What will happen to my estate after I pass away?
A variety of factors determine what happens to a person’s estate when she passes away, including the size of the estate and whether the person made advance preparations. A person who uses legal planning tools, such as a trust, can ensure that planned for property passes immediately to beneficiaries. Where a person makes no advance preparations, on the other hand, Arizona probate law most times requires her property to go through probate before passing on to her beneficiaries.
What is probate?
Probate is the legal process by which a person’s property passes to her beneficiaries after she passes away. Where a person dies with a Will, probate primarily involves proving its validity and distributing the estate according to its terms. Where a person dies without a Will, on the other hand, probate involves distributing the estate according to Arizona probate law.
Are there disadvantages to property passing through probate?
Probate is not an inherently bad process, but many people find that using other means of transferring their estate property is advantageous. For instance, avoiding probate may provide people with certain tax advantages. Furthermore, people who work with an Arizona trust lawyer to establish alternative means of transferring their property can generally speed up the process by which their assets transfer to their beneficiaries.
Must every estate pass through probate before going to beneficiaries?
The Arizona Probate Code does not require that every estate pass through probate, nor does it require that every type of asset pass through probate. Whether probate is necessary depends first on the value of the estate, and second, on the legal title by which the property is held. As to the estate’s value, Arizona’s simple estate exception allows estates with less than $50,000 worth of personal property and $75,000 worth of real property to pass to beneficiaries by special affidavit, without going through probate. As to the property’s legal title, probate is unnecessary for community property, property held in joint tenancy with survivor rights, life insurance policies with named beneficiaries, and property held in trust.
What can I do to avoid probate?
There are many tools available to help people avoid probate, including living trusts, bank accounts held in joint tenancy, and payable on death accounts. Selecting the most suitable set of tools is generally referred to as estate planning. An Arizona Estate Planning attorney can help people create an estate plan that designates beneficiaries and directs how their assets will be transferred upon their death. A comprehensive estate plan includes a variety of probate avoidance tools, and may include a trust. Trusts may provide detailed instructions on how to transfer assets, and they oftentimes become the primary source of authority on handling an estate.
Why should I take the time to create an estate plan?
Developing a thorough estate plan is almost always a good idea. Even where probate turns out to be unnecessary, people can benefit from evaluating their affairs. At a minimum, everybody should create a Will so that their assets are distributed according to their wishes. Those with more sizeable estates should consider implementing additional tools for preserving as much of their estate as possible for their beneficiaries. Estate planning ultimately provides people with control over their estate, and the ability to create guidelines for accomplishing their objectives after they are gone.
What types of tools should I include in my estate plan?
A validly executed Will can help people ensure that their property is divided and distributed according to their wishes. Powers of attorney (POAs) should also be included in an estate plan. Nevertheless, executing a Will and POAs is the bare minimum of what people should do to get their affairs in order. Generally speaking, estates that are larger in size require a more complex estate plan. Estate plans may include living trusts and insurances to accomplish specific planning goals.
In addition to providing instructions on dividing assets, a comprehensive plan should also include medical and financial directives for end-of-life issues. With the right legal documents, such as advance directives and powers of attorney, people can avoid unnecessary costs, while retaining control and flexibility. Moreover, including these documents in an estate plan does a great service to family members by helping to eliminate medical, financial and legal uncertainties.
A variety of probate avoidance techniques can be used in an Arizona estate plan, depending on the particular circumstances. Those with sizeable estates should create an estate plan that will allow them to enjoy tax benefits and avoid probate by transferring their assets to their loved ones immediately upon their death. On the other end of the spectrum, those with few assets may qualify for the small estate exception, and require nothing more than a basic Will. In deciding which tools to include in an estate plan, the best approach is to seek guidance from an Arizona Estate Planning attorney who understands the entire range of options.
Who handles an estate’s business while the estate is in probate?
Most times, a person’s Will names a personal representative to handle the estate’s business. Where a person dies without a Will, the court may appoint an administrator to handle the estate, but personal representatives and administrators differ primarily in title. The personal representative initiates probate by filing a petition for probate with the court. Once the court determines that the Will is valid, it provides the appointed personal representative with letters of administration, which authorize the personal representative to act on the estate’s behalf. When dealing with financial institutions and such, personal representatives must produce these letters as evidence of their authority.
To whom must a personal representative give notice that he is handling an estate’s business?
