This comprehensive overview of Arizona inheritance law will help you understand your rights and responsibilities as an inheritor or executor. From the distribution of assets in the event of dying without a will to the filing of necessary tax returns, this guide covers all the essential information you need to navigate the inheritance process in Arizona.

Overview of How Arizona Inheritance Law Works

In Arizona, the process of inheriting assets after someone dies depends on whether the deceased person, known as the decedent, had a will. If the decedent had a will, i.e., testate, their assets would be distributed according to its instructions. If the decedent did not have a will (i.e., intestate), their assets would be distributed according to state law.

Also, if the decedent had a will but did not address all their assets, the remaining assets will be distributed according to state law (i.e., partial intestate succession).

The specific distribution of assets depends on the relationship between the inheritor and decedent, the value of the assets, and instructions or limitations in the will.

Are There Inheritance Taxes or Estate Taxes in Arizona?

Arizona does not have inheritance or estate taxes, unlike some other states. This means that residents and nonresidents owning real property or personal property in Arizona do not have to pay taxes on inherited assets or the value of theestate. Depending on the size of the estate, there may be federal taxes to consider.

Following an individual’s death, you must complete the following tax-related tasks:

File the final individual federal & state income tax returns, due by the tax day of the year that follows the individual’s death.
File a federal estate/trust income tax return, due by the 15th day of April of the year after the individual’s death.

This is only necessary for individual estates with a gross asset and preceding taxable gift value of $12.92 million ($25.84 million for couples) in 2023.

It is worth noting that the estate of a deceased person does not inherit their Social Security number. As a result, the estate may need more property identification before the Internal Revenue Service (IRS). You can resolve this issue by applying for an employer identification number (EIN) online, by mail, or by fax because the EIN represents the estate on official tax documents.

Also, carefully review all relevant tax laws and seek legal guidance from estate planning attorneys if you have any questions about the tax implications of inheritance in Arizona.

Inheritance With a Will (Testate Succession) in Arizona

Under Arizona inheritance law, a will is considered valid if it meets specific requirements and is labeled as “testate” in the state. Distributing the testator’s assets is known as testate succession if a person dies with a valid will.

In this scenario, the decedent has complete control over how they will distribute their assets. It is essential to follow the proper legal procedures when creating a will to ensure it is valid in Arizona. It includes having at least two witnesses present when the will is signed and having the witnesses sign it. It is generally advisable to have a professional draw up your Arizona will to make sure it is correct.

The decedent may also choose an executor to manage the distribution of their assets. It is crucial to select an executor with no financial interest in the estate and who has some familiarity with the decedent and their family. The executor is responsible for carrying out the instructions outlined in the will and ensuring that the assets are distributed according to the decedent’s wishes.

For those who want to have even more protection of their wishes after death, a Living Trust in Arizona helps protect your assets from creditors, predators, and divorcing spouses. It also helps your family avoid probate upon your death.

Inheritance Without a Will (Intestate Succession) in Arizona

Arizona’s intestate succession laws dictate the distribution of a person’s estate assets if they die without a valid will. The intestacy laws state that the decedent’s spouse and other heirs, as determined by state law, are entitled to inherit any portion of the estate not covered by the decedent’s will.

The decedent’s will cannot exclude or limit the rights of an heir unless it is deemed valid. If there are no qualified heirs to claim the inheritance, such as a spouse or other family members, the State of Arizona acquires the intestate estate.

What Is an Intestate Estate in Arizona?

Intestate inheritance rules in Arizona only apply to estate assets, which are assets that must go through the probate process. These rules do not apply to non-probate assets or assets held in trust.

According to Arizona probate law, a person’s estate consists only of assets not covered by a non-probate transfer or held in a trust. Non-probate assets include joint tenancy with the right of survivorship and bank or investment accounts with a listed beneficiary.

In Arizona, bank accounts or retirement accounts owned by two or more individuals are automatically considered joint tenancy with the right of survivorship unless the account documents specify otherwise. This means that upon the death of one account holder, the surviving account holder will inherit the assets, regardless of the terms of a will. The terms of the trust document govern trust assets.

Inheritance With Partial Intestacy in Arizona

In Arizona, a person can die partially intestate, which means they have a will in place, but the will does not address all of their estate assets. When this occurs, the assets not covered by the will are subject to the rules of intestate inheritance.

The state law determines the distribution of estate assets that the will does not cover rather than the terms of the will. These assets will be distributed according to a predetermined hierarchy of heirs, which includes the deceased person’s spouse, children, and other blood relatives.

It is wise to ensure your will is comprehensive and covers all of your estate assets to avoid partial intestacy. If you have questions about how you distribute your assets upon death, you should consult with experienced estate planning attorneys who can advise you on the best way to structure your will and other estate planning documents.

Who Is Considered a Decedent’s Heir in Arizona?

In Arizona, when a person dies without a valid will, the court distributes their estate assets according to the rules of intestate succession.

These rules establish a predetermined hierarchy of heirs entitled to inherit the decedent’s assets. Here’s the order:

Spouses

According to Arizona inheritance laws, the deceased’s spouse is typically entitled to inherit their entire intestate estate. This applies when there are no children from the marriage or where all the children are also the spouse’s children.

However, if there is at least one child from a preceding relationship, the spouse will only inherit half of the estate’s separate property. The child/children will inherit the other half of the separate property and the decedent’s share of community property.

Children

Under Arizona inheritance laws, children will inherit the entire intestate estate of their parents if the parents were divorced at the time of their death. If the parent was married and all their children were born into the marriage, the children would not inherit any part of the estate.

However, suppose the parent or their spouse had children from another relationship. In that case, the children’s share of the estate will be half of the separate property and half of the community property.

Biological children born during the parent’s lifetime have substantial rights to inheritance under Arizona law. This includes children born within the marriage and those adopted or conceived before the parent’s death but born afterward. Grandchildren may also be entitled to inherit if their parent (the deceased’s child) predeceased the parent.

Stepchildren and foster children do not have inherent rights to inherit from the intestate estate, nor do biological children who have been successfully put up for adoption. No matter how long they lived in the parent’s home, these children are not entitled to inherit from the intestate estate.

Parents, Siblings, and Extended Family

The intestate succession process will determine how to distribute your property if you are unmarried and without children. This process is more complex than when there is a surviving spouse or children. Here is an outline of the hierarchy of how the State law distributes your asset:

If you have no surviving spouse or children but have surviving parents, the state passes your entire estate to your surviving parents.
Your siblings will split your estate evenly if you have no surviving parents.
If you have no surviving siblings, your paternal or maternal grandparents inherit your estate.
And if you have no surviving grandparents, your paternal or maternal aunts and uncles will split your estate evenly.

If the estate remains unclaimed after these potential heirs have been considered, it will escheat to the state. That means the state will assume ownership of the unclaimed assets and manage them according to state laws and regulations.

You may have to go through probate, so be sure you know everything about probate document preparation ahead of time, to avoid any unnecessary complications. It’s best to get your affairs in order before there is a crisis, making it easier for everyone involved.