Property Transfer after Death
When someone passes away, their assets pass in one of two ways, either automatically – in a non-testamentary fashion – or through probate. Those assets that transfer without going through probate are those that already have beneficiary designations, or are owned in a manner that automatically transfers ownership to another party upon death of the owner. Some examples of non-probate assets are accounts with payable-on-death designations, life insurance policies with named beneficiaries other than the estate, property held in joint tenancy, inter-vivos trust property, and retirement accounts. Property that hasn’t been set up to pass automatically must go thru probate to determine the proper heirs and complete legal passing of title.
Probate Assets – Control of Distribution:
The distribution of probate property is directed by the person’s valid Will, or, in the case where there is no valid Will or not all of the decedent’s assets are accounted for in the Will, the state’s statutory intestate succession rules control the distribution. Arizona’s intestate succession laws direct the distribution of the decedent’s estate to his or her “heirs at law,” as determined at the date of the decedent’s death, subject to a survival requirement. The first in line to inherit are the decedent’s surviving spouse and children, including adopted children. If there is no surviving spouse, Arizona law provides for descendants to take shares per capita in each generational level, so all property will go to the children in equal shares. If any of the children have predeceased the decedent, their share of the property will then be distributed in equal shares to the descendants in the next generational level in relation to the initial decedent, and so on. If there are no lower generations, the property goes to higher generations – parents, grandparents, etc. If there are no living relatives and there is no Will, the estate goes to the state.
Exceptions – Rights that Override Devises under a Will:
There are several ways to override the direction of the Will or the state’s succession rules. A spouse may sign a written agreement, or waiver, either before or during their marriage, giving up their rights to any inheritance provided for them under Arizona law. If there is Will, but it was executed prior to the marriage and does not provide for the surviving spouse, Arizona laws provide an entitlement to a share equal to that which would be received had the decedent died intestate, subject to exceptions. A similar provision exists for children omitted in the Will, also subject to exceptions. Arizona law also provides for an $18,000 homestead allowance, $7,000 of exempt property, and a $12,000 family allowance for the surviving spouse and children. These allowances and exemptions are in addition to statutory succession rights. Rights can also be lost in divorce or by murdering the decedent, and can be voluntarily disclaimed as well.
Distribution of Property Not Clearly Directed by Terms of Will:
Sometimes, not all property is devised under a will or not all devises can be fulfilled. When this happens, Arizona probate law provides default rule for how such property is to be handled. Occasionally, specific property is devised to a particular person, but that heir or devisee can not be found. When this happens, their share is to be held either in a conservatorship or a state fund, to be claimed by that person when they when are located. There are many cases where property is either acquired after a Will has been executed and is not covered in the Will’s devises, or specific property bequeathed to someone in the Will is sold or otherwise lost before distribution of the assets. Other issues are presented where a testamentary provision fails, or where a specifically devised asset is encumbered. These issues can all be settled relying on the statutory provisions, or the Will can include prevailing directives on how such problems should be handled, whether by satisfying the devise with substitute property or rendering the devise void or any other method of solution. The terms of the Will will override the statutory default rules were there is a provision to address the problem.
Priority of Distribution:
Before any devises can be distributed, the personal representative must use the assets of the estate to settle any valid claims against the estate. Once the creditor claims have been satisfied, the remaining estate property can be distributed to the devisees, in a particular order. The order of abatement – the appropriation of the assets in the case there are not enough assets to fulfill all devises – is derived from the Will, unless the Will or testamentary plan provides no guidance, in which case the Arizona Code will apply. The default order in which bequests abate is first the property not disposed of in the Will, next the residuary devise, then the general devises, and finally the specific devises. There are also default rules controlling which property is to be used to satisfy each particular debt.
Once all charges against the estate are known, creditor claims have been settled, and the personal representative has interpreted and applied the provisions of the Will to the estate, a notice of the proposed distribution must be delivered to all interested parties, giving them an opportunity to object before any distributions are actually made. If there are no objections or challenges, the final distributions can be made and the estate can be closed.
Going through the probate process can be complicated, so it is best if you contact an experienced attorney to help you through the process.