If one of your primary motivations for creating an estate plan is to ensure that your loved ones are provided for in your absence, you undoubtedly don’t want there to be e lengthy delay between the time of your death and the time estate assets are available to your family. If your estate has to go through formal probate, however, that’s exactly what could happen. In an effort to prevent such an unwanted outcome, a Phoenix estate planning attorney at Morris Hall PLLC explains how your estate might be able to avoid formal probate in Arizona.
What Is Probate?
When a person dies, he or she leaves behind an estate that consists of all the assets the individual owned or had an ownership interest in at the time of death. This includes both real and personal property as well as both tangible and intangible assets. Probate is the legal process that many of those assets must go through before eventually being transferred to the intended beneficiaries or legal heirs of the estate.
What’s Wrong with Probate?
Probate often serves a number of important functions; however, probating even a relatively modest estate also takes a considerable amount of time. In the State of Arizona, creditors have four months from the date probate was opened within which to file claims against the estate. Consequently, you can expect it to take a minimum of six months to probate even a modest estate. Meanwhile, probate assets remain out of reach of the intended beneficiaries until the end of the probate process which often means your loved ones cannot utilize the assets you intended for their support. In addition, probate can be expensive. Everyone involved in the probate of an estate is entitled to a fee for their services which typically diminishes the value of the estate, meaning your loved ones may receive less than what you intended. For these reasons, avoiding probate is a common estate planning goal.
Estate Planning Tools to Help Avoid Formal Probate
When you are creating your estate plan, there are several tools and strategies to keep in mind that can help your estate avoid the need for formal probate, such as:
- Using a trust to distribute assets. Assets held by a trust bypass the probate process altogether and can be distributed to beneficiaries as soon after your death as you wish.
- Choosing the right type of joint title. Real property can be held jointly with rights of survivorship, allowing your interest in the property to pass directly to the co-owner upon your death without first going through probate.
- Titling accounts as “POD” or “TOD.” Certain accounts can also be designated as “Payable on Death (POD)” or “Transfer on Death (TOD)” accounts which allow you to designate a beneficiary who will automatically become the owner of the assets held in the account upon your death. Unlike jointly held assets, however, a beneficiary of a POD or TOD account has no ownership interest in the asset while you are alive.
- Lifetime gifting. Gifting assets while you are alive results in a smaller estate that must be distributed after your death.
Arizona Small Estate Alternatives to Formal Probate
Like most states, Arizona also offers an alternative to formal probate for estates that qualify. If the estate does qualify, assets can be transferred using a small estate affidavit instead of having to go through the formal probate process. To make use the of small estate affidavit, either of the following must apply:
- The value of all personal property in the estate, less liens and encumbrances, is $75,000 or less. There is a 30-day waiting period. OR
- The value of all Arizona real estate in the estate, less liens and encumbrances, is $100,000 or less at the date of death, and all debts and taxes have been paid. There is a six-month waiting period.
Contact a Phoenix Estate Planning Attorney
For more information, please join us for an upcoming FREE seminar. If you have additional questions about how to avoid probate with your own estate, contact an experienced Phoenix estate planning attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.
- How Much Power Is in a Power of Attorney? - May 19, 2023
- What Are Some Benefits of Lifetime Giving? - May 18, 2023
- Top 5 Things to Discuss with Your Estate Planning Attorney - May 17, 2023
Leave a Reply