If you live in the state of Arizona, or have a loved one who does, you need to understand the estate laws that govern the region and how those rules may affect you and your family. The state of Arizona has some very specific laws governing estates and the distribution of property, and an incomplete understanding of those guidelines could mean increased expenses at what is already a trying time.

One of the most important things for both Arizona residents and their loved ones to understand is how small estate affidavits work and why they are so important. Here are some of the most commonly asked questions about small estate affidavits, also known as Affidavit for Succession to Real Property, in the state of Arizona.

 

What Are Small Estate Affidavits?

The state of Arizona uses the Small Estate Affidavit process to transfer assets from the deceased to their heirs without going through probate. This process is in place to provide for easier transfer of small estates to the deceased to their heirs, lowering costs and providing a greater degree of simplicity.

Under current Arizona law, small estates are defined as those in which the deceased owned less than $100,000 in real estate equity or less than $75,000 worth of personal property. For estates over this size, probate is typically required, and those estates will not be eligible for the small estate affidavit process. The small estate affidavit process may only be used in cases where probate is not required. A.R.S. § 14-3971.

 

How Do You Transfer Real Estate Using a Small Estate Affidavit?

It is important to understand the process of transferring property through the small estate affidavit process. If the entire value of the decedent’s equity real estate interest is less than $100,000, then the property may be transferred to the designated heir using the small estate affidavit process.

For purposes of the small estate affidavit process, the value of the real property will be determined using the assessed value of the property for the current year, less any outstanding debt. It is important to note that the tax assessment of the property is often substantially less than the current fair market value of the real estate. For instance, the tax assessment on a given parcel of real estate may be $180,000, even if the fair market value of the property is closer to $220,000.

Filing the small estate affidavit involves a two-step process. The first step is to file the affidavit with the county probate court. For purposes of the affidavit, the county of filing is the county where the property is physically located.

When the affidavit is filed, it must be accompanied by a certified copy of the death certificate, along with the original will (if there is one). The second step of the small estate affidavit filing process is to record the affidavit in the same county.

 

What Happens if the Property Has an Outstanding Mortgage?

In many cases, the property in question will have an outstanding mortgage. In those cases, the mortgage will probably include a due-on-sale clause. That due-on-sale clause means that the mortgage in question will automatically become due and payable when the property is transferred. This clause may not apply if the surviving relative continues to live in the home. In that case, the surviving relative who assumes the home will be required to continue paying the mortgage.

If the designated heir does not plan to live in the home, they will need to contact the lender before making any transfer of property. In cases like this, probate may be better than the small estate affidavit process, since it can make refinancing the mortgage easier.

What Problems Do Real Estate Agents Face When Working with a Small Estate Affidavit?

One of the biggest disadvantages of using the Affidavit of Succession to Real Property is that the beneficiary is required to wait six months after the death of the prior owner before making the filing. In some cases, it may be better to petition for an informal probate, since the probate can be opened and closed before the six-month waiting period has expired.

It is important to note that filing for informal probate will typically be more costly than using the small estate affidavit process. Beneficiaries will need to weigh the inconvenience of waiting the six months against the added expense of the informal probate petition.

When they file the affidavit, the beneficiary must also verify that there are no estate taxes due on the transfer, and that all funeral expenses, unsecured debts and expenses of last illness have been paid in full. In cases where the home is the only significant asset, the value of the property may mean that the small estate affidavit cannot be used. That is because the proceeds of the home sale may be needed to settle the expenses of the estate.

 

How Much Does the Typical Small Estate Affidavit Cost?

While the price of handling an estate will vary, you can expect to spend anywhere from around a $1000 on an a small estate affidavit, plus any additional expenses.

Understanding the asset transfer process is important for Arizona residents and their loved ones. The more you know about the process, the easier it will be transfer assets and avoid unnecessary expenses.

 

Do You Need Help with Probate Matters?

As you can see, probate in Arizona can be 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.

Call us at (480) 464-1111 or fill out the form below.