Probate

Disgruntled family members can dispute the will, which will drag out the process. There will also be court fees and attorney’s fees to pay, so the longer an estate spends in probate, the more expensive it will be. Probate will usually take at least 6 months to complete, but it can take far longer to complete for larger, more complex estates with several disputes. Probate matters are public record, so many people who plan their estates do so to maintain their privacy.

Arizona Estate Planning Tips to Avoid Probate

No matter your age or current health, it’s probably a good idea to create an estate plan if you haven’t already. This is your opportunity to leave treasured possessions and financial support for the people that you love. You can also use your estate plan to endow charitable organizations, name a legal guardian for your minor children, and more. Proper planning can also help reduce the amount deducted from your estate due to taxes, fees, etc. Another advantage estate planning offers is the chance to reduce the time the estate spends in probate, or eliminate the need for probate altogether. Read on to learn more about how you can strategically plan your estate to avoid probate in Arizona.

How Much Does an Estate Have to be Worth to Go Through Probate in Arizona?

In Arizona, certain estates can bypass the probate process using a small estate affidavit. The court will excuse small estates from probate based on the value of real property, or real estate, and personal property, which is just about everything else. To qualify for a small estate affidavit, the estate must have less than $100,000 in real property and $75,000 in personal property. Estates that exceed these limits will need to be executed with the probate court’s supervision.

I Have a Will – Do I Still Have to Go to Probate Court?

Right of survivorship allows you to own property with someone else.  It is as it states, the surviving owner automatically owns the property when the other owner dies.  Using joint ownership is a good way to avoid probate in Arizona.  Right of survivorship on your assets allows you to avoid probate in Arizona.

Another way of avoiding probate in Arizona when it comes to your vehicles would be to register your vehicles with a “Transfer on Death” registration on your Arizona registered vehicles. Using this method, no probate proceedings will be necessary in the event of your death.  The beneficiary of a Transfer-on-death vehicle will automatically inherit your vehicle after your death.

A payable-on-death designation on your bank accounts, the beneficiary can claim the money from the bank upon your death.  This also is a way of avoiding probate in Arizona.  You still control all the money in your account and can spend it all if you wish.  The designator does not have access to your monies using a payable-on-death designation for your bank accounts.

Give gifts while you’re still alive

If you already know you want to give certain assets to certain people, you may want to consider giving them away before you pass. Through gift giving, you may be able to reduce the total value of your estate so that it falls within Arizona’s small estate limitations. Of course, you should keep enough of your estate to maintain a comfortable lifestyle. You may also want to avoid giving gifts valuable enough to trigger tax liability. Arizona is one of many states that doesn’t have a gift tax, but your gift could still be subject to federal taxation. You can gift up to $15,000 to each recipient per year without paying federal gift taxes. So if you have three children, you can gift each of them up to $15,000 per year without paying taxes.

Hold your property in a joint tenancy

If your property is titled as a joint tenancy with right of survivorship, it will transfer to that beneficiary automatically when you pass away. This means that it will avoid the probate process, and the property’s value won’t count towards your estate’s value for small estate affidavit purposes. You can use this method on not just your house, but your car, motorcycle, bank accounts, and more. Keep in mind that the beneficiary will have the right to take or sell the property during your lifetime, so you should only use this method with someone who is trustworthy and understands the game plan.

Contribute to charitable organizations

If you’re planning on leaving some of your estate to charity when you pass away anyway, you might as well start before that happens. You can donate and give gifts, or you can create a charitable trust. Not only can this help your estate avoid probate, but you may also be able to use contributions towards an income tax deduction.

Create a POD, or payable on death, account

You can create a new payable on death account, or many types of accounts can be amended to be payable on death. You will choose a beneficiary, and if desired, an alternate beneficiary for the account. The beneficiary won’t have access to the account until you pass away.

Use a transfer on death, or TOD, account

This tool is similar to a payable on death account. Unlike several states, Arizona allows for the use of TOD accounts. This is more commonly used for stocks and bonds rather than bank accounts.

Use a family LLC or LP

Creating a family limited liability company or limited partnership is a creative and complex way to avoid probate. This method involves transferring ownership shares of the company to younger family members. While assets transferred this way still have to go through probate, it can help you avoid estate and gift taxes. This also allows you to maintain control over the asset until you pass away. However, this method can be more complicated to use due to its complexity, and your beneficiaries may be left dealing with the company after your death.

Place money or assets in a living trust

This is one of the most popular ways to avoid probate. You can use either a revocable or irrevocable living trust. Property that is in a trust doesn’t belong to the estate, but the trust itself. This can make it easier for your estate to fall within Arizona’s small estate limitations. A revocable trust is one that can be canceled while the grantor is still alive and of sound mind. An irrevocable trust can’t be canceled after valid execution. A trustee will control the asset until your death, when it is transferred to the beneficiary. You can serve as the trustee of a revocable trust, but not an irrevocable trust.