Probate terminology can be confusing. Even Phoenix Probate lawyers sometimes misuse and confuse probate terms.   But you need to know the language if you are to understand what is going on. So here are some common terms used in estate proceedings along with definitions.   More definitions can be found in A.R.S. §14-1201.

Application is a written request directed to the probate registrar for an order of informal probate or appointment.

Petition is a written request to the Court for an Order after notice to interested parties.

A Living Will is different from a normal Will.   A Will is a common estate planning document that controls the distribution of a person’s property after he or she dies. It is not effective until death. A living will, however, is effective during a person’s lifetime and serves a wholly different purpose.   Also known as an “advance directive” a living will allows a person, in advance, to give written instructions for medical treatment should he or she become terminally ill and be unable to communicate with a physician or family member. Most states have laws authorizing living wills/advance directives. Arizona’s statutes are found at A.R.S. §36-3201, et.seq. A sample Living Will can be found in A.R.S. §36-3262.

Medical care has become so good that life can be extended artificially for long periods. Physicians often opt to extend life where possible, but this may not be what a patient wants. Few of us want our lives to be artificially extended where we are terminally ill with no chance of recovery. Most want to be allowed to die with some dignity.   This is where a living will comes in.

A Living Will provides a means to control the medical procedures provided to you at a time when you cannot speak for yourself.   In most cases, this amounts to a description of what services are not wanted in the event of a terminal illness. Often, people opt for “comfort care” with instructions that they are to be medicated to be free from pain but other life extending procedures such as feeding tubes, blood transfusions, cardio-pulmonary resuscitation and similar services are rejected. In other cases, patients may wish to preserve life as long as possible using current technology. A Living Will can also be drafted with this goal in mind.

Your Will is an essential estate planning document. However, it covers only those assets that make up your probate estate. There are other assets called non-probate assets and your Will does not control these. Your Phoenix estate planning lawyer needs to know about both types of assets when preparing an estate plan.

Non-probate assets are normally those for which you have already designated a beneficiary upon your death. These are often:

  1. Life Insurance policies,

When trying to figure out whether an Arizona probate estate is required, the Phoenix probate attorneys at Platt & Westby, P.C. suggest that it is often helpful to look at the decedent’s assets (especially how they are titled) and the decedent’s debts.

The manner in which decedent held title to his/her various assets makes a big difference. Real estate can be held in a variety of ways including solely and separately, joint tenancy, community property, and as tenants in common. Often the joint tenancy and community property titling is coupled with “right of survivorship” language. This additional language means that when a property is held by two or more persons, the surviving persons receive the deceased person’s share of the property automatically at the time the deceased person passes. This happens without the need for probate. On the other hand, property held solely and separately, or as tenants in common usually require a probate in order to transfer title or to sell the property. Similar to the manner in which title is held, it also depends what name the property is titled in. In the event that the decedent titled his/her real estate into a trust, a probate will be unnecessary. Instead, the trustee or successor trustee as the case may be, can usually proceed to administer the trust without court proceedings.

Bank accounts can be a little tricky because you have to distinguish whether a person associated with the account is an owner, a signer, or a beneficiary. Jointly owned accounts will normally pass to the surviving person automatically without the need for a probate. When the account is owned only by the decedent, and there is a surviving person who is only a signer on the account (or acting as an agent under a power of attorney on the account), then the signer/agent will not have access to the funds upon the owner’s death. Instead, it will have to be determined whether the account has another surviving owner or had a beneficiary designation on it. If there is a surviving joint owner, that person will likely own the funds remaining in the account and will have continuing access to them without anything further. If there is no surviving joint owner, then the next step is to determine if there is a beneficiary to the account. These beneficiary designations are often referred to as TOD (transfer on death) or POD (payable on death) designations. Essentially, these POD/TOD designations work just like a beneficiary designation on a life insurance policy. In order to obtain the funds in the decedent’s account where a valid POD/TOD exists, the person entitled to the funds applies to the bank institution for the funds, proving who they are and providing information about the decedent’s passing. In most cases, these kinds of designations will permit distribution of the funds without opening a probate proceeding. An example where such a designation would not work is when the beneficiary passed away before the owner of the account dies and the owner did not update the POD/TOD designations. In that case, a probate would need to be opened up to collect the funds, to determine who gets the funds, and to distribute them to the person(s) entitled to them.

