One of the main questions clients will ask is, “How I can avoid probate when I pass away?” This common question stems from a long history of “probate” being associated as an evil word or a long and expensive legal process, which is to be avoided at all costs.
It is true that probate is court driven, public, can be time consuming and expensive, and can be easier to contest, but truth be told, the majority of Arizona probates cases are a straight forward, legal process that allows the personal representative chosen to administer ones estate, pay and settle creditor claims and distribute the balance of a decedent’s estate to his or her beneficiaries and heirs. The entire process usually takes between 6 months and 1 year (for an informal probate in Arizona).
Granted if someone has been involved in a formal or contested probate, which lasted years and cost the estate thousands of dollars, one would try to avoid a future probate at all cost.
Arizona law affords its residents different ways to avoid probate, some of which are very simple, while other methods may present other pitfalls, which may be more detrimental and costly than the actual probate process itself.
The following are various ways one can avoid probate in Arizona. Please note that each of these legal decision should be discussed with a competent estate planning attorney, as each have their own set of pros and cons:
- Revocable Living Trust:
- Beneficiary Deeds:
- JTWROS and CPWROS:
- Motor Vehicle Beneficiary Designation:
- POD/TOD Designations:
- Contractual Assets:
This is usually the best way to plan for and protect your family and affairs, if you are willing to spend the necessary time and effort with a qualified estate planning attorney to discuss, contemplate and design a trust-based plan that will meet all of your personal and family goals. However, let it be noted that even the perfectly designed trust can fail, if it is not funded properly. Trust “funding” is the process of transferring ownership and title of your assets into the trust during your lifetime, thereby avoiding the probate process for transferring title after death.
A beneficiary deed is a recorded document that conveys title to a “beneficiary” after the death of the owner/grantor of a piece of real property in Arizona. The recording of the owner/grantor’s death certificate after death authenticates the transfer of title by operation of law, thereby avoiding the probate process.
Joint tenancy with right of survivorship (JTWROS) and community property with right of survivorship (CPWROS) are used commonly in Arizona, usually with married owners of real estate and personal property. Again by operation of law, upon the death of one of the common owners, the survivor takes on the decedent’s ownership of such property. I would strongly suggest discussing this form of ownership and its pros and cons prior to placing non-spouses on any title with you and or solely relying upon this non-probate vehicle for all of your estate planning.
In 2011, Arizona enacted a new statute that allows for owners of motor vehicles titled through Arizona Motor Vehicle Division, to list a beneficiary on the title to a motor vehicle, which takes effect and transfers ownership after the death of the owner to the beneficiary listed.
Payable on death (POD) and transfer on death (TOD) designations are fairly common with many financial institutions. These designations allow an account to transfer at death to the person listed as the payee listed as the POD/TOD designee and will avoid the probate process.
There are many contract-type assets, which name a beneficiary in the contract, which controls who receives the asset after the death of the owner. Some examples of these “contractual assets” are: life insurance, annuities, IRA accounts, 401K’s and pensions.
As you can see, there are many ways to avoid probate in Arizona. Although the question, “how can I avoid probate” is the most common question initially asked by many new clients, the better question to ask is, How, at death, I can give what I have, to whom I want, the way that I want and when I want all the while controlling my property while I am alive yet taking care of myself and loved ones if I become disabled?” This question can be answered by utilizing a qualified family based estate planning attorney, who is willing to talk about, utilize and implement these non-probate techniques after discussing the pros and cons of each with you.
If you have any questions regarding family based estate planning, probate administration, guardianships, conservatorships or any other legal issues, please call the attorneys at Rowley Chapman & Barney, Ltd. (480) 833-1113. Kenneth C. Barney is a partner with the law firm of Rowley, Chapman & Barney, Ltd. practicing in these areas of law since 1999.