Last will and testament

Regardless if a living trust is involved in your estate plan, you will likely have a last will for the following purposes:

• Naming guardians for dependents
• Distributing personal assets without designated beneficiaries nor in a trust
• Naming executors to handle distribution of assets not in a trust

If you die without a will, Arizona has a default will for you naming beneficiaries based on how closely related.

A last will and testament can create a testamentary trust to hold assets like a living trust for controlling distributions to young beneficiaries . However, a last will and testament nor a testamentary trust help assets avoid probate.

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Probate's purpose

Probate is a court process to:

1. Validate a will
2. Present an opportunity for creditors to be repaid
3. Oversee the transition of your estate

A will is valid in Arizona if it is in writing, is signed by the decedant and has two witnesses. A.R.S. § 14-2502
A handwritten will is valid if it is completely handwritten regardless if it is witnessed.   A.R.S. § 14-2503   Handwritten wills (also known as holographic wills) are typically subject to greater scrutiny by the probate court.

In Arizona, regardless of the probate type, creditors are given a four-month window of probate to make a claim against the estate. If a creditor misses this opportunity then the creditor is out of luck - a big advantage over a living trust which leaves the window for creditors open if a detailed list of debts is not provided with estate planning documents.

If you do not have family, friends or want to pay a professional service such as a corporate trustee to handle your estate's transition, the court can provide needed oversight to ensure your will's instructions are fulfilled.

Estates with less than $75,000 of real property (less any leans/encumbrances) and $50,000 of personal property (less any leans/encumbrances) can avoid probate in Arizona with the small estate exemption. A.R.S. § 14-3971

Some assets are not included in the calculation of probate assets. These include assets with named beneficiaries such as but limited to life insurance, IRAs, 401(k)'s, bank accounts with POD's (payable on death) and real estate using beneficiary deeds.

Probate is not a tax. Probate costs include:

1. Court filing fees which in Arizona are usually a few hundred dollars
2. Newspaper publishing of Notice to Creditors which costs about fifty dollars
3. If required, the cost of a obtaining a bond
4. Attorney fees if legal help is needed which can be several hundred to several thousand dollars.

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Naming guardians

A last will and testament is used to name guardians for dependents. Read more on dependent's guardians.

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Testamentary trusts

A last will and testament can create a trust to hold assets for beneficiaries similar to a living trust. The testamentary trust is not created until after the will's creator has passed. Assets are transferred into the trust after the creator passes (which is why testamentary trusts do not help avoid probate).

Testamentary trusts can hold payouts from life insurance or the proceeds from the sale of other estate assets until certain requirements are met by a beneficiary, such as age, education, drug testing, etc. A trustee is named by the will's creator to manage the trust for the beneficiary until the trust is empty.