There IS a will, Why Probate in Tucson?

Posted on November 9, 2011 by trezzalaw



There IS a Will, why do I have to do a Probate in Tucson?

There are many reasons why you may have to file a Probate case even if your loved one left a Will. There are many assets that a will does not cover.  For instance if a home was owned, and there wasn’t a beneficiary deed recorded prior to death, that home would have to go through Probate. If there was a bank account solely in the decedents name with no Deliver on Death card on file, or beneficiary listed, the funds in that bank account would need to go through Probate. In addition, if a will wasn’t properly witnessed it could be deemed void. This can happen if the Will does not have enough witnesses, if it is able to be proven that the decedent was incompetent at the time of the signing or if all of the listed attachments aren’t remaining, upon contest the will could be deemed inadmissible in Probate court.

Typically a will is for final wishes and personal property to be distributed. Assets with value over $50,000 (personal property) or $75,000 (Real Property) will need to go through the probate court verses a simple affidavit process.

Please call a local Tucson Probate Attorney today to discuss your possible probate case.

Stephen M. Trezza

Trezza & Associates

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What are the tax issues associated with the probate process?

Posted on August 16, 2011 by trezzalaw

When someone passes away, there are several tax issues with regard to that person’s estate that must be addressed.  An individual income tax return for the decedent for the current year must still be filed.  Additionally there are multiple estate tax returns that must be filed as well. The personal representative is responsible for taxing care of these tax issues, making sure all forms are accurate and timely filed.  Generally, the personal representative retains a professional familiar with estate tax issues to help them with the process.

The personal representative must make sure that individual income tax returns are filed for the decedent in the year of death and for the previous year, both at the state and federal levels.  These returns can still be filed jointly with the decedent’s spouse, though it may be easier to file individually in most cases.  Keep in mind that income tax returns may need to be filed in other states as well.  All of the decedent’s income must be tracked down and accounted for.   These generally must be filed on April 15th of the year of the decedent’s passing.

Estate tax returns also need to be filed at both the state and federal levels.  The Federal Estate and Generation Skipping Transfer Tax Return is due 9 months after the decedent’s death, although an extension may be granted if more time is needed.  If the decedent’s gross estate is less than the current estate and generation skipping tax exemptions, then no filing is necessary.  However, keep in mind that the gross estate includes both probate and non-probate property and that both must be listed on the form.

Arizona no longer imposes the “pick-up tax,” or state estate tax, so unless the legislature reinstates it, no filing or estate tax is due at the state level.  This may be different in other states so it is important to assess the relevant state’s current laws.

In addition to these, a fiduciary income tax return must be filed.  Since the estate is viewed by the government as a separate tax payer, the personal representative must file and pay any income taxes incurred by the estate, from the funds of the estate of course.

The personal representative may want the assistance of a Tucson probate attorney, as well as that of a CPA, preferably the decedent’s CPA, who will already be familiar with the decedent’s finances.  This will make the process much more smoothly and likely save the estate money in the long run.

Stephen M. Trezza, Tucson probate attorney.

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What does it mean for the Personal Representative to take custody of the decedent’s assets?

Posted on August 9, 2011 by trezzalaw

One of the duties of the Personal Representative is to take control or possession of all the decedent’ assets so that they can be accounted for and safely and appropriately managed while the estate is being administered.  This does not mean that the Personal Representative takes that assets as if they were his property until they are ready to be distributed.  Instead the assets are held and managed separately as if the estate itself were an individual. There are several steps the Personal Representative must take to do this.

A separate bank account must be opened for the estate once it has been assigned an identification number.  The decedent’s monetary assets can be collected and held in this account.  All other estate assets must also be located and taken possession of to be held safely.  When necessary, it must be ensured that these assets are appropriately insured and secured.  Also, any safe deposit boxes must be located and the contents must be listed and inventoried.  Once all assets have been collected, they must be valued as well.  This often times calls for the expertise of a qualified appraiser.  There have been instances where valuable paintings or other items have been sold for mere fractions of their value due to improper appraisal, creating huge liability problems so this is an important step.

