At some point, most of us will have to deal with administering the Estate of a loved one who has passed away. You should know that Arizona Probate law is undergoing a significant change. Earlier this year, the Arizona legislature passed an amendment to Arizona Revised Statutes § 14-3971 that increases the value of a decedent’s assets that can pass to the beneficiaries via a Small Estate Affidavit.

While there are definite positive aspects of this change, please read to the end for a real-life fraud scenario that happened to 3 people I know… It’s worth the time.

What is a Small Estate Affidavit?

In Arizona, and many other states, assets belonging to a decedent (a person who died) can pass to their heirs with a simple written and notarized Affidavit, provided the value of those assets did not exceed a certain amount and the required waiting times were met. This process allowed a grieving family to distribute the personal property and the real property without having to open Probate.   

• Personal property transfer:
• The value of all personal property cannot exceed $75,000
• Includes: vehicles, jewelry, furniture, household belongings, and money in any form – bank accounts, investment accounts, stock ownership, etc.
• Cannot use an Affidavit until 30 days after decedent’s death

• Real property transfer:
• The value of all real property cannot exceed $100,000
• Includes: homes, buildings, and land
• Cannot use an Affidavit until 6 months after decedent’s death

If the Estate contains both personal and real property, the Affiant (the person who signs and uses the Affidavit) must meet the longer time frame. Distributing property with value in excess of those limits would require Probate, as would distributing property in a state other than Arizona.

What changed in the law?

With the recent change, personal property with value of $200,000 or less, and real property with value of $300,000 or less, can now pass via Small Estate Affidavit. The same waiting periods apply.

How does it work?

If you are a legitimate heir of a person who has passed away, you may serve as the Affiant. You would then present that Affidavit to any banks or financial institutions, title companies, and other institutions holding property of the decedent, for them to transfer that property according to a Last Will and Testament or Arizona’s intestacy laws (which determine the order of priority of the decedent’s relatives for receiving the property) if there is no Will.

So while the “good” is that you, as an heir of an Estate, can avoid formal Probate, save time and legal costs, and transfer assets more efficiently using a Small Estate Affidavit, there are negatives and risks.

What are the negatives?

Multiple Heirs – The Affiant must represent on the Affidavit that they are the sole heir of the Estate. The Affiant could be personally liable to other rightful heirs or creditors if they do not distribute the assets properly or have the other heirs assign their own rights to the Affiant.

Incorrect valuation of property – If the Affiant has valued the personal and real property too low, then the use of the Small Estate Affidavit could be improper. This would open up the possibility of litigation by other people who believe they have a claim to the property.

Transferring Real Property – It’s possible that a lender or title company will not accept the Small Estate Affidavit as being a legitimate tool for transferring real estate. Additional documentation may be required, and possibly Probate, if an Affiant attempts to sell or refinance the decedent’s property.

And the risks?

Look out for fraud!  Yes, there are fraudsters out there, looking to steal the property of rightful heirs. Since a Small Estate Affidavit cannot be used on real property until 6 months after the death of the decedent, the heirs must be vigilant in ensuring that no other person attempts to transfer title before the heirs have done so. Now, with the ability to transfer real estate valued at up to $300,000 via Affidavit (rather than the previous value of $100,000), these bad actors have an even greater incentive to attempt to illegally transfer the Estate’s property to themselves.

How could this fraud occur?

Many people assume that if a spouse or parent dies, that person’s personal and real property will automatically become their own, as the surviving spouse or child. That’s not true. But because there are so many myths about Probate – it’s expensive, time-consuming, avoid it at all costs - they don’t do anything to legally transfer the property, especially real estate. A home remains in the decedent’s name even if the heirs are living in it and paying the bills and the mortgage. 

Well, a fraudster may read about a person’s death in an obituary or some other source, and take matters into their own hands. According to Arizona law, a legitimate creditor of the decedent, someone to whom the decedent owed money, may open Probate and petition the Court to be named the Personal Representative. A fraudster’s Court filings are likely fraudulent, but if none of the rightful heirs are watching, and they don’t know about or file any objection to the fraudster’s petition, the Court might approve it, giving the fraudster significant legal authority over the decedent’s property.

True Stories!

I have personally listened to the stories of 3 people to whom this has happened. Once named as the Estate’s Personal Representative, a fraudster deeded the decedent’s home to themselves and evicted the decedent’s heir – two were elderly spouses of the decedent  who had lived in the home for decades, the other was an adult child of the decedent who had lived in the home for nearly a decade after the parent passed and had paid the mortgage, bills, and improvements.  In one case, the home had been subsequently sold several times and the current owner was completely innocent of any wrongdoing. 

None of these victims had opened Probate or taken any steps to legally transfer the real estate after their family member’s death. And while the transfer of these homes by the fraudster to themselves was illegal, the victims’ only option was to file a civil lawsuit and fight the transfer in Court – a process that could take years and thousands of dollars.

And there’s no guarantee that they would win. It’s heartbreaking.

The Truth about Probate

Probate is the legal process of transferring the decedent’s property to his or her rightful heirs, whether they are named in a Last Will and Testament or determined by Arizona’s intestacy laws. Under NO circumstance will the Courts or the state take the decedent’s property. It belongs to the heirs, and if the heirs do not come forward or cannot be found, then it will be considered unclaimed property, and sit in limbo until a rightful heir makes a claim. 

According to Arizona statute, Probate can be opened 120 hours, or 5 days, after a person’s death. Probate requires disclosure to the Court of all rightful heirs and all assets of the Estate, and requires written notice to all heirs and creditors that Probate is being opened. Every step is disclosed to the people who have the right to be notified.

• Yes, there is a fee to file the Application to be named as the Personal Representative.
• Yes, you may want to seek the help of an attorney, which will involve additional fees.
• Yes, the Probate process takes time, at minimum 4 months.
• But yes, an attorney can also move the process along more efficiently because they know what to do.

A title company will only transfer a decedent’s real estate in a transaction approved by a Court-appointed Personal Representative. Please make sure that person is YOU. 

Bottom line: moving quickly to open Probate can provide a strong defense to any possible fraudulent actions that might take place.

What to do?

If there is a death in your family, please contact the Law Office of Wendy Anderson as soon as possible, at least to have a discussion about how to administer the Estate. It may be that using a Small Estate Affidavit is the preferred method, for all of the good reasons listed above. But it is possible that opening Probate could be the safer method in the long run and well worth the additional time and expense. 

Please give me a call or schedule an appointment and we can talk about your situation and the best process for transferring the Estate property to the heirs.

NOTE: THIS ARTICLE IS FOR GENERAL INFORMATIONAL PURPOSES. IT DOES NOT CONSTITUTE LEGAL ADVICE, NOR DOES IT CREATE AN ATTORNEY-CLIENT RELATIONSHIP. EACH SITUATION IS DIFFERENT. YOU SHOULD CONSULT WITH AN ATTORNEY TO DETERMINE YOUR LEGAL RIGHTS, REMEDIES, AND DUTIES.

By Wendy M. Anderson, Esq.
Law Office of Wendy Anderson, PLLC

480-825-4509

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