What is probate?

Probate is the court process designed to transfer title of assets to your heirs and clear your debts. In Arizona, probate lasts a minimum of four months and, depending upon the complexity of the estate, will usually be longer — anywhere between six months and a few years. Generally speaking, however, delays are due to reasons other than the probate process itself. Unlike many states, Arizona does not have mandatory probate fees based upon the size of the estate.

What is a Beneficiary Deed?

The word “probate” — the court process designed to transfer title of assets to your heirs and clear your debts — sends chills down the backs of many. In reality, the probate process in Arizona isn’t as expensive or burdensome as most people believe. An Arizona probate typically lasts anywhere from four months (the statutory minimum) to a few years and can cost anywhere between two and five thousand dollars. Still, avoiding probate is an important and legitimate goal in estate planning.

The Arizona Legislature passed a new law, effective August 9, 2001, creating an alternative way of transferring title to real estate — the “Beneficiary Deed.” The Beneficiary Deed can prevent the probate of real property.

How can I avoid probate?

Under Arizona law, real property titled solely in the name of a decedent valued more than $75,000 must go through probate. Oftentimes, married couples intend to avoid probate by holding assets as joint tenants with right of survivorship or in community property with right of survivorship. However, these forms of ownership don’t avoid probate after the second spouse dies.

To solve the problem for certain accounts, people wishing to avoid probate can title their bank and brokerage accounts in their names with a “POD” (Pay on Death) or “TOD” (Transfer on Death) designation. Upon death, these types of accounts pay immediately to the named beneficiaries without probate. Properly naming beneficiaries for life insurance policies, annuities and retirement plans such as individual retirement accounts and 401(k) plans also avoids probate. However, there was never a similar option for Arizona real estate — until now.

Before the new law, real property owners had three choices upon death: (1) probate of their estate; (2) create a living trust; or (3) placing children’s names on the title as joint owners. While trusts remain the most effective way to control property after death, many estates simply aren’t large enough to justify the creation of or administration of a trust. And, while the third option seems reasonable, it is irrevocable and exposes the real property owner to a child’s liabilities and creditors. In fact, there are numerous examples of unwary homeowners who have lost their homes as a result. In addition, such a transfer to a child may have both gift tax and capital gains tax consequences!

Under the new law, the Beneficiary Deed is a simple solution to the probate problem. The deed names a beneficiary or beneficiaries to receive the real property upon the death of the title holder (or the survivor of the title holder, if joint tenants). The beneficiary acquires no interest in the property until your death and you can change or revoke the selection of a beneficiary during your life with another deed. After you die, the beneficiary (or beneficiaries) files a simple form and an original death certificate with the County Recorder and the property automatically transfers to the recipient.

If I have POD accounts and a Beneficiary Deed on my home, do I still need a Will?

Yes. Even if you’re sure that you’ve covered all of your current assets, you still need a will — or even a trust — to ensure all your assets (which may change form or interest) will be distributed as you want. In addition, everyone needs estate planning documents such as medical powers of attorney, financial powers of attorney, and living wills. An experienced estate planning attorney can assist you in determining what types of documents are best for you.

Probate Attorney Tucson and Green Valley Arizona