Frequently Asked Questions about Trust and Probate Litigation
Probate is the court-supervised
administration of property that passes by a will or
intestacy (i.e., where there is no
will). Probate has three functions:
-
to make sure any will is valid;
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to deal with creditors of the
estate; and
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to transfer the property to the
right people.
Although probate administration
involves some court involvement, Arizona has streamline the process
for most estates. Most probates are relatively inexpensive and
efficient.
In Arizona, the probate court
(officially the Probate Division of the Superior Court) handles not
just probate estates, but also trusts, guardianships,
conservatorships, and elder law questions.
Do I need a probate?
It depends on how the property is
supposed to be transferred. If all of the property is held in a
trust, you may not need a probate proceeding. If the property passes
through insurance policies, pay-on-death accounts, joint tenancy
with right of survivorship, beneficiary designations, or beneficiary
deeds, you may not need a probate. And if the value of the estate is
very small, you may not need a probate.
Even if you’re convinced a probate is
not necessary, you should speak with an experienced probate attorney
to make sure. Most probates are simple and straightforward. But
failing to open a probate where one is needed can lead to much more
expense and frustration down the road.
In what state should I
open the probate?
The short answer is: wherever the
decedent was domiciled at the time of death. But that may not be
obvious in all cases. What if the decedent was in the state only for
medical care, and intended to return home? What if the decedent was
planning a move to another state, and had already purchased a home
there? And – as often occurs in Arizona – what if the decedent split
time equally between Arizona and another state?
In a close case, where more than one
state could be a person’s domicile, it is wise to compare the
probate law of the two states to determine if one has more favorable
terms.
Even if domicile is clearly in one
state, you may have to open a second probate – known as an ancillary
probate – in another state if the decedent owned land there. Arizona
has a streamlined procedure, known as Proof of Authority, to
transfer land owned here where the probate is open in another state.
Other states are not so streamlined and may require that a full
probate proceeding be opened in the other state.
What is a trust?
A trust is simply a special
relationship to property. If I give money to my brother to take care
of our mother, I’ve created a trust. As trustor, I transfer what I
own to my brother, who is the trustee. He has a duty to use the
money only for our mother, who is the beneficiary.
Usually, a trust is set up using a
written trust agreement. Trusts are much more flexible than wills,
especially for tax reduction and long-term financial planning. As a
result, they are increasingly popular with people of even modest
wealth.
If all of a person’s property is in a
trust, it is very possible that a probate will not be needed.
Nevertheless, the probate court still has a role to play, if needed,
in the administration of trusts. It can settle disputes, interpret
unclear language, and even arrange for mediation. Although “avoiding
probate” is often given as a reason for creating a trust, it’s
important to balance the cost of preparing the trust itself with the
cost of a simple probate. Frequently, the “cure” costs more than the
“disease.”
Can I challenge a
will?
Yes, provided you have a valid reason.
In Arizona you can challenge a will for:
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lack of capacity (i.e., the person
who executed the will lacked a sound mind);
-
undue influence (i.e., someone
coerced, tricked or manipulated the person into doing the will);
-
mistake; or
-
fraud.
Challenging a will can be difficult
and expensive. The standard for capacity is very low: a person may
be able to execute a will even if they don’t have the ability to
sign a contract, or if they have a guardian or conservator to care
for them. Undue influence is also hard to prove, although the law
now makes it easier in certain circumstances. You should speak with
an experienced probate lawyer to determine whether you have enough
evidence for a will contest.
Intestacy simply means that a
person died without a will. If everything passes through a
non-probate transfer (trust, pay-on-death account, joint tenancy,
beneficiary designation, etc.), the lack of a will has no effect on
the distribution. But if there are assets in the probate estate,
those assets pass by intestacy.
As with all states, Arizona has
detailed statutes to provide for the transfer of intestate assets to
a person’s heirs. In essence, the statutes are based on what most
people would want to do with their assets – spouses, children,
grandchildren take priority. But in families where the next of kin
are more difficult to determine, intestacy may require an heir
search and court proceedings to figure out the proper heirs.
A fiduciary is someone who accepts the
responsibility for taking care of the needs or property of another person for
that person“s benefit. The fiduciary serves in a role of trust; the person
served by a fiduciary places trust in the fiduciary to manage his or her affairs
solely for his or her benefit and not for the fiduciary“s benefit.
A guardianship proceeding is one in which the
court considers whether a person needs the assistance of a type of fiduciary
known as a guardian to provide
for various personal needs.
In order to establish a need for a guardianship,
the petitioner must establish, by clear and convincing evidence, that:
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the person is incapacitated;
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the appointment is necessary to provide for
the person“s demonstrated needs; and
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the person“s needs cannot be met by a less
restrictive means than the appointment of a guardian.
In a guardianship proceeding, the proposed ward’s
family, such as spouse, children and siblings, must be notified.
A person who is ordered by the court to be in the
care of a guardian is known as a “ward.”
The court may appoint a family member or a
professional fiduciary, depending on the circumstances.
What are the duties of a guardian?
A guardian stands in loco parentis, a legal
doctrine in which an individual assumes responsibilities for another individual.
The guardian is responsible for ensuring that the
ward is placed “in the least restrictive environment” and that all of their
personal needs, such as medications, treatment, placement and social issues, are
attended to.
The guardian does not assume personal liability
for the ward’s debts or assets. However, a guardian is held to the same standard
as any other fiduciary and must always act in the best interest of the ward.
Under Arizona law, a guardian must file an Annual
Report of Guardian which includes the Physicians Report. The guardian must also
notify the court of any change of address for the guardian or the ward.
In Arizona, conservatorship proceeding is one in
which the court determines whether the proposed protected person needs
assistance in managing their affairs. A conservatorship proceeding is similar to
that of a guardianship; however, there is no requirement that the proposed
protective person be declared incapacitated.
The court must find that the
protected person is in need of a type of fiduciary known as a conservator if they have property which is in
need of protection and if there may be waste if a conservator is not appointed.
Generally speaking, a conservator must post bond
for any amounts that they are managing. However, under certain circumstances,
assets can be restricted in order to reduce the amount of bond and the related
bond premium. In most situations, the conservator must file an Annual Accounting
with the court.
What is a “fiduciary
arrest
warrant”?
Under Arizona law, a person who is serving in a
fiduciary capacity to another, is subject to being arrested if they fail or
refuse to appear in court at a specific time and location (A.R.S.
§ 14-5701). The judicial officer can order the fiduciary arrest warrant and
the clerk issues the warrant. A peace officer, such as a policeman or sheriff
deputy, can serve the warrant and arrest the named person. The warrant shall set
forth a bond in a reasonable amount to guarantee the appearance at further
hearings. |