Outstanding obligations and active services must also be taken care of during this process.  The decedent’s credit cards must be cancelled, as well as any utility services, such as phone or electric.  It is important that any deposits due are requested and obtained.  Also, any payments due on leases, mortgages, or insurance policies must be made as they come due and kept current.  Likewise, any payments on contracts due to the decedent need to be collected.

It is also the responsibility of the personal representative to file any claims on insurance policies, as well as social security or other benefits due to the decedent.  This includes things such as checking the decedent’s employment contract to see if any benefits or deferred compensation are due.  This can be an overwhelming process, but it is important that nothing is overlooked.  It is important to consult with an experienced probate attorney who is familiar with the process so they can ensure that all the decedent’s assets are located and collected.

Stephen M. Trezza, Tucson probate attorney.

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The Personal Representative

Posted on July 20, 2011 by trezzalaw

The first step in estate administration is the appointment of a personal representative – the individual, company, or group of individuals that will handle the affairs of the estate.  Once appointed, the personal representative has a fiduciary relationship and duties to the estate and the powers necessary to carry out the estate administration.  The position of personal representative is a very important role and carries much responsibility.

Priority of Appointment:

When there is more than one person seeking appointment for the personal representative position, there is an order of priority that is used to select the appropriate person.  This order is applied the same in both formal and informal probate proceedings.  If the person is not otherwise disqualified, the order is as follows: (1) the person nominated by the decedent in his or her probated Will, (2) the surviving spouse who is also devisee under the Will, (3) other devisees under the Will, (4) the surviving spouse even if not a devisee, (5) other legal heirs of the decedent, and finally, if no one else fills the position within 45 days after death, any creditor may fill the position, or a public fiduciary may be appointed.  If there are multiple parties with the same level of priority seeking to fill the position, formal proceedings will be necessary to make the appointment.

Notice of Appointment:

Once the application to serve as personal representative has been approved, the appointed personal representative must provide proper legal notice by mail to all interested parties of the appointment, along with a copy of the probated Will, within 30 days of their appointment.  An objection can be made to the appointment only in formal probate proceedings.  Each heir that has received notice then has 4 months to contest probate.  If the personal representative fails to provide notice to any heir, the personal representative is personally liable for damages suffered by the heir caused by lack of notice.

Duties and Powers:

The office of personal representative carries with it fiduciary responsibilities equivalent to the standards of care and duties of accounting applicable to trustees.  In general, the personal representative has the duty to settle and distribute the estate in accordance with the terms of the probated Will and the Arizona state code, expeditiously and efficiently, consistent with the best interests of the estate.  All authority granted must be used only as in the best interests of the successors of the estate.  Some such duties include preparing and filing an inventory, taking possession of assets, making proper filings, and keeping appropriate parties apprised of progress.

The personal representative will have the same power over the property of the estate as would the absolute owner of the property.  However, this power is to be exercised only in trust, for the benefit of the creditors and others interested in the estate, but may be exercised by the sole action of the personal representative, without notice or court action.  The personal representative also has the same standing to sue as the decedent had at the time of his or her death, so long as the cause of action survived the decedent’s death.  The personal representative essentially steps into the shoes of the decedent and has the power to take any actions the decedent could have taken while alive.  Some such powers include performing contracts, receiving assets, selling or leasing assets, investing, purchasing insurance, paying creditors, distributing assets, and making repairs or improvements. 

The personal representative may hire outside parties, such as appraisers, attorneys, or investment advisors, as necessary to assist them in carrying out their duties.

Compensation:

The personal representative is entitled to reasonable compensation for his or her services.  If there is a provision of the Will providing for inadequate compensation, the personal representative may renounce such consideration and instead be eligible to receive other reasonable compensation.  A personal representative may also renounce the right to compensation altogether.  If it is determined by the court that a person has received excessive compensation, the court may order an appropriate refund to the estate. 

The personal representative is also entitled to make any necessary disbursements or pay fees and expenses from the funds of the estate if they are reasonably incurred in administration of the estate.

