Is a Trust the Only Way to Avoid Probate? Not in Arizona.
For many people, an important goal of creating an estate plan is to avoid probate of their estate. A living trust is often an excellent way to accomplish that goal. But in Arizona, there are also other ways to avoid the probate process.
This article explains the available options for avoiding probate of property in an Arizona estate, as well as the reasons why that may be a beneficial goal for your estate plan.
Understanding Probate in Arizona
Probate is a court-supervised process for distributing a person’s property after death. State laws govern Arizona probate administration. It is a detailed, time-consuming process with numerous specific legal requirements. Some small Arizona estates may qualify for streamlined procedures.
Some types of property do not go through the process at all. You can structure your estate to avoid probate entirely, but doing so requires advance planning. After a person passes away, it’s too late to make changes that eliminate the necessity of probate administration.
Attempting to avoid probate on your own carries substantial risks. The only surefire way to structure an estate plan that avoids probate is to rely on a knowledgeable Arizona estate planning attorney.
Benefits of Avoiding Probate
Avoiding probate has several benefits. By eliminating the need of going through probate administration, the estate saves time and money. Beneficiaries receive their inheritance sooner. Since the estate doesn’t pay probate costs, the value of the property available for inheritance may be greater.
Maintaining privacy of the deceased person’s finances is another desirable advantage for many people. When an estate goes through probate, all the financial details of the deceased person become publicly available. That is not the case if an estate avoids the probate process.
Arizona Options to Avoid Probate
Generally, any solely-owned property remaining in an estate on a person’s death must go through the probate process. That includes property distributed to beneficiaries under the provisions of a Last Will and Testament. So, to avoid probate, your estate plan must ensure that there is no property that stays in your estate when you pass away. In Arizona, there are several alternatives available to accomplish that goal.
Revocable Living Trust
In many circumstances, including a revocable living trust in your estate plan is an excellent way to avoid probate. One significant benefit of using a trust is that you have the ability to control property distribution after you pass away.
If you leave property to a beneficiary through one of the other methods of avoiding probate, the beneficiary immediately receives full ownership of the property. That’s not a desirable outcome in some situations, such as beneficiaries who are minors or are financially irresponsible. A trust enables you to control the distribution after your death, which other probate-avoidance options may not accomplish.
Naming a beneficiary for specific property is another way to avoid probate for an asset. A life insurance policy is an excellent example of this option. Other financial accounts, such as IRAs, 401ks, and some brokerage accounts are eligible for beneficiary designations as well.
However, caution must be exercised when making beneficiary designations, particularly for IRA and 401K accounts. Naming an individual beneficiary for those accounts can have unintended consequences, such as making the assets vulnerable to creditor claims or subject to shortened distribution periods. Before you use this option for avoiding probate, it’s important to talk with an estate planning lawyer who can analyze the effect of your beneficiary designations and recommend the best way to pass along those assets.
Joint Ownership of Property
If two (or more) people hold title to property as joint tenants with a right of survivorship, that property transfers to the surviving joint tenant(s) outside the probate process when one of the owners passes away. To accomplish this type of automatic transfer, the title to the property must meet specific requirements. Consulting with an attorney is advisable if you wish to take this approach for some of your property.
Pay-on-Death / POD & Transfer-on-Death / TOD Designations
Arizona laws permit payable-on-death (POD) and transfer-on-death (TOD) designations for certain types of financial assets, such as bank accounts and securities. The state also permits TOD designations for motor vehicles and deeds. Both types of designations accomplish transfer of assets on the owner’s death, without the need for probate of the property.
Arizona is one of just a handful of states that allows use of a beneficiary deed for real estate, which is a TOD deed for real property. Before you decide on this option, it’s important to discuss your circumstances with a lawyer to make certain that it’s the right choice and that the document you put in place satisfies Arizona legal requirements.
Finding the Best Approach For You and Your Family
You can make certain that your estate avoids the Arizona probate process by planning ahead. In fact, avoiding probate is one of the primary reasons for creating a thorough and thoughtful estate plan. There are other important reasons to have an estate plan as well.
Every estate plan is as unique as the person who creates it. Your plan should take into account all your circumstances and your family situation. The only way to ensure that you create the best strategy for distribution of your estate is to consult with an experienced Arizona estate planning attorney. You should never attempt to create your own estate plan without a lawyer.
You have a number of alternative strategies to avoid probate of your estate. No single option is right for everyone and every estate or for type of property. Your lawyer explains what different options are available for you and your assets, and then helps you decide what approach to take for your circumstances and your family.
Schedule a Free Consultation With a Trusted East Valley Estate Planning Attorney
At Peterson Law Offices, our practice includes all aspects of estate planning, including creating a plan to avoid probate of your estate by using the methods available in Arizona. Your initial consultation is always free of charge. We provide top-quality services at affordable prices and can assist you in creating a new estate plan or revising an existing plan to accomplish your goals and protect your family.
We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.