Conveyance after Death Flashcards
Wills
A will or last will and testament is an instrument made by an individual to voluntarily convey title to their property after their death. A will is also called an amendatory instrument.
It prescribes the method of distribution of the owner’s estate to heirs. A will takes effect only after the death of the person who made the will; until that time, any property covered by the will can be conveyed by the owner and can thus be removed from the owner’s estate.
Hereditament
Any property, whether real or personal, that is capable of being inherited is called a hereditament. A hereditament should be handled or disposed of by a will.
Intestate
When a person dies without having left a valid will, we say they have died intestate. The person who has died (also called the decedent) may leave behind real estate and personal property. This passes to their heirs according to the intestate succession laws. In effect, the state makes a will for the decedent.
Testate
In contrast, a person who dies testate has prepared a will indicating how property will be conveyed after their death.
Intestate vs. Testate
Testate is the name for conditions in which the owner of a property dies having left a valid will.
Intestate is the name for conditions in which the owner of a property dies without having left a valid will.
In Short
A will is a written or verbal legal statement by an owner (testator) that prescribes the method of distribution of the owner’s estate to heirs.
Transfer of a Deceased Person’s Property
There’s all sorts of lingo that you’ll hear in the world of conveyance after death. Let’s get a quick rundown of the who’s who of wills.
Testator
Because a person who has died and left a will is said to have died testate, a party who makes a will is known as a testator.
Beneficiary
The beneficiaries of the will are typically called heirs.
Heirs: Personal Property
A gift of personal property left by a will is known as a legacy or bequest – for example, a diamond ring.
The person receiving the personal property is known as a legatee. 💍
Heirs: Real Property
A gift of real property left by a will is known as a devise. The person who receives real property by will is known as a devisee. 🏠
The devisee would be considered the owner of the real property immediately upon the original owner’s death.
Parties to a Will
Much like with deeds, there are certain legal requirements that must be met when making a will that is considered valid.
Competent Testator
First, the testator must be an adult, and of sound mind, at the time they execute the will.
There are no rigid tests to determine the capacity to make a will. Usually, the courts hold that the testator must have sufficient mental capacity to understand the nature and extent of their property, the identity of the natural heirs, and the fact that execution of the will means that the property passes to those named in the will at their death.
A will that was made by someone who had previously been declared mentally incompetent by the courts would be void, as well.
Voluntary
The drawing of a will must be a voluntary act, free of any undue influence by other people.
This requirement helps protect testators and aims to eliminate property owners from being swayed and pressured. For example, a husband or wife may feel pressured by their spouse to designate their property in a certain way, or a grandparent may feel influenced by their grandchildren to will their property contrary to their desires.
Lawful
Because a will must be valid to convey title to real estate effectively, it must be executed and prepared in accordance with the laws of the state where the real estate is located.
Codicil
Remember when you had to learn about all of the amendments to the constitution during school? Well, wills can have amendments, too. When they do, and when they’re official, they’re called codicils. Codicils are changes or additions made to a will that already exists. These alter the will, but they don’t rewrite it.
Codicils are important because, besides entirely rewriting a will, they are the only way to change a will. Wills aren’t like grocery lists or love letters to your high school sweetheart. You can’t erase, cross-out, or draw hearts over existing words to make changes – things need to be a little more official than that. If a testator scratches out a part of a will or makes their own changes, these changes will not be honored by the courts.
If a party wants to completely change a will, however, the will may be revoked at any time prior to the death of the testator.
Pass It On
Legally, a decedent’s title to their real estate immediately passes either to the persons named in the will or to the heirs by descent. However, the will must be probated if there is a dispute among the devisees. We’ll go over probate later on in this chapter.
Witnesses
Any witnesses to the creation of the will should NOT be anyone who is named as devisee or legatee in the will. That would be a big conflict of interest.
Legal Requirements for Making a Will
There are three types of wills we’ll talk about. Some are recognized by the state, while others aren’t.