Termination of Appointment:

Termination of the appointment will end the rights and powers of the appointment.  The appointment will be terminated automatically in the case of death or disability of the serving personal representative or can be terminated voluntarily by resignation, or involuntary by removal.  To terminate by resignation, the personal representative can resign either one year after the closing statement has been filed, by a court order closing the estate or by filing a written statement with the registrar.  In any case, if the estate remains open and no successor petitions to fill the position, the termination will be effective.  A personal representative appointment can also be terminated by removal for cause if it can be shown to the court that it is in the best interest of the estate.  If the appointment is validly terminated in any manner, the personal representative is still not discharged from their liabilities and fiduciary duties to the estate.

Contact us today to discuss your Probate Case. 520-327-4800

Stephen M. Trezza

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Are Holographic Wills Allowed In Arizona?

Posted on July 14, 2011 by trezzalaw

What is a “holographic will”? Are they allowed in Arizona?

A holographic Will (also known as a “handwritten will”) is a Will that has been handwritten and signed by the testator. While many wills require that several witnesses be present, with a holographic Will there is no requirement that any witnesses be present. In Arizona, holographic Wills are permitted as long as they meet certain requirements.

The first requirement is that the person making the holographic will must be above age 18. Minors are not allowed to make holographic wills. Second the person must be of “sound mind”. What does of “sound mind” mean? While the definition depends on the state you are in, it generally requires that you are: (1) aware of the actions you are taking; (2) know what property you own; (3) can identify family and close friends;  and (4) understand how your property will be distributed under your Will. If you can do all of these things you are of “sound mind.”

Third, the will-maker, also known legally as the “testator”, must place his or her signature on the Will in order for the Will to be valid. This means you must physically sign the Will in your handwritten signature. Make no mistake, you must sign the actual document. Signing the outside of an envelope that contains the holographic Will is not sufficient to meet this requirement. Furthermore, printing your name will not suffice.  Finally, there must be evidence that the testator actually created the will.  Proof of this can be made through witnesses, handwriting experts, and any other method that proves the testator made the will.

What is NOT required for a Holographic will? As previously mentioned, a holographic Will does not require the signature of any witnesses. Furthermore, although it is probably advisable, you are not required to put any date on your holographic Will. Also, while pre-printed forms may be used to help the testator, all of the material provisions of the holographic will must be in the testator’s handwriting. For example if you want to leave your spouse $10,000, you must state this in your handwriting and not on a preprinted form.

Overall “holographic wills” are most often used in emergency situations where a regular Will has not been made. Although it is probably advisable to go through the formalities to create a regular Will witnessed by several people, a validly created holographic Wil has the same force and effect of a regular Will. The drawback is that while you can be almost certain that a regular Will properly created will be enforced, you run a greater risk a holographic Will of making certain errors which may invalidate your Will.

For more information on wills and probate matters please contact our firm at (520)-327-4800

Stephen M. Trezza, Tucson Probate Attorney

http://fileprobateinarizona.com/

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What assets must go through probate? Is it possible to avoid it altogether?

Posted on June 28, 2011 by trezzalaw

A person’s assets can be divided into two groups:  probate assets and non-probate assets.  Probate assets are those which most go through the probate process in order to pass title, while title to non-probate assets passes automatically by operation of law or contract.  If a person died with only non-probate assets, probate would clearly be unnecessary, though this is very rare.  More likely, if a person died with primarily non-probate assets and very few to non-probate assets, it is possible that the probate process may be avoided.

Non-probate assets pass automatically because there is a contract or designation that says who the asset will go to upon that person’s death.  There are various ways this can be done.   Common examples are life insurance policies, retirement accounts, or other account that have a specific living beneficiary named.  Similarly, accounts with POD (payable on death), TOD (transfer on death), or ITF (in trust for) designations will automatically pass to the named party.  Yet another example is property held as joint tenants with right of survivorship.  Upon the death of one tenant, the other automatically receives their share.  

Assets which do not contain information directing their transfer upon death are probate assets.   Examples of such assets are any accounts, stocks or bonds, or other investments that are help in the decedent’s name alone and have no beneficiary designation.  The same goes for real property the decedent holds title to solely or as a tenant in common.  Also, the decedent’s one-half share of all community property must go through probate.  There are also instances where property with a beneficiary designation will go through probate, where the decedent’s estate has been named as the beneficiary.

Still, even where there are primarily non-probate assets, there are filings that must be made and accounting and other work that must be done.  A Tucson Probate Attorney can help you locate all the decedent’s assets, determine which category they fit into, and help you take the appropriate actions to ensure clean passing of title and compliance with state and federal regulations, whether probate is necessary or not.

