Articles Tagged with Estate Administration

When I first started practicing law digital assets did not exist. Now many of us consider digital assets indispensable since they make up a large portion of the record of our lives. Digital Assets are, of course, all of the things we store on the web; social media pages such as facebook, photos, videos, personal and business documents, personal and business websites, e-mails and even text messages. So what happens to all of this when a person dies? Does it all pass to the decedent’s heirs? Until just recently, these questions were answered by the website’s Terms of Service Agreements. These are the long documents in legalese that a prospective user must accept as a condition of using the site. Most of us are guilty of simply clicking the “accept” button without reading any of it. But these agreements supersede a decedent’s will or trust and can create hardship.

In 2016 Arizona changed this and brought predictability to the disposition of digital assets by enacting the Fiduciary Access to Digital Assets Act (FADAA).   The new law became effective on August 8, 2016 and provides that you can now pass your digital assets to your heirs or beneficiaries by your will, trust, power of attorney, notarized written statement or by using a website’s online tool provided for this purpose, if one exists. Not only can you now pass your digital assets via your estate planning documents, you can also specify that access to certain digital assets is to be withheld and the content deleted.   The complete text of the new law can be found at A.R.S. §14-13101 through A.R.S. §14-13118.

To take advantage of the new law we recommend that you consider amending estate planning documents to give instructions for the disposition of your digital assets. If you use an online tool to give such instructions, you need to know that your online instructions will supersede any instructions given in your will or trust. It works like a Payable on Death account which passes the account balance to the listed beneficiary despite the existence of a will or trust.   We also recommend that you provide your attorney or other trusted individual with a current listing of the online accounts and websites used by you with the log in and password information for each.

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.