Arizona probate law requires newly appointed personal representatives to notify the decedent’s creditors that they have taken control of the estate. The notice must provide creditors with an address to which they can present claims, and explain that creditors have only four months in which they can make such claims. Notice is perfected by publication in a local newspaper once a week for three consecutive weeks, and by mailing the notice directly to each known creditor. Additionally, personal representatives must notify the decedent’s heirs and others who may benefit under the Will about the appointment within thirty days of being appointed.
What are personal representatives required to do with estate property upon opening probate?
Perhaps the biggest job for personal representatives is locating all of the estate property, which must be appraised and inventoried. The inventory must describe the nature of all estate properties as community or separate; the fair market value of all properties; and every lien or encumbrance that exists on any of the properties. Upon completing the inventory, the personal representative must make it available to every interested party by either filing a copy of it with the court or providing a copy to all who may receive a portion of the estate. Time is of the essence because Arizona probate law only gives personal representatives 90 days from the time of appointment to complete the inventory.
Does a personal representative take possession of estate property upon taking control of an estate?
Personal representatives are entitled to take possession of all estate property unless the Will states otherwise. But, this does not mean that personal representatives must take possession. Sometimes it makes sense for personal representatives to leave certain property in the hands of those who are entitled to receive it. Under the Arizona Probate Code, a personal representative who leaves assets in somebody else’s possession, and later finds it necessary to take possession of the assets to properly administer the estate, may do so at any time during probate.
Who handles paying taxes for the estate?
Personal representatives have the job of paying taxes for the estate, so it may be wise for them to recruit the assistance of an Arizona probate attorney familiar with tax law. In addition to property and other applicable taxes, estate tax may also be an issue. While the federal estate tax is repealed in 2010, the repeal sunsets in 2011, at which point estates worth more than $1 million will be subject to federal estate tax. With proper insight and planning, personal representatives can minimize tax obligations and help preserve the estate.
When should a personal representative distribute estate property?
Personal representatives should not distribute estate property until creditors have been repaid and tax issues are handled. What is left of the estate can then be divided and distributed appropriately. If the decedent left a Will, distributions must be made according to its terms. If no Will is available, Arizona’s intestate succession laws control the distribution. Each transfer requires the personal representative to fill out certain documents to transfer title and possession of the asset.
How much does it cost to probate an estate?
Arizona Probate costs vary from case to case, but at a minimum, the Arizona Probate Court charges a $251 filing fee just to open probate. In addition to the filing fee, probate expenses include the costs of publishing notice in a newspaper, any bond that may be required, compensating the personal representative or administrator, and attorney fees. Personal representatives are generally not responsible for these costs, as the estate pays for them.
Do trusts require oversight?
While property held in trust avoids probate, trusts still require careful attention and oversight. Like a personal representative, trustees have specific obligations and responsibilities to fulfill. Although trusts avoid some of the complexities of probate, trust administration has its own unique issues. An Arizona trust attorney can help trustees fulfill their obligations and properly administer the trust.
What are an Arizona trustee’s duties?
Arizona trustees are bound to abide by certain obligations. At a minimum, Arizona trustees must:
- Abide by the terms of the trust, and follow trust instructions.
- Always act in the beneficiaries’ best interest.
- Never give preferential treatment to one beneficiary over another.
- Never use trust assets for personal benefit, and keep trust property separate from personal property.
- Invest and administer the trust assets cautiously.
- Diversify investments to protect the trust.
- Maintain detailed records, and provide reports to trust beneficiaries.
What powers may an Arizona trustee exercise to carry out the terms of a trust?
Arizona trustees have certain powers they can exercise to carry out the terms of a trust. For instance, Arizona trustees can:
- Invest trust funds prudently.
- Buy and sell trust assets.
- Purchase insurance for trust property.
- Make reasonable repairs to trust property.
- Distribute payments to trust beneficiaries.
Why is it important to hire an Arizona probate attorney or Arizona trust attorney?
Both probate and trust administration present unique sets of issues. It is always important to carry out the decedent’s wishes, but doing so is not always simple. Without an Arizona probate attorney or Arizona trust attorney, it can be easy to overlook critical steps. An attorney can be instrumental in helping personal representatives and trustees fulfill their duties and obligations. Likewise, an attorney can help trust beneficiaries or those awaiting an inheritance under a Will who believe that the estate is not being administered appropriately. There is a lot at stake when it comes to handling an estate’s business and administering a trust. Whether through Arizona probate or other means, those charged with the responsibility of handling the matter stand to benefit from the assistance of an Arizona probate attorney or Arizona trust attorney.