Frequently Asked Questions And Answers for:
WHAT IS THE PROBLEM? -- You or a family member,
friend, or a client is a non-Arizona resident who owns Arizona real
estate. The owner died and the Arizona estate must be "probated".
What is the best way to handle the Arizona probate?
WHAT IS PROBATE? -- Probate is the legal process
of administering the decedent's "probate property", which
includes, appointing an executor or personal representative to manage
the estate, paying debts and administration expenses, and distributing
the probate property to the decedent's beneficiaries.
WHAT ARE PROBATE ASSETS? -- Since only probate
assets are subject to probate administration, one must understand
what they include and do not include; probate assets include only
assets which are effectively titled in the decedent's sole name
at death, and therefore do not have other at-death title designations
automatically built into them which provide who the decedent's property
passes to at death; examples of "non-probate" assets include
(a) joint & survivor tenancies (where there is a surviving tenant),
(b) assets held in trust, (c) assets with named (surviving) at-death
beneficiaries such as insurance contracts, employee and retirement
benefit contracts, etc.; if the at-death title designation applies,
then a probate procedure is not necessary for them.
WHAT IS ANCILLARY VS. DOMICILIARY PROBATE? --
Administration of probate assets held in the decedent's state (or
foreign country) of residence is "domiciliary probate",
conversely, administration of probate assets located and held in
a state (or foreign country) where the decedent does not reside
is called "ancillary probate".
WHAT PROBATE PROPERTY IS SUBJECT TO DOMICILIARY
VS. ANCILLARY PROBATE? -- The probate property (both real and personal)
physically located in the state (or country) of the decedent's residence
is subject to domiciliary probate; conversely, the probate property
(both real and sometimes personal) physically located in the state
(or country) of the decedent's non-residence is subject to domiciliary
probate; note, however, if a domiciliary executor or personal representative
is already court appointed, then (absent litigation) that executor can
usually exercise power over the Arizona (tangible and intangible)
personal property without Arizona ancillary probate.
WHAT DO WE MEAN BY ARIZONA REAL ESTATE? -- Basically,
we mean land located in Arizona in which the decedent holds a deed
of ownership; but in some cases it can include a contract receivable
secured by Arizona land such as a mortgage, deed of trust or land
contract--depending on what a title company will require to secure
IS ARIZONA ANCILLARY PROBATE FOR PERSONAL PROPERTY
NECESSARY? -- That depends on (a) whether domiciliary probate is
required and (b) the value of the Arizona probate property; if there
is a domiciliary probate, then usually the domiciliary executor
can handle Arizona personal property (both tangible and intangible)
unless Arizona litigation occurs (see also paragraph 9 + 12 below);
if there is no domiciliary probate, then an Arizona probate procedure
is required, although it may be very simple for small value probate
estates (see 9 below).
WHAT DO WE MEAN BY ARIZONA PERSONAL PROPERTY? - Personal property comes in two forms: (a) tangible personal property (physically located in Arizona) is anything that has physical attributes such as furniture, furnishings, equipment, jewelry, vehicles, tools, etc.; tangible personal property can include property which has a legal title associated with it, such as a motor vehicle, boat, park model home, etc.--these assets would have Arizona documents of title (such as through the Arizona Department of Motor Vehicles); however most other tangible personal property (such as furniture) has no document of title - therefore, possession of this property may be a probate issue; (b) intangible personal property has no physical attributes; it thus includes, many forms of investment property such as bank accounts, CDs, stocks, bonds, insurance and employee benefit and retirement contracts receivable Ė these assets have documents of title associated with them held or monitored by a custodian (bank, brokerage company, corporation, partnership, insurance company, etc) Ė thus probate documentation must be presented to the custodian of physical assets (such as a storage unit co.) and any custodian of an intangible asset subject to probate; note, a park model home which is not physically attached or affixed to the land (e.g., is on rented land) is treated as tangible personal property.