Formal Will
All states and courts recognize a formal or witnessed will. That’s a will created by an attorney as well and signed by at least two witnesses.
These types of wills are highly recognized and honored because they’re created by third parties and officially witnessed, so there is less room for error in conveyance. But there are other types of wills, as well. Let’s talk about them!
Holographic Will
If a will is handwritten, created solely by the testator, and not witnessed, it is called a holographic will.
Holographic wills are recognized in Arizona. Note that holographic wills can’t be typed — they must be handwritten, dated, and signed.
And though they’re legally recognized, holographic wills are NOT recommended as a first choice because they are more easily challenged by people claiming to be heirs and are more subject to fraud.
Oral Will
Oral wills are also called nuncupative wills and are wills created verbally by a party directly before their death. These are also referred to as a deathbed will.
Only some states recognize these types of wills, as they allow more room for error and fraud (much like holographic wills). Arizona does not recognize nuncupative wills.
Types of Wills
Now that you know all about wills, let’s talk about probate.
Probate is a legal process by which a court determines the validity of a will and establishes the assets of a decedent and who will inherit those assets. Probate is not always necessary, especially in straightforward cases or when an estate is small. Probate court is also referred to as surrogate court.
Probate proceedings take place in one of these places:
The county where the deceased resided, if they had a fixed place of residence
The county where their principal estate was located
The county where they died
Starting Probate
To initiate probate proceedings, the custodian of the will, an heir, or another interested party must petition and present their issue to the court. The court then holds a hearing to determine the validity of the will and/or the order of descent, should no valid will exist.
Probate Outcomes
If the will is upheld, the property is distributed according to the will’s provisions; and if the decedent owned real estate in another county, a certified copy of the probate would be recorded in that county also.
If the court declares that the will is invalid or too much time has passed since the date of death, any property owned by the decedent passes by the laws of descent.
Paying off Debts
It’s important to note that, whether the will is determined valid or invalid, creditors and lienors will need to be paid off before the estate is distributed to heirs.
Follow the yellow brick… arrows below to see how an estate’s assets are distributed during a testate probate proceeding.
Probate outcome flow chart based on testate with named heirs.
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Testate Probate Proceedings
Probate proceedings don’t just happen on their own. They need people to carry them out. Let’s meet some of those probate people.
Executor An executor (executrix is another seldom-used antiquated term for a female executor) is the person identified in a will to carry out its provisions, including the disbursement of property. After the heirs are established, the court gives the executor the authority to appraise the assets of the estate and satisfy all debts that are owed by the decedent. Executors are also referred to as personal representatives.
Real property specified in a will passes with the debts against it unless the will specifically states that the debt is to be paid from the estate.
Executor Duties
The executor is responsible for paying:
Federal estate taxes
State inheritance taxes
Other claims (such as liens) payable against the estate
The remaining assets of the estate are distributed according to the provisions of the will.
Administrator
If no executor was named in the will, the court appoints an administrator – also known as a personal representative — to oversee the administration and distribution of the estate. The court gives the administrator the authority to appraise the assets of the estate and satisfy all debts that are owed by the decedent.
The administrator is responsible for paying:
Federal estate taxes
State inheritance taxes
Other claims payable against the estate
Then the remaining assets of the estate are distributed according to the state law of descent.
Leinors and Creditors
It’s important to note that, whether a person has died testate or intestate, outstanding liens and debts to creditors must first be settled.
Probate proceedings will include claims by lienors and creditors against the estate of the deceased. These claims follow the rules of lien priority. For instance, if there is an unpaid vehicle loan in the name of the deceased, as well as unpaid real estate taxes, the tax lien will receive the superior lien priority position.
Once all liens have been paid to the appropriate parties, the estate can be distributed to heirs.
The Probate People
When a person dies intestate, by law the title to real estate and personal property of an intestate decedent:
Passes to their heirs
Is distributed according to state laws
These laws are referred to as descent and distribution.
