life insurance proceeds, there is no need to go through probate. Ownership Models that Avoid Probate Other types of assets only become non-probate assets if the owner or owners make certain decisions as to how those assets are held.
• Joint tenancy with rights of survivorship: A joint tenancy with rights of survivorship means that two or more owners hold title to an asset together. When one of the owners dies, that person's ownership interest automatically passes to the remaining owner or owners. Married couples typically hold assets such as real estate, automobiles and bank accounts in this way.
• Payment on Death (POD) bank accounts: Payment on Death bank accounts name contingent beneficiaries when the account is opened with the financial institution. The beneficiary possesses no ownership interest in the account until the account owner dies. At that time, the beneficiary receives full ownership of the money held in the account.
• Transfer on Death (TOD) securities: Transfer on Death stocks, bonds and brokerage accounts provide the same advantages as POD bank accounts. The account holder retains exclusive ownership rights while he or she is alive, and the named beneficiary receives the proceeds when the account holder dies.
• Revocable Living Trusts: A revocable living trust is a legal entity that holds title to property. Since the trustee for the trust, not the donor, has title to the trust, the property within the trust will pass outside probate. Because the trust is revocable, the testator has access to the property during his or her lifetime, almost as if he or she owned it outright. At the time of the testator's death, a trust document, similar to a will, directs the trustee as to the distribution of the trust property.
• Beneficiary Deed: A beneficiary deed is a recorded instrument involving real property that is similar to a transfer on death. The beneficiary deed directs the transfer of real property to the named beneficiary upon the death of the deed holder. Upon the death of the property owner, the beneficiary can take the beneficiary deed and the death certificate to the Maricopa County Recorder and the Recorder will transfer the real property to the beneficiary named in the Beneficiary Deed. Although probate is avoided, holding assets jointly or with survivorship rights can create problems. For example, in the case of assets held in a joint tenancy with rights of survivorship, the owner gives up exclusive control of the assets. As a result, the owner may be at risk that the other owner will take all the assets, or that creditors of the joint owner will seek to satisfy their claims from the joint account. Experienced legal advice can help you determine the best model for your needs.
While non-probate assets are not subject to probate procedure, there are pros and cons to each model. To determine the best way for you to maintain your assets, contact an attorney experienced in probate and estate administration at Royer Law Office in Phoenix, Arizona.
The fact that a person (the decedent) leaves a will does not guarantee that the decedent's property will be distributed according to the will's terms. A court generally must provide an opportunity to allow others to object to the will, and a challenge may be brought by anyone with an interest in the will who believes the document is invalid in some way. A will contest is an action challenging the validity of the will and is governed by Arizona state statutes.
If you believe a will is invalid, or if someone is challenging a will you are administering or benefiting from, you should contact an attorney with experience in will contest cases. Royer Law Office can assist you with this type of difficult and emotionally-charged case, and can advise you on the best way to proceed under Arizona law.
Grounds for contesting a will include:
• Later Will. If a later will was made, and the making of the will conformed to the necessary legal requirements, then the later will replaces the earlier will.
• Incapacity. A valid will requires that the decedent was of sound mind at the time the will was made. The "sound mind" requirement typically requires that at the time the will was made, the decedent had the ability to generally understand the nature and extent of the property to be disposed, his or her relationship to those who would naturally claim a benefit from the will, and the practical effect of the will as executed. Proving that the decedent was mentally ill or under the influence of alcohol or drugs at the time the will was made are ways to establish incapacity.
• Undue Influence. If at the time the will was made, the decedent did not exercise his or her judgment in making the will, but rather made the will according to the wishes of another, the will may be found invalid on the grounds of undue influence. Coercion, duress and fraud are examples of undue influence.
• Improper Execution. A will must be properly executed in order to be valid. This requires that the creation and the execution of the will conform to the state's requirements, which can include the will having to be in writing and signed by the person making the will (the testator) and that the will be witnessed or notarized.
• Forgery. A will can be found invalid if any portion of the will, including any terms of the will or the signature of the testator or the witnesses, are determined to be forged. There is a limited amount of time set by state statute (four months in Arizona) to challenge the validity of the will on one of these grounds. If the validity of a will is successfully contested, the probate court may:
• Disallow only that part of the will that is successfully challenged
• Admit an earlier valid will (if one was made) in its place
• Determine that the decedent died intestate and distribute the assets according to the state's intestate succession laws, which are the legal default rules for estates without a will
The consequences of a will contest are significant for all of the parties involved. If there is the possibility of a will contest, contact an attorney experienced in probate and estate administration at Royer Law Office in Phoenix, AZ to ensure that your rights are protected throughout the process.