August is National Wills Month - Who Knew?

 

        You can take care of a number of issues with a will.  Particularly for young couples, one of the most important reasons for having a will is to nominate a guardian for their children should they die while their children are minors, as well as provide for adult supervision of any property left to their minor children.  If you have not executed a will in which you have nominated a guardian for your children, the court may step in and appoint someone.

          By having a will, you can not only choose who is to receive your property when you die, but you can also name an alternate beneficiary or beneficiaries if your first choice fails to survive you.  In addition, you can choose a personal representative to carry out your wishes.  If you die without a will in which you’ve named a personal representative, the court will appoint one.

          When a person dies without a will, they are said to have died “intestate” and their property is distributed pursuant to Arizona’s statutes of intestate succession.

Types of Wills Recognized by Arizona Law

          The Arizona Code recognizes holographic wills, attested wills, self-proved wills, and electronic wills.  To be valid, a will must comply with the execution formalities of either a holographic will or an attested will.  A holographic will does not require witnessing, but it must be signed by the testator, and the material provisions (which would include the identity of the testator’s property and the beneficiaries chosen to receive that property) must be in the testator’s handwriting.

          An attested will must be in writing and signed by the testator and at least two witnesses.  The will does not have to be signed by the testator in the presence of the witnesses, and the witnesses do not have to sign in the presence of the testator or each other.  However, the testator must then tell the witnesses that the signature on the document is, indeed, the testator’s or that the document constitutes the testator’s will.

          Most attorneys continue to execute an attested will with greater formality by having the testator sign in the presence of two witnesses, who then sign the will in the testator’s presence at his or her request, and in the presence of each other.  This helps prevent any question about the validity of the will if it must be probated in another state.

          The advantage of a self-proved will is most evident in the event of a will contest.  Formalities of execution are conclusively presumed if a self-proved will is contested in a formal testacy proceeding.  An attested will may be self-proved either at the time of the original execution or later.  Regardless of when an attested will is made self-proved, the process involves an acknowledgment by the testator and affidavit of the witnesses before a notary public.  There are statutory requirements regarding the content of the language that must be included at the end of the will if it is to be self-proved.

          Regardless of the type of will, the testator must be of sound mind to make a will.  To have sufficient mental capacity, the testator must understand the natural objects of his or her bounty, the kind or character of his or her property, and the nature of the testamentary act.

The Use of a Separate Personal Property List to Dispose of Specific Property

          Certain tangible personal property may be disposed of by a separate written list, but there are some limitations and requirements.  The property and the recipients of that property must be described with reasonable certainty, the list must be referred to in a properly executed will, and the list must be either in the handwriting of the testator or signed by the testator.  In addition, property disposed of by the list must not be property specifically devised in the will itself, and is limited to tangible personal property.  For example, the list cannot be used to dispose of money or property such as bank accounts or securities, which are intangible personal property.

          The purpose of this provision is to allow a testator to prepare a separate list of things such as jewelry, collections, pictures, furniture, clothing, and other personal effects he or she would like to leave to family and friends.  The advantage of a list such as this is that it may be made up after the execution of the will and completed or changed at a later date.  Although there is no limit on the value of the tangible personal property that may be disposed of by the list, it should be used to dispose of items of relatively small value, and valuable items should be specifically devised in the will.

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Wood v. Coconino, 1-CA-CV-2022-0710 - Guardianship and Voting

 

    Arizona’s guardianship statutes A.R.S. §§ 14-5101(3), 14-5304, and 14-5304.02, violate the due process rights of a person subject to guardianship proceedings by terminating the right to vote upon establishment of a general guardianship without a determination of the person’s voting capacity and by placing the burden on the ward to justify retaining the right to vote.  The statutes are not narrowly tailored, nor are they the least restrictive means of achieving the State’s interest.  The statutes target all wards, not just those who may lack voting capacity.  Due process requires that, before terminating the right, petitioner must show by clear and convincing evidence that the person lacks the capacity to vote.  The ward does not bear that evidentiary burden.  Wood v. Coconino, 1-CA-CV-2022-0710, 5/30/24.

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Arizona Supreme Court Declines to Add a Ninth Factor When Considering Undue Influence

 

Examining the non-exclusive factors that are treated as significant indicia of the presence or absence of undue influence in the execution of a testamentary document, as found in In re Estate of McCauley, 101 Ariz. 8, 10-11 (1966), the Arizona Supreme Court declined to add a new ninth factor, statements that a grantor made after executing a deed, though such statements may be relevant in some cases alleging undue influence.  A grantor’s post-execution statement is relevant to an undue influence claim if it addresses the grantor’s state of mind or mental condition, or the circumstances present, at the time of the execution of the document.  Rosenberg v. Sanders, CV-22-0170-PR, 12/11/23.   

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Lindquist v. Mathias et al., 1 CA-CV 2022-0213, 3/2/23

 

The Superior Court must first determine an individual is a vulnerable adult before it empowers an interested person to sue for damages on the vulnerable adult’s behalf under A.R.S. § 46-456(G).

The above-referenced section requires the court to make three findings before it grants an interested person’s petition to sue on behalf of a vulnerable adult.  The petitioner must qualify as an “interested person” under A.R.S. § 14-1201(33), the individual to be protected must be a “vulnerable adult,” and neither the vulnerable adult nor “a duly appointed conservator or personal representative” must have filed an action against the proposed defendant under A.R.S. § 46-456(B).  Lindquist v. Mathias et al., 1 CA-CV 2022-0213, 3/2/23.

The full text of the case: 

Lindquist v. Mathias et. al 

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Probate Advisory Panel

        

      On May 8, 2023, Governor Hobbs signed SB1038, which establishes the Probate Advisory Panel and outlines membership and duties of the panel.  The panel is required to hold quarterly public hearings on how to improve adult guardianship and conservatorship laws through statutory changes, and requires the panel to submit a report of its findings by November 15 of each year. 

      The Chaptered version may be read at the following link:

      Chapter 123 Senate Bill 1038

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Does Arizona Law Allow For Pet Trusts?

    Yes, Arizona allows for the creation of trusts to benefit pets.  A “pet trust” may be created for the benefit of one or more animals that were alive during the settlor’s lifetime.  Animals may be added before the settlor’s death, and the trust may last until the death of the last surviving animal.  While all fifty states now allow for the creation of pet trusts, Arizona law has allowed for pet trusts for quite some time, and the statute can be found at Arizona Revised Statutes § 14-10408.

 

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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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