Remember: All lienors and creditors are paid off BEFORE the estate is distributed, even when a person dies intestate.
A hand reaching out offering money.
Descent and Distribution
During the probate process, the court hears any legal life estate claims, including dower or curtesy, elective share, or homestead claims (we learned about these earlier in the course). Because Arizona is a community property state, we don’t do elective share or dower/curtesy. After that, under the laws of descent and distribution, property is transferred to the decedent’s heirs.
Joint Tenancy
Recall that joint tenancy with the right of survivorship allows a co-owner to inherit a property without going through probate. So even if a deceased co-owner with joint tenancy died intestate, their living co-owner can inherit the property without going through the probate process. This is one advantage of joint tenancy with the right of survivorship. In Arizona, married couples who have taken title as community property with the right of survivorship (CPWROS) will be able to inherit their jointly-owned property this way. Couples who took title as community property without the right of survivorship will not.
Intestate Probate Proceedings
In what order do heirs inherit property? It’s different in every state. Here’s how it works in Arizona.
Spouse
If a decedent is survived by a spouse, that person is generally first in line to inherit property. Remember that they own their half of the community property already, so they keep that. If there are no surviving children or grandchildren, the spouse inherits all of the deceased’s separate property plus their half of the community property.
Children
In the inheritance world, children, grandchildren, great-grandchildren, etc. are all described using the word “issue.” So when we say issue, we mean people directly descended from someone. It just makes for less complicated sentences than listing out all of the possible grands and great-grands.
If a couple has issue that are the couple’s together, the spouse inherits everything (the same as if there were no issue). If there are issue that were related to the deceased but not to the spouse, they inherit half of the decedent’s separate property and all of the decedent’s community property.
If there are issue but no spouse, they inherit all the decedent’s property.
Parents, Siblings, Etc.
If the decedent doesn’t have a living spouse or issue, the next people in line to inherit their property are their parents. After that it goes: siblings, then nieces and nephews (or their kids), then grandparents, aunts, uncles, or cousins (or their kids).
Escheat
If there are no claims made by creditors on the property and no heirs are found, it will escheat to the state. This is a last resort when absolutely no living relatives can be found.
Review
Take a look at this chart to review how an estate gets distributed after probate when the owner dies intestate.
Probate outcome flow chart for scenarios where decedent passes intestate with and without heirs.
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The Parties to Descent and Distribution
Will you look at that? This chapter has come to an end! And now we know a little something about what happens after we die. Not everything, of course. But at least we know what happens to our stuff after we pass, and isn’t that really what matters most? (It isn’t.)
Key Terms
Here are the key terms you learned in this chapter:
intestate
the name for conditions in which the owner of a property dies without having left a valid will
testate
the name for conditions in which the owner of a property dies having left a valid will
testator
the party who makes a will
will
a written or verbal legal statement by an owner (testator) prescribes the method of distribution of the owner’s estate to heirs
Key Concepts & Principles
Here are the concepts and principles you’ll want to master from this chapter.
Intestate vs. Testate
Testate is the name for conditions in which the owner of a property dies having left a valid will.
Intestate is the name for conditions in which the owner of a property dies without having left a valid will.
Kinds of Wills
Formal will: created by a lawyer, signed by two witnesses (recognized everywhere)
Holographic will: created by the testator, handwritten, dated, and signed, not witnessed (recognized in AZ but easier to contest)
Nuncupative (oral) will: created verbally by the testator, told to a witness before dying (not recognized in AZ)
Executor and Administrator
An executor is the person identified in a will to carry out its provisions, including the disbursement of property.
If no executor was named in the will, the court appoints an administrator – also known as a personal representative — to oversee the administration and distribution of the estate.
Both are responsible for paying:
Federal estate taxes
State inheritance taxes
Other claims payable against the estate
Probate Proceedings
Here’s how a person’s assets are distributed in probate.
Probate outcome flow chart for scenarios where decedent passes testate with named heirs and intestate with and without heirs
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Chapter Summary
