Probate Proceedings

Probate is one of the most misunderstood areas of estate planning. People often incorrectly assume that property passing through probate is at risk of seizure by the state, or decimation by attorney fees and the Internal Revenue Service.

Probate proceedings are designed to ensure that property owned by the decedent and not otherwise assigned at death will be properly distributed to the rightful beneficiaries once debts and taxes are paid. If the decedent did not leave a valid will (i.e., if he dies intestate), then an executor, or Personal Representative, is named and the proper heirs are determined. Intestate succession laws set the following order of priority for distribution of the decedent’s estate: the spouse has highest priority to inherit (or, if there are children from a former marriage, the assets are split between the spouse and those children); if there is no spouse, then children of the decedent, if there are no children or any direct descendants of the decedent (also known as “issue”), then the decedent’s parents stand to inherit, then siblings, then the issue of the siblings. The decedent’s intestate estate passes to the state only if there are no relatives closer than second cousins. For this reason, persons who have no family should take special care to make a will naming friends or charities as beneficiaries.

In Arizona, the laws have designed a streamlined informal probate process whereby unchallenged wills or intestate estates can be processed quickly and efficiently, without need for a hearing before a commissioner or judge. By submitting the proper paperwork, the Personal Representative named in the will, a family member or other interested party if there is no will, or a creditor can initiate probate proceedings and have a Personal Representative named to gather, manage, and distribute the decedent’s estate. Most probate proceedings can be closed within 6 months or so, with delays usually attributable to a slow real estate market or procrastination of the Personal Representative (or the attorneys!).

Under informal proceedings, the Personal Representative can be appointed within a couple of days of filing the petition. He or she must then notify all devisees (persons named in a will) or heirs (of an intestate estate) of the appointment, as well as all creditors, by written notice and publication. Creditors and other claimants (e.g., potential heirs omitted from the will) have four months to submit their claims to the Personal Representative. The Personal Representative is also responsible for filing all tax forms required, and for storing or distributing the tangible personal property of the decedent, such as cars and household items.

Formal proceedings are required if there is a dispute over the will, or if the intestate heirs cannot be determined. Notice must be given to all interested parties of any upcoming hearings.

Bypassing probate. The probate estate (i.e., the assets passing by will or intestate succession) does not include real or personal property held in joint tenancy with right of survivorship, pay-on-death benefits such as life insurance or IRAs, and property held in trust. Probate is not necessary if the decedent’s estate is worth less than $50,000; the estate beneficiaries may instead collect the assets from third parties using affidavits of succession.

Although it is possible for probate proceedings to be initiated and ultimately closed without the assistance of an attorney, mistakes can be costly and add significant delays to the proceedings. The Personal Representative should consult with an attorney prior to filing the paperwork to make sure all requirements have been met.