What is Probate?
Probate is the process of proving a will. This is done in the superior courts of the various counties in the state of Arizona. A probate requires the finding of the original copy of a person’s will, along with the other documentation and paperwork. If they do not have that original copy, then even though somebody has prepared a will, it’s presumed that the person had destroyed the original copy because they didn’t like it. Unless it can be shown that it was destroyed inadvertently, like in a house fire or something, that’s the presumption, in which case they’re said to have died “intestate,” which is somebody who dies without a will.
But the probate process requires the filing of a legal action in the superior court, which includes the paying of a filing fee (somewhere between $350 and $400). It requires getting approval of the court for the appointment of a person to serve as a personal representative. In other states it’s called an executor, but it’s the same function.
The purpose of the probate process is to prove the will, meaning prove that it is in fact the person’s will, then to carry out the stated purposes within the will. If a person has a will, then it says who they want to be their personal representative. If that person is available, the court will ordinarily appoint them unless somebody else objects and has good cause why that person shouldn’t be the personal representative. If the person does not have a will, the Arizona statutes basically spell out how an estate is to be distributed. Otherwise, in a will, you can leave your money to whomever you want. Now, if you are not careful in making your will, others can make claims on your estate. For example, if you have a child and you fail to mention that you’re excluding them or that you’re only giving them a certain amount of something from your estate, that child could make a claim that said that you forgot about them, and they could be recognized as a pretermitted heir. Therefore they have a right to a certain portion of your estate.
Is estate planning about avoiding probate or streamlining it?
It’s a little of both. Basically, the probate process usually ‑‑ not always ‑‑ only takes effect for a married couple when the second one of them passes away. That’s because most married couples own their home in joint tenancy with right of survivorship. When the first one dies, the other one owns the home outright. There’s no need to do a probate at that point, because the home is owned by the surviving joint tenant. Most couples have joint bank accounts that are set up as joint tenancy accounts, so when on dies, the other owns the account outright.
So you’re saying there can be some clean up involved, even in a community property state.
There can be, yes. There can be clean up involved, but ordinarily probate isn’t required when the first of the husband/wife couple pass away. It’s when the second one passes away and their house or their real estate is no longer in joint tenancy with other people. If the bank accounts don’t have pay on death provision or something, all of that needs to be probated.
Sounds like it’s more about preparing for it and smoothing the process.
If you only have a will in most situations you’re not going to be able to avoid the process. So it is smoothing it out in that sense. One of the major issues with the probate process is where a couple has minor children, and that results in a situation, if they’re both killed in a common disaster, a car crash or a plane crash or something like that, then ‑‑ if they’re leaving their estate, usually a husband would leave everything to his, wife would leave everything to husband. But if they’re both gone, then they leave everything to their children.
If those children are under age 18 and they are to inherit $10,000 or more, then it has to go into a conservatorship. The probate process is necessary to transfer the assets to the child. The child as a minor can’t own them outright, so they have to go into a conservatorship.
In estate planning, then, would that couple have made their wishes known in some formal way such that it would not be left to the discretion of the probate process?
If they have created a revocable living trust, then instead of the money going directly to the kids, which requires the conservatorship, it would be held in trust for the benefit of the children. And the trustee that the couple had named as an alternate when they were both gone would then manage the money and use it for the health, welfare and education of the children. Under those circumstances, the trust agreement can specify that the children don’t take control of the money until they’re at a much more mature age. By law, they become an adult at 18, so if property was placed in a conservatorship, then once the children turn 18, it gets distributed outright. That in and of itself is one of the things that is most troubling for parents — the concept that their 18 year old child is going to have control of everything they leave them when they turn 18.
Most 18 year olds are not really mature enough even if it was $100,000 going to an 18 year old ‑‑ that’s usually a good way to see $100,000 disappear shortly.