It can be emotionally challenging for families to close a loved one’s estate when they pass away. Sorting through their personal possessions, accessing their private accounts, and handling their assets is frequently delayed until the family has had time to mourn and process their loss. While the law provides time to accommodate for this, there can be significant repercussions for waiting too long to close an estate.
If the decedent has a will, the party in possession of the will should submit the document—along with a petition to open probate—to the county probate court within 30 days of the decedent’s passing. In most cases the will is left in the hands of the executor (aka personal representative), so it’s usually the executor’s responsibility to file the petition for probate. However, if the decedent did not leave a will, or if the executor fails to submit the petition, any interested party to the estate (family, beneficiaries, creditors) can petition to open probate proceedings.
What happens if an estate is not probated and closed?
If an estate is not properly probated and closed in a timely manner, there may be a number of consequences that can jeopardize the estate:
- The statute of limitations for creditors’ claims is extended
- Assets may lose value or be lost altogether
- The state may claim the assets
- There may be financial and/or criminal liability
Statute of limitations
When probate proceedings are officially opened in court, the decedent’s creditors have 120 days submit a claim to the estate. As long as the creditor was properly served or notified, failure to submit a claim within the allotted time frame may result in their claim being rejected. If nobody files a petition for probate, a decedent’s creditors have up to 2 years to file a claim against the estate. After a reasonable amount of time, creditors and other interested parties can step in and petition for probate, and request the court appoint a third-party special administrator to settle the estate’s debts.
Asset devaluation and loss
Estates that are not probated tend to include assets that are left unattended and uncared for. If nobody pays the home mortgage, the bank may step in and foreclose on the home. Buildings that are neglected can fall into disrepair, which can significantly lower the fair market value when someone finally gets around to selling the property. Vehicles that are left parked on the street for too long may be towed, vandalized, or stolen. Mismanaged investments can suffer market losses, and personal possessions that aren’t properly cared for can lose their value. Each of these cases results in a decreased estate value, which ultimately impacts what’s available to settle the estate’s liabilities and distribute to the beneficiaries.
Assets claimed by the state
In rare cases where the court cannot find any heirs to the estate, a court-appointed administrator will settle the estate’s liabilities and the state can claim the residual value (ARS 14-2105). Heirs who fail to respond to officially-served notices and summons may lose their opportunity to claim their portion of the estate.
Financial and criminal liability
Failing to file a will within the allotted time frame is not a criminal offense, but the party in possession of the will may be held responsible for consequences that arise from their lack of action. For example, a beneficiary who is financially impacted by the executor’s failure to file the will can pursue a lawsuit against the executor to recoup any damages. The executor could also be subject to criminal charges if the court finds that they concealed the will, or deliberately refrained from filing it, for financial gain.
Why would an executor not close an estate?
In the majority of cases where an estate is not properly probated and closed, the root cause is the executor’s inability to accomplish their responsibilities. Unfortunately, it’s not uncommon to see irresponsible executors who procrastinate probate proceedings, ignore the estate’s creditors, or refuse to distribute the assets because they disagree with the will’s instructions. Some executors give up on closing the estate because the estate is insolvent (meaning there are more liabilities than assets), so they see no benefit in finishing the job when none of the beneficiaries will receive anything. Others wrongfully assume that because the decedent had a small estate, it’s unnecessary to probate and close the estate. Again, all of these behaviors can have detrimental consequences that materially harm all of the estate’s beneficiaries and interested parties.
How to resolve a situation where the executor doesn’t properly close the estate
If you are an interested party and you believe the executor has failed in their responsibilities, there are a few actions that you can take:
- Serve notice to the executor – if the executor is a family member or close friend, it’s usually best to try to resolve the issue outside of court. Draft a notice with the help of an attorney, have a courier serve them the notice, and file proof of the notice with the court. Ideally, your formal warning will prompt them to expedite their actions and close the estate.
- File a complaint with the probate court – if the executor fails to comply with your notice, it’s time to bring the problem to the court’s attention. File a petition with the probate court, and request that a judge assess the situation to see if the executor has failed in their duties.
- Demand an accounting – if your petition has any merit, the judge will probably request an accounting from the executor to see what they have been able to accomplish, and to check their work for accuracy and honesty. If the court doesn’t request an accounting, an interested party has the right to demand an accounting.
- Remove the executor – after reviewing the accounting, if the court finds evidence that the executor has failed in their responsibility to the decedent, whether willfully or incidentally, the court will dismiss the executor and appoint a new one in their place. The court will usually try to appoint a better-qualified family member as the replacement, but in some cases the judge can appoint a third-party special administrator.
How long does it take to close an estate?
Generally speaking, formal probate shouldn’t take more than a year to close an estate. Informal probate is even quicker, usually wrapping up in 4 – 6 months.
Do You Need Help with Probate Matters?
As you can see, AZ probate laws 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.