What happens if you die without a will?
When someone dies without a will, they die “intestate,” and their estate will be distributed to their heirs according to the state’s intestacy laws, not necessarily according to the decedent’s wishes. In Arizona, the surviving spouse will inherit the entire estate as long as the decedent doesn’t have children from a previous relationship. If so, half of the estate will go to the current spouse, and half will be distributed to the decedent’s children from the previous relationship. If the decedent does not have a surviving spouse, the estate will be distributed in the following order:
- The decedent’s children
- The decedent’s parents
- The decedent’s siblings (or the decedent’s nieces and nephews if the sibling has died)
- The decedent’s grandparents
- The decedent’s extended family (aunts, uncles, cousins, etc.)
Do you need a minimum estate value to write a will?
There is no minimum asset value required to write a will. Anyone can draft one, whether they have $100 or $100 million. However, if your estate is insolvent (meaning there are more liabilities than assets), then the directions for your assets included in your will are irrelevant. Creditors with valid claims against your estate must be paid before your beneficiaries receive their share, and if there aren’t assets left to distribute after the creditors get their share, your heirs won’t receive anything.
What is included in a will?
The contents of a will vary greatly based on the size and complexity of the estate, but generally speaking there are a few features that every will includes:
- A guardian for your children
- An executor
- Instructions for assets subject to probate
- Your notarized signature
- Signatures from two witnesses
What is an executor?
An executor is the individual you choose to manage your estate when you die. This person (also called a personal representative) will be tasked with initiating the probate process, gathering your assets, settling your liabilities, distributing your assets, and ultimately closing your estate. Most people nominate a close family member for the job, but you’re free to choose anyone you trust. It’s also a good idea to include a backup executor in your will, just in case the primary executor passes away before you, or declines to accept the responsibility.
Who should you name as beneficiaries?
Before you begin to divvy out your assets, start by making a list of everyone you’d like to include in your will. The list will probably be mostly family, but you can also include friends, business partners, and charitable organizations. For each of these individuals and organizations, track down important identifying information such as their full legal name, birthdate, address, and phone number. When your list is finished, let these individuals know that they will be receiving assets from your estate. If there’s anyone who may feel entitled to a portion of your assets but who are not included in your will, make sure these people know this ahead of time. Nobody likes to be disinherited, and leaving the matter to be a surprise may result in their contesting your will in probate court.
Can your will dictate how your beneficiaries can use the gifted assets?
A will can only direct how your assets should be distributed—it cannot put restrictions or parameters on when the assets will transfer, and how they should be used. If you want to include special instructions for your assets, you’ll need to establish a trust.
What constitutes your estate?
If you’re single, your estate includes all of your assets. If you’re married, the state of Arizona considers any assets you’ve acquired during your marriage to be community property. Community property is shared evenly between spouses. Assets you acquired before your marriage are considered separate property, unless those assets have been comingled with community property, in which case they would become community property. In this case, your estate would include separate assets from before your marriage, and 50% of the community property.
What is probate?
Probate is the legal process of settling your liabilities and transferring residual assets to your beneficiaries. As long as there are no objections to your will, informal probate will usually take 4 – 6 months, and can be accomplished without court supervision. Your executor will handle everything outside of court, and a judge will simply sign off on the final disbursement. However, if any interested parties contest your will, formal probate would require court supervision and could take 1 – 2 years.
What types of assets can be included in your will?
Many people don’t realize that not all of your assets are subject to probate. There are certain types of accounts that can naturally pass to your beneficiaries outside of probate court (discussed later). Before we address those, here are the assets that require probate, and therefore should be included in your will:
- Individual bank and brokerage accounts
- Property owned as tenants in common
- Assets where the decedent or the decedent’s estate is listed as the beneficiary
- Personal property and possessions, such as furniture, art, jewelry, collectibles, electronics, guns, cars, trucks, and recreational vehicles
What types of assets should not be included in your will?
As mentioned previously, some assets have the ability to bypass probate. Such assets usually have a contracted beneficiary, and therefore cannot be governed by instructions in a will. Most financial institutions allow you to name multiple beneficiaries with equal or differing percentage-shares, and alternate beneficiaries in case one or all of the primary beneficiaries die before the decedent. These assets include:
- Bank and brokerage accounts with a payable-on-death (POD) or transfer-on-death (TOD) beneficiary designation
- Retirement accounts (401k, IRA, etc.)
- Life insurance policies
- Real property owned in joint tenancy or as tenancy in the entirety
What is the difference between a living will and a last will & testament?
Though they sound similar, these two documents are not related. A living will, also known as an advance healthcare directive, details your preferences for end-of-life healthcare and medical treatment. If you become incapacitated, perhaps due to a serious illness or accident, your doctors will consult your living will to determine which surgeries and treatments you would or would not approve. Common topics addressed in a living will include palliative care (treatments to alleviate pain and suffering), resuscitation (such as a do-not-resuscitate order), and artificial life support.
What is the difference between a living trust and a last will & testament?
Where a will offers instructions for your assets, a living trust takes the matter a step further by actually taking ownership of your assets. A trust is a legal entity that can own and distribute property, making it much easier to transfer assets to your beneficiaries. Every trust has three core parts:
- A trustee to manage the assets
- A beneficiary to receive the assets
- A trust agreement which establishes the terms of the trust
If you establish a trust during your lifetime, it’s called a living trust. If you leave instructions in your will to establish a trust when you die, it’s called a testamentary trust. Most living trusts are revocable, meaning they can be amended or dissolved by the grantor as long as the grantor is still living. When the grantor dies, the trust becomes irrevocable, and the terms of the trust are ironclad.
Do You Need Help With Probate Matters?
As you can see, the probate process in Arizona is complex. It requires a number of steps and without the right approach, it’s easy to get lost in the details.
At JacksonWhite, we can make probate a clear, easy-to-understand process. If you’d like help with probate matters, call the talented team at JacksonWhite Law today.
We can help explain your legal options and direct you to the probate solution that works for you and your loved ones.