WHAT PROBATE IS REQUIRED IF THE NON-RESIDENT DECEDENT OWNS ONLY ARIZONA ANCILLARY PERSONAL (BOTH TANGIBLE AND INTANGIBLE) PROPERTY? Ė As indicated directly above, if an executor or personal representative is court appointed in the decedentís domicile, then that personal representative can usually deal with Arizona custodians of the personal property using the domiciliary courtís appointment authority; however, if no domiciliary executor or personal representative is appointed, then (a) a SMALL PERSONAL PROPERTY PROBATE ESTATE procedure is available; namely, if there is no (court) probate proceeding pending in any jurisdiction (or a personal representative has been discharged and more than 1 year has passed since a closing statement has been filed), and the value of the non-resident decedentís intangible or tangible personal property, wherever located, does not exceed $50,000 in value at death (less liens and encumbrances), then 30 days after the decedentís death, payment may be made to the person claiming to be the decedentís legal successor through presentment of a small estate affidavit, sometimes also known as an AFFIDAVIT FOR COLLECTION OF PERSONAL PROPERTY; (b) for Arizona personal property assets in excess of $50,000 at the decedentís death (less liens and encumbrances) informal or formal Arizona ancillary court proceedings are necessary. (see below)
WHAT PROBATE IS REQUIRED IF THE NON-RESIDENT DECEDENT
OWNS ARIZONA ANCILLARY REAL ESTATE? -- That depends on (a) whether domiciliary probate is required and (b) the value of the Arizona probate property; if there is a domiciliary probate, then usually the domiciliary executor can simply enroll his or her domiciliary court appointment with the Arizona court; if there is no domiciliary probate, then an Arizona probate procedure is required, although it may be very simple for small value probate estates. (see below)
WHEN CAN ARIZONA ANCILLARY PROBATE OF REAL PROPERTY BE HANDLED AS A SMALL ESTATE? -- No earlier that 6 months after the decedentís death, a person(s) claiming to be the decedentís legal successor to real property (including a debt secured by a lien thereon) may file in the county where the property is located, an affidavit describing that property and the decedentís interest therein, and stating that, (a) funeral and last illness expenses have been paid, (b) why (and proof that) the affiant (s) is legally entitled to the property, (c) that no federal or Arizona estate tax is due and (d) that either (i) no probate proceeding is pending in any jurisdiction and that the value of the Arizona real property does not exceed $75,000 (less liens and encumbrances) as of the decedentís death; or (ii) the personal representative has been discharged or more than 1 year has elapsed since a closing statement has been filed and the value of all the decedentís real property , wherever located, does not exceed $75,000 (less liens and encumbrances) valued as of the date of the affidavit - in either case the value is taken from the assessorís ďfull cash valueĒ (respectively, as of the decedentís death, or the date the affidavit is given Ė this procedure is by AFFIDAVIT FOR TRANSFER OF TITLE TO REAL PROPERTY; if the property interest exceeds $75,000, then either a probate by PROOF OF AUTHORITY OF DOMICILIARY PERSONAL REPRESENTATIVE (see below) or an informal or formal probate proceeding is required (see below)
HOW IS ARIZONA ANCILLARY PROBATE HANDLED WHEN AN EXECUTOR OR PERSONAL REPRESENTATIVE HAS BEEN COURT APPOINTED IN THE DOMICILIARY JURISDICITON? Ė In this case, a simplified, streamlined, Arizona probate process is available, and is preferred. The domiciliary executor or personal representative merely enrolls court certified copies of the appointing documents (including the decedentís will, if any) in the Arizona court. If the domiciliary executor or personal representative is appointed to serve without surety bond, then none is required in Arizona; otherwise, surety bond for the value of the Arizona property is required. The process is begun by filing a PROOF OF AUTHORITY OF DOMICILIARY PERSONAL REPRESENTATIVE with the Arizona court and obtaining a court certified copy thereof Ė this instrument can then be used in conjunction with a Deed of Distribution, transferring title to an estate beneficiary or buyer. If the property is sold from the ancillary Arizona estate, then as Arizona title (escrow) company should handle this process.
WHAT IF THE ARIZONA ANCILLARY PROBATE ESTATE CANNOT BE HANDLED UNDER THE SMALL ESTATE AFFIDAVIT OR UNDER ACTION TAKEN BY THE DOMICILIARY PERSONAL REPRESENTATIVE? -- In that case, an application for "informal" probate must be filed in the Arizona superior court--in this proceeding no prior court hearing is necessary to appoint the personal representative or to admit the non-resident decedent's will to probate; if the estate is not eligible for informal probate, then a petition for "formal" probate must be filed in the Arizona Superior Court--in this proceeding a prior court hearing is necessary to appoint the personal representative or to admit the non-resident decedent's will; in either case a will admitted in the domiciliary court is automatically admissible in Arizona and the domiciliary executor has priority for appointment as Arizona personal representative.
WHAT ABOUT ARIZONA ESTATE TAXES - - For Arizona decedents who died before 2005, Arizona charged a pick up tax against their Arizona taxable estate. Thus estate tax was collected based on the state estate tax credit that the IRS allowed on the decedentís federal estate tax return (form 706). However, starting in 2005 the federal state estate tax credit was repealed and Arizona never provided a substitute method to collect estate taxes. Therefore, for decedents dying in 2005 and after, no Arizona estate (or gift) tax is due. Note, for ancillary estate taxes, generally speaking, only the value of Arizona real property would be subject to Arizona estate tax; the domiciliary jurisdictionís death tax laws would apply to the other decedentís property.
HOW DO I DETERMINE WHAT ANCILLARY PROBATE IS NECESSARY IN ARIZONA? - - Complete the Questionnaire (see link below) and contact Matthew L. Howell, the Arizona Ancillary Probate Lawyer.
DO I NEED TO TRAVEL TO ARIZONA TO BEGIN ANCILLARY PROBATE PROCEEDINGS? -- No! Absent litigation, contact with the Arizona attorney, including preparation, signing and filing of legal documents with the court, can all be handled by phone, fax, email or regular mail, so no trip to Arizona for that purpose is necessary.