This post is part of our continuing series addressing basic areas of the law.
Probate is the process through which a will is validated by the Arizona Superior Court and the personal representative is appointed, gathers the assets of the decedent, pays the liabilities, and distributes the remaining assets in accordance with the provisions in the will.
This probate process is often thought of as expensive and time consuming, however, in many situations it can occur relatively quickly and with relatively little cost.
Arizona law provides that a decedent's probate estate contains all of that decedent's separate property and half of the community property in which the decedent had an interest except property that automatically passes to another by operation of law or contract, e.g. real property held in joint tenancy or life insurance proceeds.
In Arizona, an estate will be probated via one of three processes: 1) informal probate, 2) formal probate, and supervised probate. In general, informal probate requires the least amount of court involvement and cost, while both formal and supervised probate may require significantly greater court involvement and cost.
As previously mentioned, a disadvantage of probate can be the cost and amount of time it may entail depending upon the type of probate proceeding Arizona law requires.
In contrast to a living trust, probate may require more out-of-pocket cost than the cost of administration of a living trust. However, there is a less-obvious consideration as to costs: when costs are are paid. The costs associated with living trusts are generally paid while the grantor is alive while the bulk of the costs associated with wills and probate are paid after the testator's death.
Bar to Unsecured Creditors
Arizona law imposes a limited time period, 4 months from the date of first publication, during which unsecured creditors of a decedent's estate must present their claims against the estate. After this period of time has elapsed, unsecured creditors are barred from making claims against a decedent's estate and any assets transferred out of the estate during probate.
Another common misconception is that estates which are transferred through living trust will be less impacted by estate taxes. Even though assets held in living trust are not titled in the name(s) of the person(s) who created a trust, they will be treated the same as assets that are probated, i.e. included in decedents' gross estate.
This brief overview of some important considerations associated with Arizona probate law is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.