Monday, August 1, 2022

An Overview of Probate Law in Arizona

          

        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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Tuesday, July 12, 2022

Obtaining a Will That Has Been Stored in a Safe Deposit Box


        How does a named personal representative (that is, one who has been nominated as personal representative in the deceased’s Will) obtain access to the decedent’s Will when the Will is locked in a safe deposit box at a bank and the only person allowed access to the safe deposit box is the decedent?  Arizona Revised Statutes 6-1008, the text of which I’ve provided below, provides a remedy for this situation.  Essentially, when a person dies, two employees of the bank may open the safe deposit box for a person who claims to be interested in the contents of the safe deposit box.  For example, a named personal representative in a Will located in the safe deposit box would qualify as an “interested person” under the statute.  Employees of the bank may also remove any life insurance policies and deliver them to the beneficiaries named in the policies.

6-1008. Procedure on death of lessee

        In the event only one lessee is named in the lease of a repository and the lessee dies, or on the death of last surviving lessee under a tenancy in two or more names, the repository may be opened by two employees of the lessor in the presence of any person who presents himself and claims to be interested in the contents. The employees may remove any document which appears to be of a testamentary nature and deliver it to any person named in the document as executor or to a clerk of the superior court. The employees may also remove any policies insuring the life of the deceased lessee and deliver them to the beneficiaries named in the policies. All other contents of the repository shall be retained by the lessor and shall be delivered only to the person legally entitled to them.

 

Disclaimer 

Friday, July 1, 2022

The Importance of Complying With Statutory Requirements When Providing Notice to Creditors

      

        Pursuant to A.R.S. § 14-3801, the personal representative of an estate must publish a notice to creditors once a week for three successive weeks in a newspaper of general circulation in the county announcing the appointment, the personal representative’s address, and notifying creditors of the estate to present their claims within four months after the date of the first publication of the notice or be forever barred.  In addition, a personal representative shall give written notice to all known creditors of the personal representative’s appointment.  The notice shall also notify all known creditors to present their claims within four months or be forever barred. 

        In BMO Harris Bank NA v. Espiau 1 CA-CV 20-0460, the Arizona Court of Appeals, Division One, held the statute requiring notice for claims against a decedent’s estate must be strictly complied with.  If a notice does not include all required information, including the deadline for presenting claims, the time limit does not begin to run.  This is true even if the recipient of an incomplete notice is a sophisticated and experienced bank.  

 

Disclaimer 

Tuesday, June 28, 2022

Rosenberg v. Sanders

 

        In Rosenberg v. Sanders, the Arizona Court of Appeals, Division One, held a grantor’s alleged statements after executing a beneficiary deed may provide relevant and admissible evidence of undue influence.  The trial court did not consider the statements because it applied the eight non-exclusive factors set forth in In re McCauley’s Estate.  The Court of Appeals held the statements should have been considered on summary judgment and, when so considered, along with evidence of the grantor’s earlier state of mind, the record had just enough evidence to create a factual dispute and defeat summary judgment.

The full opinion may be read here:

Rosenberg v. Sanders 

 

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