For more information please contact our firm.

Stephen M. Trezza, Arizona Probate and Bankruptcy Attorney

(520) 327-4800

http://fileprobateinarizona.com/

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How should the estate be distributed if the heirs are young children?

Posted on June 27, 2011 by trezzalaw

There are special rules to handle situations where minor children inherit property in order to protect their interests. These rules also apply to incapacitated adults.  Whether or not a child is a minor is determined by the probate statutes.  In Arizona, a child below the age of 18 is a minor.  Children are all treated the same, even if adopted and regardless of the marital status of the parents.  There are a few ways property can be held by minor children:  in a trust, under a conservatorship, or in a special trust for minors with a custodian. 

If the assets go outright to the minor children, then is it necessary to have conservatorship established.  The court will appoint a conservator and these assets will then be held by the conservator in a fiduciary capacity for the benefit of the minor.  Due to the need to protect the child’s interests, there are many regulations in place to ensure the safety and competent handling of the assets.  For example, the conservator’s actions will be under court supervision and they will be required to file annual accountings and possibly put up a bond.  This can be costly and time consuming and is generally not the favored approach to handle the child’s assets.

The more preferable route is to create a trust to hold the assets, thus eliminating the costs of court supervision and annual accountings.  There are different types of trusts that may be used.  The Will may have provided for a testamentary trust which is already set up to hold the assets.  In this case, the terms of that trust will govern the treatment and management of the assets and multiple children may be beneficiaries of the same trust.

There is also another type of trust allowed for minors, referred to as an UTMA trust.  The Arizona Uniform Transfers to Minors Act provides for a special type of trust with special protections and requirements.  The custodian must be chosen very carefully because although they have the same fiduciary duties as the conservator has, there is no court supervision ensuring compliance.  There are slight differences in rules here as well.  If assets are held in this type of trust, a child is considered a minor until 21 years of age, rather than 18 – meaning they will not be able to withdraw the assets until that age.  Instead, a custodian will have the ability to make distributions to the child as they see fit.  Also, there can be only one beneficiary per trust.

The best way to handle the inheritance of a minor child is very fact specific and will depend on several factors.  It is advisable to consult with a Probate Attorney to determine how to best handle your particular situation.

Stephen M. Trezza, Arizona Probate and Bankruptcy Attorney

(520) 327-4800

http://fileprobateinarizona.com/index.html

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How does a disclaimer work and why might I want to disclaim property left to me?

Posted on June 22, 2011 by trezzalaw

A disclaimer is essentially a voluntary release of your legal claim to property.   The disclaimer is a very important tool for estate planning after the fact.  It can be used in many ways, particularly to avoid unnecessary tax and provide creditor protection.   Other uses include distribution of family business interests or correction of documents. 

When property is disclaimed, it passes to the next rightful heir as if the person who made the disclaimer had predeceased the other heirs.  A bequest can be disclaimed either in whole or in part, and any type of interest can be disclaimed, even if there is a limitation or restriction imposed on the transfer of such property.  

For a disclaimer to be valid, it must be in writing, declare the person that is disclaiming the property, describe specifically the property or interest that is being disclaimed, and be signed.  The disclaimer then must be either delivered or filed, depending on the property disclaimed.  Once the disclaimer has been delivered or filed, it becomes irrevocable. 

A disclaimer does not create any transfer or assignment from you.  In fact, you must never have accepted, taken ownership of, or acted upon any property, interest, or power over the property or that interest cannot be disclaimed.  You cannot receive any benefit of the property or a disclaimer will be invalid.  Even allowing the assets to pass through your account will trigger this so you need to be extremely careful in how you treat the bequest.

The most common use of the disclaimer is for tax purposes, generally allowing property left to the decedent’s children to pass directly to the grandchildren instead.  This can avoid gift tax, future estate tax, and even generation-skipping tax in some situations.  This adds up to a significant amount in tax savings in many cases and is often an important part of the decedent’s estate plan.  It is also very useful if the parent has significant debt and a significant portion of the bequest would go to pay off the recipient’s creditors.  A disclaimer will allow this property to pass to other heirs without ever being subject to that person’s creditors.

