Under Arizona probate laws, not all assets have to go through the probate process. Rather, there are certain assets that transfer immediately to named beneficiaries upon the owner’s death. For instance, jointly owned property, pension plans, trust assets and life insurance policies all transfer to named beneficiaries without having to go through the Arizona probate process. But, because Arizona is a community property state, sometimes even dividing non-probate assets is relatively complicated.
Community property is property that the law deems as belonging to the marital estate. The law presumes that any wages or earnings accumulated during a marriage are community property. Upon the death of either spouse, the community property is equitably divided, so that each spouse takes about one-half of the community property. Because of Arizona’s strong presumption favoring community property, life insurance policies are typically considered as belonging to the marital estate.
When a married individual passes away with a life insurance policy, his or her spouse may be entitled to a share of that policy’s proceeds, regardless of whether that spouse is named as the beneficiary. How much of those proceeds the spouse may be entitled to depends first on whether the policy is whole or term. If the policy is a whole life insurance policy, the spouse is entitled to a prorated share based on when the policy was purchased relative to when the couple got married. If the policy is a term life insurance policy, however, if the last payment was made during the couple’s marriage, it is deemed community property.
This is just one example of how Arizona probate can quickly become complicated. Even with assets that have named beneficiaries, personal representatives must take the nature of the property – community or separate – into consideration before making a proper distribution. These types of issues should always be approached with an Arizona probate lawyer.