In order to avoid
probate, it is essential that you understand what probate is and how an
estate ends up in probate.
In simple terms, probate is the process of, among other
things, determining heirship to your assets upon your death. This is a court
process that may be entirely avoidable, if only you knew how to avoid it.
See also: Probate and
The only time you really need to go through probate is when
your assets are in your individual name with no beneficiary or joint owner. If
it can be determined who is entitled to an asset by locating surviving joint
owners or designated beneficiaries, there is no need for probate. When you
cannot tell from the title to an asset who is to receive it upon your death,
then probate may be needed to make that determination.
There are ways to avoid probate, even in that situation, by
using a small estates affidavit. In Arizona, effective September 13,
2013, this can be done when the cumulative value of your personal property (less
liens and encumbrances) is less than $75,000 and your real estate (less liens
and encumbrances) is valued under $100,000.
Beneficiary designations are commonly found on life
insurance contracts, annuity contracts and retirement plans. But they may also
be found on nearly every type of bank account, investment product or security
investment. Even real estate can have a beneficiary, utilizing a beneficiary
Absent the beneficiary designation or a joint surviving
owner of an account, probate may be the only way to establish who the heirs are
for that asset. How does a court decide who the proper heir should be?
First, the court will consider who you designated as heirs
in your Last Will and Testament. If there is no Will, then the court will refer
to state law to make that determination. Another way to avoid probate is to have
assets titled in the name of a revocable living trust. Since a trust "survives"
your death, it will serve as a testamentary document, much like a will, that
designates who your heirs will be.
One big difference between a will and a trust is that a
trust does not require going through the probate process. A Last Will and
Testament, on the other hand, must pass through probate to become an effective
instrument (unless the small estates procedure is available).
Keep in mind that a Will does not avoid probate. Also
keep in mind that a revocable trust will not prevent that outcome either, unless
you have properly transferred titles to appropriate assets to the name of your