Probate is a court-supervised process of validating the will of a deceased person. It involves identifying the person’s final assets, paying their last debts, and then distributing their estate’s property to the proper heirs.
State probate laws vary, but you can expect Arizona probate laws to be similar to those in many other states. Lawyers do much of the grunt work but if you ever find yourself in the position of being a beneficiary or executor, it’s helpful to know what’s involved.
What is Probate?
Probate is a process by which a decedent’s will is processed. It usually involves lawyers and a court proceeding during which the will is read aloud and the appropriate inheritances handed out. The process can take some time, but how long depends on the size of the estate.
Generally, a will names an executor who is responsible for overseeing the probate process. They have 30 days from the date of the will owner’s death to file the document with the local probate court.
If the decedent died without a will or didn’t clearly identify an executor, the probate court appoints an administrator to oversee the probate process. Often, this role falls on the next of kin.
When is Probate Necessary?
Probate is not always required to transfer property. Several state laws stipulate that property below a certain value can be passed on without probate or through a simplified version of it.
If a person dies without a valid will in place, they are considered to be intestate. Each state has its own intestate succession laws that mandate where inheritances should go, based on family relationships.
Certain accounts such as IRAs or 401(k) plans or pensions with listed beneficiaries don’t need to go through the probate process either. The same goes for insurance policies.
How to File and Validate a Will
Generally, an executor has to file a will with the local probate court as soon after the death of the decedent as possible. They may also need to file the death certificate as well as a petition to open probate at the same time.
A probate court then determines whether the will is legal and valid. Usually, this involves a hearing in which all of the beneficiaries listed in the will have a right to look at the document and accept or object to their role in it. The court decides how to move forward in cases where wills are contested.
Identifying Assets for Probate
As soon as the probate process begins, the executor must identify all the decedent’s assets and their value. This usually means diving into banking and investment account statements, tax documents and more.
In some states, the executor has to provide the court with a document that details the assets, their value, and notation on how the value was reached. This determines the “date of death values.”
The executor may also need to take possession of property such as vehicles and fine art. Moving into real estate is not necessary, but the executor does have to ensure property taxes, insurance, and mortgage payments are covered during the probate process.
Contacting Creditors and Paying Off Debt
Something else the executor has to do is track down any of the decedent’s last creditors. These creditors typically have a limited time in which they can make claims against the decedent’s estate. These time frames vary depending on the state.
The estate must pay off official debts which might include medical bills and other expenses the decedent couldn’t cover before they died.
Filing the Decedent’s Final Taxes
Death doesn’t clean the slate with Uncle Sam. An executor must file and pay off any of the decedent’s final taxes with estate funds. The federal estate tax can be as much as 40% and some states enforce additional estate taxes as well. At the federal level, estate tax currently only applies to estates that are worth $11.7 million or more.
Distributing Property from an Estate
Usually, an executor needs to provide the probate court with documentation detailing every transaction they engaged in during the probate process. These filings also detail the exact value of the remaining estate.
After the court confirms all debts and taxes are complete, it can move forward with distributing what remains of the estate, pursuant to the will.
If a person dies without a will, the court typically divides assets and property among immediate family members. Someone who dies without a will has passed away “intestate.” The surviving spouse, if any, typically takes priority.
Probate may sound like an intimidating process, but you shouldn’t feel daunted by it. If there is a detailed will that designates an executor, it will ensure the proper transfer of a person’s property to the right heirs after death. However, the probate process is not always necessary.
Seeking a financial advisor for guidance around estate planning is a great way of protecting your property from probate and taxation.
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