What Is the Difference Between Probate and Trust Administration?

State law determines the process that applies to administration and settlement of the estate of a deceased Arizona resident. For many estates, the process is either probate administration (which is also referred to simply as probate) or trust administration. While both types of administration accomplish distribution of the property in an estate, the two processes are very different. Understanding the differences is important in estate planning and in administration of an estate.

Probate Administration

Probate is a statutory, court-supervised legal process that state law requires some estates to complete. Arizona has several types of probate, in addition to an affidavit process for certain small estates. When an estate includes property that must go through probate, the process is detailed and time-consuming, and requires payment of costs and expenses.

The informal probate process, which is the most common type, begins with court appointment of a personal representative for the estate, who is responsible for following the required legal process. The personal representative often retains a probate attorney to help with the legal requirements for an estate.

The personal representative begins the process by notifying heirs, beneficiaries, and creditors of the estate. The next step involves gathering and protecting the property of the estate and creating an inventory and appraisal of assets. Throughout the probate process, specific forms and documents are filed with the probate court.

As an important part of probate, the personal representative pays filing costs, expenses, claims, and taxes from the property in the estate. Detailed rules apply to paying expenses and creditors. Tax returns must be filed for some estates. After all claims are paid and all requirements are completed, the personal representative provides an accounting to the beneficiaries and heirs and distributes the remaining assets as provided in the decedent’s will or under the laws of intestate succession (if there is no will).

Trust Administration

Property transferred into a revocable living trust during a person’s lifetime does not go through probate but is distributed after death by the trustee (or successor trustee) through the process of trust administration. Unlike probate, trust administration is not a statutory process. It is a private process that is usually not supervised by the court.

Trustees (like personal representatives) are fiduciaries, who must act in good faith and in the best interests of the beneficiaries in performing their obligations. The Arizona Trust Code, found in Title 14, Chapter 11 of the Arizona Revised Statutes, provides a comprehensive legal framework governing trusts and trustees in the state. The Code articulates the fiduciary duties of trustees and sets requirements that apply to administration and management of trusts, as well as creation and termination of trusts. Because of the detailed legal requirements that apply to trust administration, trustees often seek guidance from an experienced attorney in fulfilling their duties.

In administering the trust and managing the assets, the trustee follows the terms in the trust document that created the trust. The trust administration process generally parallels the probate process but no documents are filed in court. The process begins with gathering relevant documents, identifying and securing assets, and notifying the beneficiaries of their rights. Debts, expenses, claims, and taxes are paid from the trust assets. The trustee maintains detailed records, files tax returns, and makes accountings and reports to the beneficiaries before distributing the assets according to the trust terms.

Probate v. Trust Administration

Probate administration and trust administration both ultimately result in distribution of the property in an estate and generally follow the same processes. However, as the preceding explanations demonstrate, there are significant differences between the two types of estate administration.

Probate is a public process. Documents filed with the court are available publicly and can be viewed by any member of the public. In contrast, trust administration is a confidential, private process. Trust administration documents are not filed in court and are not publicly available. As such, there are no filing costs for trust administration, but there are filing costs associated with probate.

Both processes have applicable timelines. The timeline for completion of either process varies based on the nature and complexity of the estate property, but probate generally takes longer to complete than trust administration, which is a more efficient, streamlined process. The relative ease of trust administration is one of the primary reasons that individuals establish a revocable living trust to avoid probate of their estate after death.

Property distributed through probate is transferred in full to heirs and beneficiaries when the process is completed. A trust provides the creator with greater flexibility in controlling distribution through the trust terms. In addition, a trust is generally more difficult to contest than a will.

Schedule a Free Consultation With an East Valley Estate Planning and Probate Attorney

At Peterson Law Offices, our practice includes estate planning and probate. We welcome questions about probate and trust administration in either context. We provide top-quality services at affordable prices and serve 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.