One of the top 10 estate planning mistakes that many people make is having an inadequate plan that will necessitate probate court. Why is probate so negative? It devours time and money that is better invested in the inheritance you leave to your beneficiaries. At Phelps LaClair, serving Chandler, Mesa, Phoenix and Scottsdale, we work hard to keep your hard-earned wealth intact. Wills and trusts are important, both for you and for your beneficiaries. The way your estate plan is designed will determine whether or not probate is required. Our second generation law firm writes bulletproof estate plans so you can keep your heirs out of probate court.
What is Probate?
Simply defined, probate is an official validation of a will. For this process, the state of Arizona has adopted the Uniform Probate Code, or UPC. The UPC was created in order to standardize laws on wills, trusts, and intestacy (when someone dies without a will). Arizona is one of 15 states that have elected to follow UPC laws. The Uniform Probate Code lists three types of probate proceedings: informal, unsupervised formal, and supervised formal.
The majority of probate proceedings in our state are informal. Informal probate is used when all parties connected to the estate are cooperative, and there are no disputes that need to be settled.
In the first step of the process, the court approves a person to act as executor. This may or may not be a family member. His/her duties may include the payment of any debts and funeral expenses, taking inventory of the estate’s assets, seeing to the safety of the estate, and finally, distributing the assets to heirs when all other financial debts have been satisfied.
Unsupervised Formal Probate
In this probate class, a judge will be involved, mainly for the purpose of settling any disputes between beneficiaries over the distribution of the estate’s assets. The court proceeding is required to approve certain actions taken by the executor (aka personal representative). For example, if a beneficiary challenges how distributions are to be carried out, or how much each beneficiary will receive, or what a will means—a judge will settle those disputes.
Supervised Formal Probate
When the court steps in to supervise the entire probate process, it’s called a supervised formal probate. This means the court handles all aspects of the estate’s debts, distributions, and proceedings.
Which is Better: Will Or Trust?
By law, a will requires probate, which means some expense will be paid out of the estate due to legal representation and court costs involved. Informal probate is the least expensive form of probate, but what if a will is contested? Divorce, custody battles, or immature heirs, are only a few of the reasons families can end up in either unsupervised formal probate or supervised formal probate, where costs escalate through additional court and legal fees.
The preferred estate planning vehicle for most people is a revocable living trust (RLT). An RLT agreement is a legal document filed with the court prior to the death of the grantor. The estate’s assets held by the trust are not subject to probate. With a revocable living trust, probate can be entirely avoided because the RLT sets out the terms and conditions under which the assets of the estate can be distributed. It names a person (or persons) to administer the affairs of the estate. That person serves in the same capacity as an executor, but without needing to involve the courts or go through probate. It eliminates the need to hire expensive lawyers, and it avoids the necessity of paying court costs. It can also be settled quickly with no delay for the distribution of estate assets.
Here to Serve You
For forty years, we’ve been helping our clients successfully create estate plans that are tailored to their specific needs. A revocable living trust that has clearly designated your wishes can spare you and your heirs the unnecessary heartache and expense of probate. For a skilled estate planning attorney who can walk you through the process of protecting your estate, call Phelps LaClair in Phoenix, AZ. We know how to avoid common estate planning mistakes, and we have the real-life experience you need.
Images used under creative commons license (Commerical Use) 06/28/2020 Photo by Melinda Gimpel on Unsplash