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The term “probate” refers to the legal procedure for the administration of a deceased person’s estate. In many cases, probate is a quick and efficient way to transfer the assets of a person who has died (the “decedent”) to his heirs. About 10,000 probate cases are filed each year in the state of Arizona.
The basic philosophy of the Arizona probate code is to minimize court involvement. It allows for the “informal” administration of most estates. This means that, in most cases, the entire probate procedure can be accomplished without court supervision or involvement. If an informal proceeding is not available or desired, the probate code provides for a “formal” proceeding. In a formal proceeding, the court is directly involved in the probate procedure.
Because informal probate proceedings are utilized in most cases, this article is devoted to the informal probate process in Arizona.
Opening the Estate
The first step in the administration of an estate is to have a person appointed to handle estate affairs. This person is known as the “personal representative” (formerly, this person was called the “executor”). To get a personal representative appointed, a person interested in the estate may file an application with the probate registrar (the registrar is a person authorized by law to make certain probate decisions, but he is not a judge). An application for informal probate cannot be filed sooner than five days, nor later than two years, after the decedent’s death.
If there is a will, an estate will normally be opened by an application for both informal probate of the will and appointment of a personal representative. A person nominated in a will has priority for appointment as personal representative. If there is no will, the probate application will merely request the appointment of a particular person to be the personal representative.
The following persons have priority (in the order listed) for appointment as personal representative:
- the person nominated in a will
- the surviving spouse who is also a beneficiary under the will
- other will beneficiaries
- the surviving spouse
- other heirs
- 45 days after the decedent’s death, any creditor; and
- the public fiduciary
Where several persons share priority, they must agree on which of them will be appointed as personal representative. If they are unable to agree, the court will appoint one or more of them in a formal proceeding.
Notice of Appointment
If a will is informally admitted to probate, the personal representative must give the heirs and each devisee (a devisee is a person designated in a will to receive estate assets) a written statement that the will has been admitted to probate by the court, and that an heir has four months to contest the probate. A copy of the will must be sent with the statement.
The personal representative must also send a statement to the heirs and devisees informing them of the appointment, the personal representative’s name and address, whether or not a bond has been filed, and a description of the court where official papers regarding the estate are on file. This statement may be combined with the statement described in the preceding paragraph. The statement must be given within 10 days after the appointment of the personal representative.
Personal Representative’s Duties
A personal representative is a fiduciary. This means that he has a duty of loyalty to the beneficiaries and creditors of the estate. The personal representative must be cautious and prudent in dealing with estate assets. The assets must never be used for the personal representative’s benefit or mixed with other assets. A personal representative is prohibited by law from participating in any transaction that involves a conflict of interest.
The personal representative’s first duty is to protect the estate property. This means that the personal representative must immediately find, identify, and take possession of the estate assets. If there is reason to believe that someone is concealing estate assets, the personal representative may file a lawsuit against the person who is hiding the assets. In that suit, the personal representative may examine the person regarding any property or papers relating to the decedent’s estate.
The personal representative is required to prepare an inventory of the estate assets within 90 days after his appointment. The inventory must list all of the probate assets and their values as of the date of death. Once the inventory is prepared, the personal representative may file it with the court and mail a copy of it to the heirs and devisees, or may simply mail a copy of it to the heirs and devisees. If the family does not want the information in the inventory to be made part of the public record, the personal representative should not file it with the court.
The personal representative has the power to set allowances for the maintenance of the family during the probate process. These statutory allowances, as they are called, include a homestead allowance, exempt property allowance, and family allowance. The surviving spouse and dependent children are generally eligible to receive these allowances, in the amounts set by statute.
Claims of Creditors
The personal representative must publish notice to creditors once a week for three successive weeks in a newspaper of general circulation in the county of appointment. The notice will announce the appointment of the personal representative and tell creditors of the estate that they must present their claims to the personal representative, at the address specified in the notice, within four months from the date of first publication. If a claim is not presented within the four-month creditors’ claim period, it will not be paid. A notice must also be mailed by the personal representative to all persons whom he knows are creditors, or those who can be reasonably ascertained.
If a claim is disputed, the personal representative may disallow it, or negotiate a compromise with the person making it. The personal representative has a duty to investigate each claim and decide whether to allow it or disallow it. To disallow a claim, the personal representative must, within 60 days after the time for presentation has expired, file a notice of disallowance and notify the claimant accordingly. Failure by the personal representative to disallow the claim has the effect of allowing it.
The personal representative must pay all valid debts and expenses (including taxes) owed by the estate. If there are not enough assets to pay all of the charges against the estate, the personal representative must determine which debts and expenses should be paid according to law. The personal representative may be personally liable to the beneficiaries or to creditors with unpaid claims, if he pays a debt or expense that should not be paid.
Distribution of Assets
After payment of all debts and expenses, the personal representative must distribute the remaining assets as directed in the will. If there is no will, the assets must be distributed to the heirs as provided by law. The personal representative owes a duty of impartiality to all heirs and devisees under a will. This means that they must all be treated alike. Nonetheless, the personal representative, in some cases, may distribute the assets in cash or in kind, or partially in cash and partially in kind. For distributions in kind, the property must be valued at fair market value at the time of distribution. The personal representative may be personally liable if he makes an improper distribution of estate assets.
Personal Representative’s Compensation
The personal representative is entitled to reasonable compensation for his services. Arizona law does not designate percentage fees for the personal representative’s work or state how much he should be paid for his services. The personal representative should keep detailed records of all time expended by him on estate matters and receipts to prove out-of-pocket expenses. In determining whether a fee is reasonable, several factors will be considered, including the time required, the fee normally charged for similar services, the nature and value of estate assets, and the results obtained for the estate.
The personal representative must prepare a final account at the end of the administration process. The account must contain a full disclosure of the handling of the estate, including income received, expenses paid, and gains or losses on the sale of estate assets. The account must be sent to all persons who are affected by it.
The court does not supervise informal probates or the conduct of the personal representatives who administer them. However, if any person who has an interest in the estate believes that the estate has not been properly handled or that the fees charged by the attorney or personal representative are not reasonable under the circumstances, he may request that the court review the personal representative’s accounting.
Closing the Estate
After distribution of the estate has been completed, the estate must be closed. To close an estate informally, the personal representative will file a verified statement (known as a “closing statement”) that he has
- published notice to creditors;
- fully administered the estate (including settlement of claims, expenses and taxes, and distribution of the assets);
- sent a copy to all distributees and to creditors with unpaid claims; and
- furnished an account to all interested parties.
The court will usually expect the estate to be completely administered and closed by no later than one year after the appointment of the personal representative.
The personal representative cannot be sued for breach of duties after six months from the filing of the closing statement, except for fraud, misrepresentation, or inadequate disclosure. The appointment of the personal representative terminates one year after the closing statement is filed, unless proceedings are pending.
The above article is an excerpt from Estate Planning in Arizona: What You Need to Know, 2nd Edition (Wheatmark, 2019), by Donald A. Loose, republished with the author’s permission.
Don likes to target shoot, scuba dive, and pilot airplanes. Most recently, he has been working on his golf handicap. Don enjoys writing, reading, and spending time with his wife, twin sons, and golden retriever, Lucy.