Probate is the process of settling a deceased individual’s estate. The process is normally carried out according to the decedent’s final wishes in their last will and testament. In the absence of a valid will, probate will proceed according to the state’s intestacy laws. Either way, the probate process is roughly the same:
- Validate the decedent’s will (if applicable)
- Appoint a personal representative
- Notify interested parties
- Gather the decedent’s assets
- Settle any disputes
- Settle the estate’s liabilities
- Distribute the assets
- Close the estate
Validate the decedent’s will (if applicable)
If the decedent has a last will and testament, a probate judge will need to validate the document. Only adults with a sound mind who are not subject to undue influence can write a will (ARS 14-2501). If anybody contests the will on these grounds (e.g. the testator was mentally incapacitated or manipulated), the court can summon the testator’s doctors to attest to their mental state, and it can hear testimony from individuals who have evidence that the testator was unduly influenced.
A valid will should be signed and dated by the decedent, and the state of Arizona requires the signatures of two witnesses (ARS 14-2502). If the witnesses don’t want to be summoned to probate court to attest to the will’s authenticity during probate, they can sign in the presence of a notary public to signify a self-proved will. If the will is handwritten (i.e. holographic), the court will need to verify that the signature and material provisions in the will match the testator’s handwriting.
Appoint a personal representative
A proper will should nominate someone to serve as the testator’s executor or personal representative. When the testator dies, the executor will be the one to submit the will to the county court, petition to open probate, and manage the estate through the probate process. If the decedent does not have a will, or if the will is invalidated by a probate judge, the court will appoint an administrator to manage the estate. In most cases family members can petition to be appointed an administrator, but the court has the right to appoint a third-party special administrator when necessary.
Notify interested parties
Everyone with a beneficial interest or claim to the estate needs to be notified of the probate proceedings. The court usually requires the executor serve notice to all interested parties, file proof of service with the court, and post an ad in the local paper that notifies any unknown interested parties of the probate proceedings. Once an interested party has been notified, they have 4 months to submit a claim or contest.
Settle any disputes
If there are any disputes regarding the will’s validity, the executor’s actions, or the validity of a creditor’s claim, the court will suspend probate and hold a hearing to assess the disputes. In some cases, multiple hearings and additional discovery may be required. If a will contest is valid, the court may invalidate part or all of the decedent’s will and proceed according to the state’s intestacy laws when necessary. If the executor’s actions are dishonorable, the court will appoint a new personal representative.
Gather the decedent’s assets
An important part of the probate process is taking an inventory of the decedent’s assets and establishing the fair market value of the estate. Liquid assets such as bank and brokerage accounts are easy to value using the most recent account statements. Illiquid assets like real estate, vehicles, art, jewelry, and collectibles will need to be professionally appraised to determine their fair market value.
Assets that are specifically bequeathed in the will are usually set aside at this point, while the other assets are sold, liquidated, and gathered by the executor. The executor will often set up an estate checking and/or savings account to hold the liquid assets and pay for the estate’s administrative costs.
Settle the estate’s liabilities
Most people have at least a few liabilities when they pass away, and those liabilities will need to be settled before the estate can pass to the decedent’s beneficiaries. The probate court will instruct the executor to settle the estate’s liabilities in the following order:
- Administrative costs (court costs, legal fees, professional appraisals, etc.)
- Funeral costs
- Taxes (a final income tax return, and estate taxes if applicable)
- Other bills and obligations
Distribute the assets
When it comes to distributing the decedent’s assets, some assets will need to legally transfer title of ownership through probate court, while others can automatically transfer to beneficiaries outside of probate. The following assets will need to transfer through probate court:
- Individual bank and brokerage accounts
- Real estate owned individually or as tenants in common
- Personal property such as vehicles, art, jewelry, collectibles, etc.
Note that unless the decedent’s will specifically bequeaths these assets, they’ll usually be sold and the residual value will be distributed to the beneficiaries according to the allocation instructions in the will.
If an asset has a contractual beneficiary listed on the account, that asset is designed to transfer directly to the beneficiary when the owner dies. To initiate the transfer, the executor will just need to provide the financial institution with a copy of the owner’s death certificate. These kinds of direct transfers are significantly faster and easier than going through probate, so it’s best when most (if not all) of the decedent’s assets are arranged in advance to bypass probate with contractual beneficiaries. A few examples of non-probate assets include:
- Bank and brokerage accounts with a payable-on-death (POD) or transfer-on-death (TOD) beneficiary
- Real estate owned as joint tenants or as tenants in the entirety
- Retirement accounts (401k, IRA, etc.)
- Life insurance policies
Close the estate
When all of the estate’s liabilities are settled and its assets are distributed, the probate court will legally close the estate, making the final distributions conclusive and binding. This is an important step as it triggers another set of time limits for the estate. Any objections to an executor’s abuse of power need to be filed within 6 months of the estate’s closing and interested parties with a valid claim or contest will have up to one year to reopen the matter. However, in both cases it is extremely difficult to reclaim assets that have been lawfully distributed.
How long is probate
If there are no will contests or disputes, informal probate requires very little court supervision and can usually wrap up in 4 – 6 months. If there is a valid contest or dispute, formal probate will require more supervision from the court and the process can take up to a year or longer.