If there is no will, does all the decedent’s property go to the State of Arizona? What happens?   This is a question that is asked frequently. Fortunately, in Arizona, property of a decedent rarely goes to the state. Our statutes provide for a wide pool of family members who are potential heirs.

ARS §14-2102 gives preference to a surviving spouse who normally inherits the entire estate provided that any children are the issue of both the decedent and the surviving spouse. Where there are children from a different relationship, the estate is divided between the surviving spouse and the children.

ARS §14-2103 determines what happens if there is no surviving spouse. In that event, a decedent’s estate is distributed as follows:

What is an ancillary probate? When a person dies, their state of residence has jurisdiction over their estate. This is the state where a probate is usually filed. The state of residence is also normally where the decedent’s property is located.   However, sometimes a decedent owned property in another state. When this happens, an ancillary probate is often needed to handle the out of state property. It is a probate proceeding that is ancillary to and designed to assist the main probate.   Ancillary probates are common in Arizona because thousands of our winter visitors have purchased homes here but continue to reside in their home states.   Similarly, many of our Clients probating an estate here in Arizona often need our help to locate and hire an out of state attorney to transfer property the decedent owned in that state.   Obviously, probating an estate in two or more states adds additional cost and complexity to the handling an estate.

How can an ancillary probate be avoided? An ancillary probate can be avoided by using the same strategies employed to avoid any probate. Assets need to be held in such a way that they do not need to go through a probate. They become non-probate assets. Some of the common ways to accomplish this are:

  1. Use payable on death (POD) or transfer on death (TOD) accounts. If your financial institution accounts are set up this way, no probate is needed to transfer the accounts to the person or persons you have named as transferee.

Much has been written by estate planning attorneys as to how to avoid probate. It is true that drafting of estate planning documents with a goal of probate avoidance is of great value to families. But sometimes a probate is needed or can be useful. Here are a few of the benefits of the probate procedure:

  1. The most important benefit is that a probate provides a court supervised procedure. This encourages a timely and more formal administration of the estate. It also provides a framework within which a duly appointed personal representative can have subpoenas issued, investigate the assets and debts of the estate, recover assets, collect money owed to the estate, and challenge disputed claims.   ARS 14-3701 lists some of the duties of a personal representative.
  2. In administering a probate estate, a personal representative is held to the same fiduciary standard as a trustee including the duty to account. ARS 14-3703. This provides a measure of protection to the estate beneficiaries or heirs.

Revocable Living Trusts are flexible estate planning tools.   They can, among other things, avoid probate and streamline estate administration after a death. They can also assist during a Trustor’s lifetime by avoiding the potential need for a guardianship.   These benefits are well known.   However, what is sometimes overlooked is that a Trust is not the same as a Will. A Will is drafted and signed with no additional work needed other than a periodic review to make sure it’s terms are still appropriate.   A Trust is also drafted and signed.   But once you leave your lawyer’s office with your newly signed trust documents, a great deal of work still needs to be done.   This is the funding of your trust.   In order to deliver the benefits that make Trusts so popular, the trust must be funded.   This means that ownership of your property needs to be transferred to your Trust. It is unfortunate that this important second step is so often overlooked.

We meet often with children who bring in Mom and Dad’s Living Trust documents. The Trust usually appears to be professionally done.   It is clear that Mom and Dad likely paid a substantial fee to have it drafted. Yet when we start discussing what property is owned by Mom and Dad’s trust we get blank stares.   Further discussion establishes that no assets were ever transferred to the Trust or, some assets were transferred when the trust was first created, but those assets have been sold and others purchased that have not been transferred to the Trust.   When this happens, we have the unpleasant task of advising the kids that, despite Mom and Dad’s well drafted Trust, a probate is still needed to transfer their assets to their Trust so that they can be administered and distributed as the Trust directs.

