Whereas most states will categorize estate property depending on who specifically owns it, Arizona’s community and separate property laws muddy these waters a bit. On the bright side, Arizona inheritance laws do subject its residents and nonresidents who own property in the state to any inheritance or estate taxes. If you feel like you might have some questions about estate planning, the SmartAsset’s free financial advisor matching tool will set you up with financial advisors who serve your area.
Does Arizona Have an Inheritance Tax or Estate Tax?
There are no inheritance taxes or estate taxes in Arizona. Residents and nonresidents owning property there can rejoice. But that doesn’t leave you exempt from a number of other necessary tax filings, like the following:
- Final individual federal and state income tax returns – each due by tax day of the year following the individual’s death
- Federal estate/trust income tax return – due by April 15 of the year following the individual’s death
- Federal estate tax return – due nine months after the individual’s death, though an automatic six-month extension is available if asked for prior to the conclusion of the nine-month period
- This is required only of individual estates that exceed a gross asset and prior taxable gift value of $12.06 million ($24.12 for couples) in 2022
The estate of a decedent doesn’t inherit his or her Social Security number, leaving the estate without property identification in the eyes of the IRS. To solve this problem, apply online, by fax or via mail for an employer identification number (EIN) to represent the estate on official tax paperwork.
Dying With a Will in Arizona
According to Arizona inheritance laws, a will is labeled testate in Arizona if it follows all the laws that make a will valid. This is the most ideal situation because it allows the decedent to have full control over how to distribute his or her property. So if you’re in the process of making a will, be sure to have at least two witnesses see you sign it, and then have them sign it themselves. While state law clearly prefers that a professional will be drawn up, it can also be handwritten.
Choosing an executor for the estate is the second most important issue a valid will addresses, besides deciding property heirs. It would be wise to name an executor who has no financial interest in the estate and has some level of knowledge of the decedent, his or her family or both.
Dying Without a Will in Arizona
The term intestate refers to any estates that do not have a valid will attached them, or any will at all for that matter. If such a scenario arises, the intestate succession laws of Arizona will take over and decide who will inherit certain areas of the estate, such as community property and separate property.
Although the court system is equipped to enforce these guidelines, it will not physically transfer assets and property from the estate to an heir. So since a testate will usually names an executor to handle these matters and any debts of the decedent, the court will choose one itself.
Community Property in Arizona Inheritance Law
Arizona is a community property state, one of nine across the U.S. Property is considered communal between two spouses if either one of them acquired the property within the time the marriage was legal. Because the principle of community property must include spouses, a decedent can have community property if and only if he or she was married at the time of death, according to Arizona inheritance laws.
Inheritances and gifts made to an individual that are not considered part of a marriage’s community property are therefore separate property. However, this stipulation is voided if you place these assets into a joint banking account, as the court will then be forced to deem into communal.
Separate Property in Arizona Inheritance Laws
Simply put, if you are unmarried, everything that you own is separate property, according to Arizona inheritance laws. But the idea of separate property isn’t that simple, as it is divided into two subcategories: separate personal property and separate real property. Real property is land or anything that’s affixed to it, such as a home or other structure, while personal property is basically everything else.
The Probate Process in Arizona Inheritance Laws
Any estates that consist of less than $75,000 in personal property or $100,000 in real property can skip the probate process altogether. These are formally titled as small estates, and an executor handles them with no court supervision.
Should the decedent’s estate surpass either of the above stipulations, though, it will likely have to pass through either formal probate, informal probate or supervised probate. These proceed as follows:
- Informal probate – requires possibly one court hearing, but very little other attention, if at all
- Formal probate – could call for a few appearances in court
- Supervised probate – a court and judge oversee the entire inheritance process
Spouses in Arizona Inheritance Laws
In nearly all scenarios, Arizona will allow the spouse of the deceased to inherit his or her full intestate estate. More specifically, this applies either to a marriage where neither partner had children or where all the children in the picture they had together.
Where things split off from the norm is when there’s at least one child involved who did not arise from the marriage, but rather from a prior relationship. Should this occur, the spouse will only receive half of the estate’s separate property, while the other half and the decedent’s share of community property is left to the children, according to Arizona inheritance laws.
Children in Arizona Inheritance Laws
The only situation in which your children will be given your entire intestate estate is if you are not married at the time of your death. By contrast, the sole way that they will receive no part of your estate is if you are married and your children were all born from your marriage. If either you or your spouse have had children with anyone else, your children’s share of the estate will be half of your separate property and your half of community property.
|Intestate Succession: Spouses & Children|
|Inheritance Situation||Who Inherits Your Property|
|– If spouse, but no children||– Entire estate to spouse|
|– If spouse, and only children from marriage||– Entire estate to spouse|
|– If spouse, and some children from marriage and others not||– 1/2 of separate property to spouse |
– 1/2 of separate property to children
– Decedent’s share of community property split among children
|– If children, but no spouse||– Entire estate to children|
Biological children born when you were alive have strong rights to inheritance under Arizona inheritance law. In fact, any child born within your marriage is considered your own. In addition, children you’ve adopted and those conceived before, but born following, your death are granted equal privilege.
Grandchildren are treated slightly differently. The sole way they’ll be included in your intestate estate is if their parent (your child) predeceased you.
If it is claimed that a child is illegitimately yours, it must be proven before that you are the father before intestate inheritance rights are given to him or her, according to Arizona inheritance laws.
Stepchildren and foster children, no matter how long they resided in your home, do not hold any inherent rights to receive a part of your intestate estate. The same goes for any biological children you successfully put up for adoption.
Unmarried Individuals Without Children in Arizona Inheritance Laws
Though the laws laid out above will likely be enough to handle the inheritance of many people’s estates, anyone who passes away unmarried and without children requires a more extensive intestate succession process. So if this describes you, your property will travel as follows:
|Intestate Succession: Extended Family|
|Inheritance Situation||Who Inherits Your Property|
|– If parents, but no spouse or children||– Entire estate to parents|
|– If no parents||– Estate split evenly between siblings|
|– If no siblings||– Entire estate to paternal/maternal grandparents|
|– If no grandparents||– Estate split evenly between paternal/maternal aunts and uncles|
Should an estate remain unclaimed even after everything above is reviewed, it will escheat into the state’s control.
Non-Probate Arizona Inheritances
An asset or other account is considered non-probate if there is already a beneficiary attached to it that presupposes who will receive it in the event of the owner’s death. So for those who possess these accounts, their inheritance is already taken care of:
- IRAs, 401(k)s and other retirement savings accounts
- Joint tenancy real estate
- Pay-on-death financial accounts
- Life insurance policy payouts
- Revocable trusts
Other Situations in Arizona Inheritance Laws
To retain your rights to inheritance in Arizona, you must survive the decedent by no less than 120 hours. If this policy isn’t met, your share of the intestate estate is shifted to someone else.
Should a decedent’s relative be conceived before his or her death but born posthumously, the person would inherit as much as he or she would have if born during the trustor’s lifetime, according to Arizona inheritance laws.
Valids heirs for an intestate estate are not required to be U.S. citizens or legal residents of the country. As a matter of fact, these individuals will inherit just like any other residents.
Whether a relative is full-blooded or half-blooded is immaterial as far as Arizona is concerned. In both intestate scenarios, a family member will inherit normally.
Resources for Estate Planning
Managing your own estate, or handling the intricacies of inheriting money from the estate of a loved one who has passed away, includes many complex factors to consider. It can be such an overwhelming venture — with taxes to file, possible court proceedings to go through and more — that you might want some help.
Finding a qualified financial advisor who can help doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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