A loved one dies and the real property (land with or without buildings) is yours, or so you think, and you are ready to sell, but you learn that the property or some interest in the property is still owned by the Decedent. What do you do? This dilemma arises in a variety of situations and the process to resolve it will vary significantly based on the circumstances. The process also will vary based on applicable state law. This article applies only to Arizona law.
The first question is whether there is a right of survivorship interest in the property. If the deed states “community property with right of survivorship” or “joint tenancy with right of survivorship,” transfer of title is quick and simple. The survivor need only prepare an Affidavit Terminating Community Property or Affidavit Terminating Joint Tenancy, attach a certified copy of the death certificate and record it in the county where the property is located. No new deed is prepared; the title is clear to the survivor. If there is a certified copy of the death certificate handy, this will cause no delay in the sale and transfer of the property.
If there is no right of survivorship on the title, the process is more complicated. However, if the following criteria are met, it may qualify for transfer of “small estate” by affidavit: (1) equity in the real property (assessed value less mortgages and other liens) is less than $100,000.00, (2) the personal property, including bank accounts, furniture, jewelry, etc. does not exceed $75,000.00, (3) creditors and taxes have been paid, and (4) at least six months have passed since the Decedent died, then the property may be able to be transferred by affidavit.
If there is a valid Will, then the beneficiary of the property under the Will can file the affidavit, attaching, the original Will. If there is no Will, but all other criteria are met for the transfer of a “small estate” by affidavit, the surviving spouse can file the affidavit. Or, if the Decedent had children who were not the surviving spouse’s children, one of the children could file the affidavit to claim their interest in the property. Or, if there is no surviving spouse or child, a parent of Decedent may file the affidavit. Or, if there is no surviving spouse, child or parent, a sibling may file the affidavit. However, if there are others with an interest in the real property, the affidavit must include an assignment of all the others’ interests in the property.
The affidavit for transfer of the small estate, with all the required information, is filed with the County Superior Court, together with the original Will, if there is one, and a certified copy of the death certificate. When approved by the Probate Court Registrar, which should be just a few days, then a certified copy of the Affidavit with the attachments should be recorded with the applicable County Recorder. Once the affidavit is prepared with attachments, this process usually takes less than a week to provide a recordable document to escrow for transfer of the real property.
However, if the equity exceeds $100,000.00, there is personal property exceeding $75,000.00, creditors or taxes have not been paid, the heirs cannot wait six months after the Decedent dies, or cannot resolve others’ interests in the real property, then the heirs will have to file probate with or without a Will. If the Decedent died within two years of the probate, the person applying to be Personal Representative or Administrator must send notice of the probate to known creditors and publish notice for unknown creditors and give the creditors four months to submit their claims on the Decedent’s property. While the creditors submit their claims, the Personal Representative of the estate will be appointed and can list and even sell the property. However, the proceeds of the property may be needed to pay the creditors’ claims before the remainder is distributed to the heirs. If all goes smoothly, a simple probate could be closed in just over four months.
Of course it can be more complicated than that. Other heirs could object to the Will and/or the appointment of the Personal Representative. If there is no Will or the Will fails to waive bond to the person seeking to be Personal Representative, then either all heirs will have to waive the bond or the Personal Representative will have to post a bond for the value of the equity in the estate or the property could be restricted from sale without Court approval. Although it is rare, a probate to which heirs object or for which there are complex creditor’s claims may extend for years.
In one recent case, a widow lived in the house she had owned with her husband as “Mr. X and Mrs. X, husband and wife.” They neglected to indicate on the deed whether the property was to be owned as community property or joint tenancy and, most importantly, they neglected to indicate “with right of survivorship.” In Arizona, it will be presumed to be held in community property without right of survivorship. Since Mr. X had children that were not children of Mrs. X, under Arizona law Mrs. X inherits half of Mr. X’s interest and Mr. X’s children inherit the other half. Even though the equity was less than $30,000.00, this estate could not be resolved by affidavit. After probate, the result will be that Mrs. X will own 75% and the children will own portions of the remaining 25%.
If the children want to be nice to their father’s widow they could renounce their interest in the estate. However, a renunciation just omits their inheritance and leaves their interest to other heirs. A better option would be for them to assign their interest to their father’s widow or accept the inheritance, then quit claim it back to her.
While these processes in Arizona are not as time consuming or costly as in many other jurisdictions, there are complexities and it must be done correctly. We would be happy to assist you through probate, by affidavit or otherwise.