What Happens When You Do Not Have a Trust
Many people wonder what the exact benefits of having a trust are. One of the best ways of illustrating the benefits is to go over exactly what happens when you do not have a trust. In this article, we will go over two different scenarios: if you pass with a will and without a will. These scenarios are based on probate laws in the State of Arizona.
With a Will
It is a common misconception that if you have a will, your heirs will not have to file a probate. A will is actually a probate document, it is basically instructions to the court on the distribution of your assets. The exact type of documents your heirs will need will depend on the value of your estate. If your real property is worth over $100,000 and/or your personal property is worth over $75,000 your heirs will have to file a probate. The person that you chose in your will to be the personal representative will need to file the appropriate documentation to be officially appointed by the court. This is important because no financial institutions will speak with you unless you have these documents.
Once your personal representative is approved they will need to go through several other steps. This includes sending notice to other beneficiaries named in the will and known creditors. As well as publishing a notice to any unknown creditors in a local newspaper. Then your personal representative will have to transfer the money into estate accounts. The money must sit the for 120 days. This is so that any unknown creditors will have a chance to come forward and claim their funds. After the time period is up they can distribute the funds and close the estate with the court.
Without a Will
If you pass without a will, your assets are still subject to the same $100,000 and $75,000 limitations. Who can file the probate will depend on who survives you. The order of priority in Arizona goes spouse, children, parents, siblings. If there is more than one person in a call (i.e. multiple children or siblings) they will have to choose who will serve. Then the remaining ones will have to sign documents to allow the appointment of the chosen personal representative.
The probate process is the same as when you have a will. The only difference is how assets will be distributed. Instead of following instructions left in the will, the distributions are done according to the laws of intestate succession. This is based on the same line of succession that the personal representative does: spouse, children, parents and then children. (However, there are different rules when there is a second marriage with children from a previous relationship.)
When You Have a Trust
Having a trust, the process after you pass is extremely simplified. When you pass, your successor trustee will contact the companies where your assets are and show them a death certificate and a copy of the trust documents. They then will be able to access the assets and immediately distribute it to the beneficiaries according to your provisions. As you can see, this is much easier than what happens when you do not have a trust.
Questions? Want to schedule an appointment? Contact us by clicking here.