Many Arizona families want to spare their loved ones from going to court and avoid the time, cost and public nature of probate. The good news is that Arizona gives you several practical tools.
1. Funded Revocable Living Trust (Most Comprehensive)
A revocable living trust avoids probate for assets that are properly titled in the name of the trust. The successor trustee named in the trust can then manage and distribute those assets privately according to your instructions, without court involvement.
Key Points:
- The trust must be funded. Signing the trust alone is not enough. Real estate needs a new deed that transfers the property to the trust; most non-retirement financial accounts need to be retitled or have the trust named as beneficiary.
- A short pour-over will still accompanies the trust to catch anything left out and to name guardians for minor children. The goal is that the will, and thus probate, is only needed if something went wrong or got left out.
- Privacy is a major benefit – probate court files are public while a trust administration generally is not.
2. Beneficiary Deed for Arizona Real Estate
Arizona allows someome who owns Arizona real estate to sign a beneficiary deed (A.R.S. § 33-405). A Beneficiary Deed is signed and recorded by the property owner and states who should inherit the property when the owner passes away. The property owner keeps full control of the property during his or her lifetime. This is a simple, low-cost way to keep a home out of probate. Beneficiary Deeds are great tools in some cases, in others (like blended families) a living trust may be a better option.
3. Beneficiary Designations and POD/TOD Accounts
A beneficiary designation is designed to be simple: you name who you want to inherit something when you pass, and when you pass the person you named (the beneficiary) works with the company holding the account to transfer the funds or account to you. “POD” or Pay on Death or “TOD” or Transfer on Death are just different terms for beneficiary designations. If an account or asset has a beneficiary designation on it, that asset passes directly to the beneficiary without the need for probate.
Retirement accounts (IRA, 401(k)), life insurance and many bank and brokerage accounts can pass directly to named beneficiaries via beneficiary designations.Keeping these designations current is one of the easiest and most important probate-avoidance steps.
4. Community Property or Joint Ownership with Survivorship
Community property with righr of survivorship (married couples in Arizona) or joint tenancy with right of survivorship lets the surviving owner take the asset automatically. This is a simple and helpful tool, but does include potential tax, creditor and family implications.
5. Small Estate Affidavits (When Limits Apply)
If the remaining probate assets are under $200,000 in personal property or $300,000 Arizona real property, the small affidavit process under A.R.S. § 14-3971 can avoid a full probate case.
What Does Not Avoid Probate
A will by itself does not avoid probate. It is the roadmap the court follows during probate.
If you would like to review whether your current plan already avoids probate for the assets that matter most, or to set up a living trust or beneficiary deed, call our Scottsdale office at (480) 699-7992.
