After a loved one dies, family members appointed as Executors or Personal Representative of their loved one’s Estate often struggle to understand their roles and responsibilities. Many people have heard the term “probate,” but few have a concrete understanding of what it requires of an Executor or Personal Representative and what pitfalls to avoid.
Here, we discuss some of the avoidable hazards in the Arizona probate process. If you need assistance planning your Estate or figuring out your duties and responsibilities as Executor or Personal Representative of the Estate, please contact the experienced attorneys at Arizona Law Doctor today.
What is Probate?
Probate is a court-ordered legal process that oversees the distribution of a deceased person’s assets (known as their “Estate”) to creditors, heirs, and beneficiaries. The specifics of a probate case differ from estate-to-estate, but the process generally involves:
- Filing a Petition/Application with the proper Probate Court;
- Providing Notice to Creditors, Heirs, and Beneficiaries under the Will or statutory heirs if there is no will;
- Appointing a Special Administrator for the Estate (where there is no Will) or filing a Petition/Application for appointment of the Executor or Personal representative named in a Will;
- Assisting with the Inventory and Appraisal of Estate assets;
- Paying any debts and taxes out of Estate assets;
- Accounting for and proposing a plan for distribution of assets to the Probate Court;
- Providing legal Notice to Heirs and/or Beneficiaries (and subsequent Proof of Notice with the Court) with detailed information about the Estate;
- Distributing of assets to creditors, heirs, and beneficiaries; and
- Filing a Closing Statement with the Probate Court to finalize the Estate.
Probate can be a time-intensive and expensive undertaking, depending on a variety of factors such as the location of Estate property (both real and personal), whether there are any disputes concerning the provisions of the Will, and the number and complexity of creditor claims against the Estate.
For that reason, many people hope to avoid probate. However, simply having a Will does not allow your heirs or beneficiaries to avoid probate. A Will is only helpful in streamlining or avoiding probate if it includes a well-drafted and properly-funded living trust.
To add to the potential confusion for Executors and Personal Representatives, there is a wide variety of assets that are not subject to probate in Arizona. They include:
- Joint tenancy or community property assets that include a right of survivorship.
- Retirement accounts and life insurance policies that have a designated beneficiary.
- Certain types of specialized investment accounts and property ownership structures that have a built-in change in ownership triggered by someone’s death.
Also, in Arizona, it is possible to avoid probate altogether if:
- The entire value of the personal property in the estate is less than $75,000; or
- The entire value Arizona real estate in the estate is less than $100,000 at the date of the death and all debts and taxes have been paid.
Consulting with an experienced probate attorney is the best way to determine which assets your loved one owned that may be subject to probate.
Failure to File for Probate
While the probate process may seem like a burden, failing to follow the probate court process can result in a number of unfortunate circumstances.
- Legal Liability for the Personal Representative: If you are the executor or personal representative named in a Will, you could suffer significant personal consequences for failing to probate a will within two years of your loved one’s death. While failure to commence the probate process alone is generally not a criminal violation, if an individual (such as a creditor or intended beneficiary) is harmed by this failure, the personal representative may face personal legal liability for their losses.
- Putting a “Cloud” on Title to Real Property: The probate process transfers legal title of property from the Estate to heirs and beneficiaries. Failing to engage in the probate process can complicate the buying and selling of property by creating confusion and doubt about the property’s true owner. In the worst-case scenario, failing to put property through probate could trigger claims of fraud and subject the Estate’s Personal Representative to potential legal liability.
- Disputes Over Assets: An unfortunate number of families end up in fights over who is the rightful Executor, Personal Representative, Heir, or Beneficiary of a deceased person’s assets, especially when their loved one did not leave a properly executed (or any) Will. This scenario is especially common in blended families where there are second-marriages, or if there are estranged family members. If the Estate goes through the probate process, there is an established forum for handling such disputes. This can save family members stress and heartache during the difficult time after a loved one’s passing. If the Estate does not go through probate, then family members may end up battling through these issues in a chaotic and ultimately counterproductive fashion. This could leave to significant rifts between family members, in addition to the complications with administering the Estate as noted in the bullet points above.
- Uncertainty with Creditors. Probate provides an orderly process through which creditors can make claims against the decedent’s estate, and by which the estate can object to, and if necessary, litigate the validity of those claims. Failure to go through probate can cause significant difficulty for family members who end up responding to increasingly angry inquiries from creditors. As above, creditors left without a remedy in the probate court may claim the Estate’s representatives or others have legal liability for the deceased person’s debts.
These are some samples of the potential pitfalls that failing to file for probate can cause for family members during a difficult time.
Arizona Law Doctor Can Help
The attorneys at Arizona Law Doctor are experienced practitioners in the areas of probate, guardianship and conservatorship, personal injury, disability planning, trust administration, and estate planning (including wills and trusts).
Arizona Law Doctor is a probate law firm that is proudly dedicated to serving the greater Phoenix community. If you need help planning your Estate, navigating the probate process, or otherwise dealing with a loved one’s Estate, we are here to assist you. Contact Arizona Law Doctor today for a consultation.