What to know:
- Probate is not a tax
- The purpose of probate is to prove a will is valid and allow creditors to make claims against an estate
- The two common forms of probate in Arizona are informal and formal
- Accounts and assets that have named beneficiaries can avoid probate (examples: life insurance, bank accounts, beneficiary deeds
- $75,000 of real property and/or $50,000 of non-real property triggers a formal probate of the estate, which often lasts a minimum of 6 months and potentially over one year
- If you have property in multiple states, probate might be required in each state
Probate is a common concern in Arizona when discussing estate planning. Probate is not a tax, it is a court process to:
- Review a will
- Inventory an estate
- Open an estate to claims from both creditors and omitted heirs
- istribution of the estate
Probate does not affect all estates. For estates with less than $75,000 in real property (real estate) and less than $50,000 in other probate assets, the full probate process can be avoided and a quicker process can be used.
Some assets are not subject to probate. These assets include any that are held jointly with rights of survivorship, when one person is still living and assets that already list a beneficiary, such as life insurance, IRAs, 401(k)s and bank accounts with payable-upon-death (POD) or transfer-on-death (TOD).
Real estate is the most common asset that triggers probate. If you have property multiple states, probate might be required in EACH state depending on their probate laws.
Probate differs in each state. In Arizona, full probate is a minimum of four months (the time creditors are given to make a claim on the estate) and often the process averages six to eighteen months.
Probate costs vary as well. In Maricopa County, most court fees are under $500. However, many people feel overwhelmed with the process and hire an attorney which can add hundreds or thousands of dollars to the cost.
Assets in a living trust also will avoid probate. Assets from multiple states can be put in one trust, hence avoiding probate in multiple states.
If assets are left outside of a living trust and do not have beneficiary designations, those assets may be subject to probate. If you create a living trust, it is vital to identify assets subject to probate and then take necessary action to transfer the asset into the trust.
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