Will a Will Suffice or Should You Place Your Trust in a Trust?

In Arizona, under Arizona Revised Statute § 14-397, if:

  • The value of all of the personal property (cash, bank accounts, stocks and bonds, cars, jewelry, money owed to the person who died, etc.) in the estate of the person who died (the “deceased”), wherever that property is located, less liens and encumbrances, does not exceed $75,000, and at least 30 days have passed since the death, and/or
  • The assessed value of the real property (land and permanent structures on the land) in the deceased’s estate located in Arizona, less liens and encumbrances as of the date of the deceased’s death, does not exceed $100,000, and at least 6 months have passed since the death,

you may file a Small Estate Affidavit in order to avoid probate of the deceased’s estate.

Therefore, if personal property exceeds $75,000 in value the deceased’s equity in real estate exceeds $100,000 a small estate affidavit is not possible and the estate must undergo probate. Although the statute is silent on this point, presumably, if the deceased owned real property outside of Arizona, this would disqualify filing of a small estate affidavit. .

As a court-supervised proceeding the disadvantages of probate are that

  • it becomes part of the public record;
  • it is time-consuming resulting in delay of distribution of the deceased’s assets; and
  • it is costly because the probate court will appoint officials to oversee the process (lawyers and accountants) and they will charge the estate for their services.

The potential benefits of probate are:

  • If an estate is contested by the beneficiaries, a court-supervised distribution may be beneficial;
  • Probate allows you the ability to close out creditors to the probate estate within a short timeframe whereas, if an individual dies and all of their assets are held in trusts in order to avoid probate, there is a longer window for creditors to put in a claim on the assets to pay any outstanding debts of the deceased; and
  • Probate permits challenge of the validity of a creditor’s claims in court. If you believe a creditor is improperly trying to collect on debts from the deceased, probate may allow you to prevent having to pay unnecessary debts out of the estate that you otherwise may have to accept at face value outside probate.

A Trust (either revocable or irrevocable) is a contract among three parties:

1 – The trustmaker (a/k/a grantor, trustor, settlor);

2 – The trustee, who is an individual or institution while living); and

3 – The beneficiaries of the trust.

Because this is a contractual relationship, it is not subject to court supervision unless the trust agreement specifically so provides. Accordingly, upon the death of the last trustmaker, assets can be freely and inexpensively distributed to the beneficiaries without the cost or publicity required in a probate proceeding.

Based on the foregoing, it is clear that whether a Will or a Trust is preferable depends solely on the circumstances of each case. To learn which is right for your case, call Agins Law Firm, PLC, PLC at (480) 401-2660 for a free consultation.