Probate Avoidance
Arizona Probate, Estate & Trust Administration
Probate and estate administration are the procedures used to transfer a deceased person's assets after their passing. When there has been no prior planning to avoid probate, the state mandates a probate court proceeding if the deceased individual was a resident or owned assets within the state. Probate can take two forms: supervised or unsupervised. In an unsupervised probate, the designated estate administrator assumes responsibility for managing assets, settling debts, filing necessary tax returns and court documents, and ultimately distributing the estate's assets. However, the court may opt to oversee the process at any point, typically in response to concerns raised about the estate's administration.
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Estate Planning Strategies to Bypass Probate in Arizona
Due to its potential for lengthiness, expenses, and public exposure, many individuals opt to circumvent probate. Several legal approaches are available to transfer property to another person after one's demise, all while bypassing the probate process.
Joint Tenancy & Tenancy by the Entirety: Designating another individual as a joint owner or establishing a 'joint tenant with rights of survivorship' arrangement for your assets enables the seamless transfer of your property to them upon your passing, bypassing the need for probate. Nevertheless, it's important to be aware of potential drawbacks to this strategy, such as exposing these assets to any claims, including legal actions against the co-owner, and making them vulnerable to the co-owner's creditors, all while you are still alive and may intend to utilize the assets yourself.
Beneficiary Designations: In Arizona, you have the option to incorporate Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations for your bank accounts. Unlike joint tenancy, these beneficiary designations enable you to transfer property exclusively upon your demise without relinquishing current ownership. However, it's essential to be aware of certain drawbacks. Utilizing beneficiary designations can present challenges in achieving an equitable distribution of property among your heirs. Additionally, it's important to understand that if you have beneficiaries designated on your assets, those assets will be distributed to the named beneficiaries upon your passing, regardless of the provisions in your last will and testament.
Revocable Living Trust: A Revocable Living Trust is a legally binding document that empowers you to create a distinct entity, the trust, which assumes legal ownership of your assets while you are alive. You can designate trustees to oversee these assets in accordance with the trust's specifications. Typically, you serve as the trustee during your lifetime, managing the assets for your own benefit. In the event of your incapacity or passing, the trust's provisions name a successor trustee, who then assumes responsibility for managing or distributing the assets held within the trust. A well-crafted trust can achieve various objectives, including providing guardianship, avoiding probate for your estate and preserving assets for your heirs, safeguarding against marital and creditor claims.
Arizona Estate and Trust Administration
While a well-prepared and adequately funded trust typically circumvents probate and doesn't necessitate filing with the probate court, the administration of a trust entails several crucial steps. These include contacting beneficiaries, consolidating, appraising, and managing assets, notifying potential creditors, settling debts, taxes, and final expenses, and ultimately distributing any remaining income and assets in accordance with the trust's terms. One challenge arises when successor trustees may lack the time, resources, and expertise to personally oversee this process, leading them to seek assistance from legal, accounting, and investment professionals. To alleviate the burden of locating qualified assistance for trust administration, we are delighted to offer guidance and support to your appointed trustee. This ensures your trust remains under the care of someone you can trust, with the assurance that they will receive the necessary assistance during the administration process. We invite you to contact our office to arrange a consultation, whether we were the original estate planning company you worked with or not.
