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Probate can be laborious and pricey, so people often wonder how to avoid probate in Arizona. The process isn’t inherently bad, but it is time-consuming and has unnecessary costs.
Attempting to avoid probate is often a wise decision. Fortunately, there are ways to avoid probate in Arizona so your assets are transferred to your loved ones without any complications.
What Is Probate?
Before examining how to avoid probate in Arizona, you need to understand what it is and how it works. Probate is a legal process of administering a deceased individual’s estate. It involves validating their will, distributing assets, and settling any outstanding debts or obligations.
Probate can be a costly process for an estate. Not only are court and attorney fees involved, but executor fees are also involved. All of these expenses can significantly reduce the overall value of an estate, leaving less for the beneficiaries to inherit.
You might also seek to avoid probate in Arizona because the process is made public. This may seem uncomfortable to those who value their privacy and wish to keep things confidential.
However, there are still benefits to having this information in the public record. Probate provides legal protection for all parties involved in the estate. It helps ensure that the wishes of the deceased are carried out. That said, you can express your wishes and have them carried out without forcing your loved ones through the process.
Losing a loved one is a heartbreaking experience; dealing with that and probate’s rigid and drawn-out process can be challenging. This is another reason to avoid probate in Arizona. Proper estate planning can help you avoid the probate process.
Revocable Living Trusts
You can avoid probate by creating a trust, specifically a revocable living trust. This serves two purposes in avoiding estate taxes and probate. A revocable living trust is a powerful and versatile vehicle for transferring the ownership of your assets to a trust, which you can manage as the trustee during your lifetime.
With the proper estate planning to avoid probate, you will have you revocable living trust, power of attorney, living will, and pour-over will. All of your assets, or the assets you choose, will be given to your trust when you pass away.
With this legal document, you can ensure your assets will be distributed according to your wishes upon death, avoiding the costly and time-consuming probate process. By appointing a successor trustee to manage your living trust when you die, your assets can be passed onto your beneficiaries quickly and easily — without going through the courts.
You should also be careful when setting up a revocable trust to avoid probate in Arizona. If you have real estate, but you refinanced your home, your home could still be subject to probate. This may be because your trust isn’t properly funded. You need to ensure your property falls under your trust to avoid going to probate court later on.
This method is not only more private and cost-effective, but it also makes asset distribution faster and smoother. However, it isn’t the only way to avoid probate in Arizona; you don’t need a trust to avoid probate.
Make Use of Beneficiary Deeds
Designating beneficiaries for specific assets such as retirement accounts, life insurance policies, and investment accounts is a simple way to avoid probate. When designating beneficiaries for your retirement accounts, like your IRA or your 401k account, ensure you also add contingent beneficiaries.
Keeping your designated beneficiaries updated on these accounts is also important. By making sure your wishes are clearly outlined in these documents, you can make sure your hard-earned money and assets are used for the benefit of those who matter most to you.
Joint Ownership
Joint ownership is something that some people might overlook when it comes to avoiding probate in Arizona. Upon the death of one owner, the property is automatically transferred to the surviving co-owner without having to go through probate procedures.
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There are two types of joint ownership that could help you with this: joint tenancy with right of survivorship and community property with right of survivorship.
Joint tenancy benefits any group, and they don't need to be related to you. Upon a joint tenant's death, their ownership stake will be proportionally divided among the surviving co-owners. Community property with the right of survivorship applies to married couples and domestic partners. When one partner passes away, the other owns the entire property.
Transfer-on-Death (TOD) Deeds
Another way to avoid probate in Arizona is to use property transfer-on-death (TOD) deeds. They provide a convenient and cost-effective way to transfer real estate ownership after death. You can place stocks, bonds, and brokerage accounts in a transfer-on-death (TOD) status that will enable the beneficiaries to receive them directly after you pass away.
By completing and recording a TOD deed, you can name a beneficiary who will automatically assume property ownership upon your passing. This simple yet effective tool helps ensure that your wishes are carried out.
Payable-on-Death (POD) Accounts
With the help of payable-on-death (POD) accounts, you can ensure your bank accounts go directly to your beneficiaries. These accounts enable you to designate a beneficiary who will receive the funds in the account upon your death, without having to go through probate court.
POD accounts are an easy and cost-efficient way for families to transfer assets and provide financial security for loved ones.
Proper Estate Planning
Estate planning is an important step in ensuring your assets are protected and will be passed on to the right people.
Navigating the complexities of estate planning can be intimidating. On top of that, everyday life gets in the way, making estate planning something we often delay. That's why it's essential to consult a financial advisor with expertise and experience in this area.
At Asset Preservation Wealth & Tax, we can help you understand the legal, financial, and tax issues involved so that you can make informed decisions about protecting your estate. Access to a legal team when establishing your estate plans can help you get a clearer picture of the future.
You should have a personalized financial strategy and estate plan. This is our approach as we consider your situation, assets, family structure, financial objectives, and overall goals. With our expertise and guidance, you can have peace of mind knowing your assets are safe.
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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
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