Even when Mom and Dad are diligent and transfer all of their Arizona property to their trust, it is not uncommon that out of state property is never transferred.   Where this happens, the result is the same, a probate is needed.

Probate is the judicial procedure by which a decedent’s estate is handled through the appointment of a Personal Representative (some states use the term “Executor”).   As mentioned in Platt & Westby’s webpage titled “Probate”, a probate is not always required to handle a decedent’s affairs. Many times, the decedent will not leave behind the kinds of property requiring a Probate, or perhaps the decedent utilized a Trust or other estate planning tool that make a Probate unnecessary. However, should you find yourself in the position where Probate is required, this article provides a rough outline for the standard Probate process. In certain cases, summary Probate proceedings are available which are not addressed by this article.

The first step in the Probate process is to determine if there is a Will or not. You will need to gain access to the decedent’s important papers to determine if there is a Will or perhaps the decedent made known to you a copy of his/her Will beforehand.   If for any reason you cannot gain access to the decedent’s important papers, you may have to proceed to file for appointment of a Special Administrator to obtain the permission necessary to search through the decedent’s important papers. The Special Administrator appointment is outside the scope of this article – but a competent Phoenix Probate Attorney can assist with this. See A.R.S. 14-3614 et seq.

After determining whether or not there is a Will, the next step will be to determine if you may proceed with a formal or informal Probate opening. Arizona permits informal or formal proceedings at each of the different stages of a Probate, depending on the needs of the Probate estate, making it a flexible system. Often, you can begin an estate informally. Where the estate is testate (with an original valid Will), you can proceed to file an Application to have the Will Probated. Where the estate is intestate (without a Will) you can also proceed with an informal Application if all the heirs are agreeable to will serve as the Personal Representative.

You’ve heard the saying “You get what you pay for” – usually about the time that you have discovered that the great deal you snagged did not really save you anything because what you purchased did not live up to your expectations. And now you have to spend more money to fix it or replace it. This saying can, all too often, hold true for your ESTATE PLANNING as well. Sometimes the least costly solution is simply not the best solution, nor the most cost-effective. A WILL, for instance, is cheaper than a TRUST, at least in the near term. It costs less to the person obtaining it and, of course, only becomes operative upon you passing. But to make it effective on your passing, especially where you own property that is titled (i.e. real estate), your heirs will have to probate the WILL, have someone appointed as a Personal Representative, pay the costs for filing with the court, administer the PROBATE estate, and possibly pay an attorney to assist them.

On the other hand, a TRUST may cost more up front, but in the long run is often able to leave more to the TRUST beneficiaries because the TRUST does not have to incur the costs associated with PROBATE administration. Further, the TRUST does not need to be submitted to the court to be made effective. Rather, a TRUST becomes operative immediately after you create it, and you can use it as the central mechanism to coordinate your ESTATE PLANNING needs. And, because it becomes effective immediately, management of the TRUST assets is easier during the lifetime of the trustor (the person creating the TRUST) especially where the trustor becomes impaired. In this instance, a successor TRUSTEE takes over without court intervention, and provides a seamless process for management of the TRUST assets for the benefit of the trustor, without resorting to the need for a CONSERVATORSHIP proceeding (another type of PROBATE proceeding which declares a person incompetent and appoints a person called a CONSERVATOR to manage the incompetent person’s property and assets for the benefit of the incompetent person).

TRUSTS have other benefits too. Because you avoid filing PROBATE, your estate plan remains confidential. For many people, this is a very important consideration. Where you have a significant amount of assets, a TRUST can help reduce estate taxes which in turn allows you to leave more of your property to your family, friends and charities.