Probate has traditionally
been defined as the court procedure by which a will is proved to be valid or
invalid. In current usage, the term probate has been expanded to refer to
the legal process wherein the estate of a decedent is administered. In Arizona, there are
several ways to proceed in the handling of an estate. Basically, an
estate may be handled as a single supervised administration or as a series of
separate proceedings, which may be either “formal” or “informal.”
In the majority of cases, the administration of one’s
estate is no longer the difficult process it once was. Arizona law provides for a flexible system
for the administration of estates, which means there are several ways to
proceed in the handling of an estate. The procedure used will be
dependent upon the nature of the estate and problems anticipated in the
handling of the estate, if any.
As mentioned, an estate may
be handled either as a single, supervised administration or as a series of separate
proceedings which may be either “formal” or “informal.” Supervised
administration, reserved for more complex estates or unusual estates where
supervision by the court is found to be necessary under the circumstances or
where the will expressly directs supervised administration, is the exception
rather than the rule and is rarely used.
The basic philosophy of the probate and administration
sections of Arizona
law is to minimize court involvement. Therefore, the personal
representative has full power to administer the estate, including the
collection of assets, payment of claims, and distribution of the net estate to
the successors of the decedent, without resorting to court order except where
interested persons or the personal representative petitions the court.
Even actions requiring court involvement, for example probating the will to
give it official status, appointing the personal representative, and closing
the estate may be accomplished informally by the approval of a court officer called
the Registrar without formal hearing and without advance notice. Arizona law provides for
formal proceedings where an informal proceeding is not available.
An informal proceeding does not have the same binding
effect as an order in a formal proceeding, but it does have specified legal
consequences which can be terminated only by court action upon the petition of
an interested party in a formal proceeding. An informal probate or
appointment can be confirmed later in a formal proceeding brought by an interested
party. For example, a will may be informally probated and a personal
representative appointed on application of the spouse who is named as personal
representative. A dissatisfied heir might contest the probate by
petitioning in a formal testacy proceeding, or the spouse might anticipate such
a controversy and file a petition in a formal testacy proceeding as soon as
informal probate has been completed. Either way, the informal probate
would establish the will temporarily, and the formal testacy proceeding would
adjudicate finally whether the informal probate should be confirmed or set
aside.
An
informal probate or appointment generally does not require notice in advance
and is initiated by an application to the Registrar. The Registrar acts
on the basis of specified findings, and action by the Registrar has binding
legal consequences unless and until set aside in a formal proceeding.
Arizona law also
provides for summary administration of some estates where appropriate. If
the value of the entire estate does not exceed the allowance in lieu of
homestead, exempt property, family allowance, costs and expense of
administration, reasonable funeral expenses and reasonable medical expenses
from the last illness, the personal representative may distribute the estate
without giving notice to creditors.
The
most urgent issue in the administration of an estate is to have a personal
representative appointed. Because an informally appointed personal
representative has the same powers as though appointed formally, and because
informal appointment can be obtained by application to the Registrar, there is
ample reason for every estate to be opened by the informal process if
possible. Prior to appointment, a person named personal representative in
a will may carry out written instructions of the decedent relating to the
decedent’s body, funeral, and burial arrangements. The acts of a
nominated personal representative which are beneficial to the estate and were
conducted prior to his appointment are given the same effect as those occurring
thereafter. A personal representative is entitled to reasonable
compensation for his or her services.
The Probate Process in Five Parts
When
I first meet with clients who are serving as personal representative of their
loved one’s estate, I give them a road map of the probate process and discuss
any potential problems they may anticipate. While I go into more detail
regarding the process when speaking with clients, I generally break the process
down into five parts for ease of understanding. Please be advised that
every estate is unique and the following is only a general outline of the
informal probate procedure.
The first part of the process is the drafting and filing of the required documents for the personal representative to receive their “Letters of Personal Representative.” Informal probate in Arizona is a simplified process that allows a qualified personal representative to be appointed without the delay of the hearing process and provides the personal representative the ability to administer the estate with little, if any, court involvement. Formal proceedings are required to appoint a personal representative in certain situations such as when there is a person with a higher order of priority who has not renounced or waived their right by appropriate writing filed with the court; if a priority is shared by two or more persons, as devisees or heirs, and one or more of them has not renounced or concurred in nominating the person whose appointment is applied for; or if appointment is sought by a person who does not have any priority, the court shall determine that those having priority do not object to the appointment, and that administration is necessary.
The second part of the process involves providing notice to creditors of the estate by providing actual notice to known creditors and by publishing notice in a newspaper of general circulation for any unknown creditors of the estate.
The third part of the process involves preparing an inventory of property owned by the decedent at the time of his or her death, and the hiring of an appraiser to assist in determining the value of the assets, if necessary. Creditors will begin to present their claims, the home of the deceased may be sold, the personal representative will begin collecting, securing, and documenting the deceased’s assets and will provide an inventory of those assets to the deceased’s beneficiaries, and partial distributions may be made to the beneficiaries of the estate if prudent. The personal representative will also perform or refuse performance of the decedent’s contracts that continue as obligations of the estate, as he or she may determine under the circumstances. Dependent upon the nature of the decedent’s estate, the personal representative may invest estate funds; purchase, dispose of, or sell assets; make ordinary or extraordinary repairs or alterations in buildings or other structures; vote stocks or other securities in person or by general or limited proxy; purchase insurance; effect a fair and reasonable compromise with any debtor or obligor, or extend, renew, or in any manner modify the terms of any obligation owing to the estate; pay debts and expenses of administration; continue a business; and employ persons, including attorneys, auditors, and investment advisors to advise or assist the personal representative in the performance of his or her administrative duties.
At this point, the personal representative will have a good understanding of the value of the estate. The fourth part of the probate process generally involves the payment of valid claims, handling of any tax issues, and distribution of assets to the decedent’s beneficiaries. The distribution checks are mailed to distributees of the estate by certified mail, along with a “Receipt of Final Distribution” for signature. Unless a personal representative is certain the decedent’s estate will be solvent, it is unwise to pay any creditors or distribute any assets until the four month time for presentation of claims has run.
The final part of the administration of one’s estate involves the closing. The personal representative may close an estate informally by filing a verified statement with the court no earlier than four months after the date of original appointment, unless prohibited by court order, and except for supervised administration proceedings. The personal representative must prepare a final accounting and this accounting must be sent to all distributees affected by this accounting. A “Waiver of Formal Accounting and Release and Consent to Discharge Personal Representative” is sent to all distributees of the estate, along with the accounting. This document states the distributee is entitled to a formal accounting but, instead, accepts this informal accounting which has been prepared by the personal representative or his or her attorney. The “Closing Statement” is signed by the personal representative and is then filed with the court.
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