Because the disclaimer is such an important tool, but is also irrevocable once used, it is important that it be handled correctly the first time.  The assistance of a qualified probate attorney with the disclaimer process can be incredibly valuable, ensuring the best use of this tool to keep as much of the property away from creditors and avoid tax where possible.

Stephen M. Trezza, Arizona Probate and Bankruptcy Attorney

(520) 327-4800

http://www.filebankruptcyinarizona.com/

***The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

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What happens to money or property that should be the decedent’s but is held by someone else at the time of their death?

Posted on June 20, 2011 by trezzalaw

There are various situations where property of the decedent may be held by another party, but it is nonetheless still the decedent’s property and will pass to his or her heirs along with their other property.  This property can generally be claimed by presenting an affidavit to the property holder, who must then turn it over or face legal recourse.

        One such situation is when the decedent has earned wages, but has not yet been paid.  In this case, the decedent’s surviving spouse may demand payment of wages from the employer simply by presenting an affidavit, so long as these wages are less than $5,000.  This affidavit must state that the person is the surviving spouse of the decedent, that there is no personal representative at the time, either by pending application or already appointed, and that the estate has not been closed for over a year.  If the personal representative has been formaly discharged, this also satisfies the criteria.  This affidavit can only be presented by the decedent’s surviving spouse.

In the case of other personal property being held by a third party, an affidavit can be presented after thirty days have passed since the death of the decedent and the value of the property does not exceed $50,000.  Any person in possession of the decedent’s tangible personal property must then deliver the property to the person claiming to be the rightful successor of the decedent in the affidavit. This can be any successor entitled to receive the property, not just the surviving spouse as is required with wages.  This affidavit must state that thirty days have passed since the decedent’s death, that there is no personal representative at the time, either by pending application or already appointed, that the estate has not been closed for over a year, the value of all the decedent’s personal property does not exceed $50,000, and the successor is entitled to receipt of the property.

If any of these criteria cannot be met at the time the affidavit is to be presented, then the property cannot be retrieved by affidavit and the formal requirements of the probate system must be followed to retrieve the property.

Steven M. Trezza, Arizona Probate and Bankrupcty Attorney

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If there was a prenuptial or postnuptial agreement in place, as the surviving spouse, am I still entitled to certain property as the decedent’s spouse?

Posted on June 16, 2011 by trezzalaw

Arizona law provides for homestead allowance, family allowance, and exempt property rights to provide for a decedent’s spouse and family in the case they are not properly provided for in the Will.  However, a person may waive these rights, whether entirely or only to certain portions, by written agreement either before or after marriage. 

There are a few requirements that must be met in order for the pre or postnuptial agreement to be recognized and enforceable.  First, it has to be signed voluntarily by both parties.  Any signature obtained by fraud or duress or any other involuntary manner will not be valid.  Further, the parties must have both fairly and reasonably disclosed their debts and assets to the other party.  If one party grossly misstated, intentionally misled, or hid significant assets from the other spouse at the time the agreement was made, it will not be valid.  Finally, the agreement cannot modify or eliminate spouse support rights that, if enforced, would leave the spouse in a financial state by which they would become eligible for public support and funds. 

There are additional requirements, beyond those required for the pre and postnuptial agreements.  relating to the waiver of the allowances and exempt property rights specifically.   Any waiver of these rights cannot be unconscionable either at the time the wavier was executed or prior to its execution.  This means that the spouse waiving their rights must have either had, or been able to reasonably obtain knowledge of their spouses assets or debts, and voluntarily and expressly waived those rights thereto.   Also, for these statutory spousal rights to be waived, the waiver must clearly and expressly do so for each right.  A general waiver of all rights will not work.  The spouse must be aware of just what rights they are waiving.

There are also other types of contracts that are enforceable relating to the Will or devise of property that can supersede the terms of a Will, if they meet the specific requirements to do so.  A qualified probate attorney can help you determine whether or not a prenuptial, postnuptial, or any other type of agreement is enforceable and, if so, to what extent.

For more information please contact our firm at (520) 327-4800

Stephen M. Trezza, Tucson Probate and Bankruptcy Attorney

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