Will and Testament

WHAT IS PROBATE? AND WHY DO I NEED TO AVOID IT?

Roger Rabbit:
“Yeah. Check the probate. Why, my Uncle Thumper had a problem with HIS probate, and he had to take these big pills, and drink lots of water.”

Eddie Valiant:
“Not prostate, you idiot. PROBATE.”

Roger Rabbit is not the only one confused about what probate is.  While most people today probably have a basic understanding beyond the grasp of your average cartoon rabbit, usually what one knows about it is not much more than an awareness that it is somehow bad and should be avoided.  But what is it and why do advisors want you to avoid it?

What Is Probate?

To put it simply, probate is a court procedure for settling the estate of a deceased person.  The word “probate” has the same Latin root of the verb “prove.”  What needs to be proved?  The deceased person’s Last Will & Testament.1

A properly drafted Will designates someone to be appointed as the “Personal Representative” of the estate, which is the term Arizona law uses for the person who takes on the various duties of settling the estate.  Some states, and most movies, use the term “Executor” for this role, but the duties are the same.  The Personal Representative is responsible for, among other things, settling any of the decedent’s debts, marshaling and preparing an inventory of the decedent’s assets, and ultimately distributing the net residual assets of the estate to the devisees, which is the term Arizona law uses to refer to the decedent’s chosen beneficiaries as set forth in the Will.

But what if the decedent did not have a Will?  That is what Arizona law refers to as an “intestate” estate.  The process for administering such estates is basically the same as probate.  Arizona law provides very specific default rules for intestate estates that fill in the blanks that should have been filled by a Will.  There is a priority list for determining who should be the Personal Representative, and there are rules for establishing who the ultimate heirs are who will receive the net residual assets.2

So Why Do My Advisors Tell Me I Need to Avoid Probate?

It is probably true that most advisors now try to help their clients establish an estate plan that will avoid the probate court.  In our experience, there are three main reasons for this:

  • Cost.  The fear about cost is not actually about the direct fees that need to be paid to the probate court.  While such court processing fees exist, they are not exorbitant.  Such fees have nothing to do with taxes, which is a common misconception.  The fact is, settling an estate of a deceased person can be expensive, regardless of whether probate is necessary.3  But if you can remove some of the statutory inefficiencies of the probate court process, that cost can be significantly reduced.
  • Time.  Similar to the discussion above about costs, it can take a long time to settle an estate, even without probate.  But again, there are statutory requirements that often result in delays throughout the probate process that would be minimized or even avoided if probate was not necessary.  The average time it takes to settle a probate case in Arizona depends on a variety of factors, but probably ranges from six months to two years.
  • Privacy.  Arizonans usually do not like the idea of filing information about their deceased loved ones with the probate court since much of that information would then be a matter of public record.  If there is a way to avoid such publicity, most of us want to find it.

But How Do I Avoid Probate?

There are several techniques that are both legally legitimate and very common in estate planning that could be implemented to ensure that your estate does not need to go through the probate process.  The best and most popular technique is to use a Revocable Trust, but there are others, depending on the circumstances.  You can learn more about a Revocable Trust by downloading our Foundations of Estate Planning Guide here.  If you want to learn more about the best way to avoid probate in your particular circumstances, call us at 480-951-8044 to make an appointment with one of our excellent Scottsdale estate planning attorneys.

  1. This shatters the common misunderstanding that having a Will avoids probate.  On the contrary, processing the Will is one of the principal purposes of probate.
  2. If someone in Arizona does not like those default rules, then it becomes crucial for them to have a Will in place before they die.  Are you married with children who are not the children of your spouse?  Do you know what the default rules dictate will happen to your assets upon your death?  There is a specific answer to that question, and you may not like it.
  3. With attorney fees, accounting and tax preparation fees, appraisal and valuation fees, and other costs and expenses, the total cost to the estate can generally be expected to be approximately 3-8% of the gross value of the estate.

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