Below the Radar: When an Estate’s Assets Don’t Require Probate
When a person passes away in Arizona, his or her estate typically goes through probate. In the probate process, the person’s assets are collected, any outstanding debts are paid, and what’s left over is distributed to the heirs named in the deceased’s last will and testament. If the person didn’t have a will, the assets are distributed to the surviving spouse and/or heirs. This is done under the oversight of a probate court.
Not all of the assets of a person’s estate have to go through probate, however. Some can pass to the heir without the supervision of the court. These assets may include:
- Assets held in a living trust
- Property held in joint tenancy
- Community property with right of survivorship
- Bank accounts that are payable-on-death
- Assets registered in a transfer-on-death form
- Real estate with a transfer-on-death deed
- Retirement accounts with beneficiary designations
- Contracts, such as life insurance policies and annuities, that specify a beneficiary
In addition, some estates can avoid the full probate process. Assets from a “small estate” can be transferred using a Small Estate Affidavit.
What counts as a small estate?
Recently, the Arizona Senate amended Senate Bill 1232 to enlarge the definition of a small estate. The senate increased the limit of the value of personal property (e.g. cash, bank accounts, stocks, cars, and jewelry) and real property (e.g. real estate) that can be transferred by affidavit. The limit for personal property increased from $50,000 to $75,000 and the limit for real property from $75,000 to $100,000. Both values are determined after deducting any liens against the personal or real property.
To transfer personal property of a small estate by affidavit, an heir must wait thirty days after the death of the person. To transfer real property, six months must have elapsed, no federal estate tax may be due, and the person’s funeral expenses, expenses of last illness and all unsecured debts must have been paid. More information and forms are available on the Maricopa County, Arizona Superior Court website.
If you have questions about the probate process or transferring small estates, please feel free to give our office a call.