What Is A Small Estate Affidavit

what is a small estateIf you reside in the State of Arizona, or if you have family that resides in Arizona, you will want to make sure that you understand how the state’s laws may affect your family. The state of Arizona has comprehensive laws that govern property, inheritance and estate procedures.  A misunderstanding of those laws might mean using an incorrect process and failing to accomplish your goal or causing additional time and expense to the process.  Many individuals have maneuvered their way through a pile of court documentation required to open and manage the estate of a family member – only to discover later that the estate could have been managed by a summary procedure or small estate affidavit.  What is a small estate affidavit and when is it appropriate?

What Is A Small Estate

Arizona law defines small estates are as those in which the decedent owned less than $100,000 in real estate equity or less than $75,000 worth of personal property. These values are only counted for those assets subject to probate which means they are assets which are titled only in the name of the decedent and do not have beneficiary designations.  For example a decedent may have an investment account worth $200,000 which has beneficiaries listed to receive the account after his or her death and that decedent may have a bank account with $50,000 that is in his or her name alone.  The $200,000 investment account is not part of an estate subject to probate; only the $50,000 bank account would be subject to probate. That bank account can be collected with a small estate affidavit and without court involvement.  For any estate with personal property subject to probate and valued above the $75,000 amount, probate will be required.

The small estate affidavit process may only be used in cases where probate is not required.  An exception is when there has been a probate administration in the past and new property is discovered; if the probate administration has been closed for more than one year, the small estate affidavit can be used to collect the property.

It is important that Arizona residents and their family understand what is involved with a small estate and if they will need a small estate affidavit. Below are some commonly asked questions about a small estate affidavit for real property and known as an Affidavit of Succession to Real Property.

How Is Real Estate Transferred

For any estate where the decedent owned an interest in real property with an equity value over $100,000, probate will be required.  A.R.S. Section 14-3971 provides that the value of the decedent’s interest in that real property shall be determined from the full cash value of the property as shown on the assessment rolls for the year in which the decedent died, except that in the case of a debt secured by a lien on real property then the equity value of the property is determined by deducting the unpaid principal balance due on the debt (the mortgage amount) as of the date of death from the total value of the real property; this provides the equity value.

In most cases, but not all, the tax assessment (full cash value) of the property is often less than the current fair market value of the real estate.

An Affidavit of Succession to Real Property cannot be executed until six months after the owner has died. This can be an important consideration in deciding whether the affidavit procedure is appropriate. There are circumstances where the property must be sold before a six month period has elapsed. In these cases, a probate is required to appoint a personal representative (executor) who is given authority to manage the estate and sell the property.  An Affidavit of Succession to Real Property can be used to transfer the property to beneficiaries named under a Will or to intestate heirs.

An Affidavit of Succession to Real Property must also be filed in Court and then a certified copy of the Affidavit is recorded in the County where the property is located; the recorded Affidavit is like a deed and has the effect of conveying title to the successors.  Although the Affidavit is filed in Court, it does not commence a probate administration; it simply complies with a statutory requirement.

Paying Off The Mortgage

If there is still a mortgage on real property that is being passed to a successor(s) under an Affidavit procedure, that property is conveyed subject to the mortgage. The holder of that mortgage still has  right to collect the mortgage. This can create problems depending on the language in the lien document (called a Deed of Trust in most cases).  A lender will not simply transfer title to a mortgage to another person; often a successor will need to qualify for the existing amount of the debt or refinance the debt. You may want to research the consequences of changing the title with the lender or seek advice from a legal professional.

Please check our online library for more information on the Small Estate Affidavit and for available forms.