After you have fully administered a probate case, what are the steps necessary to close an Arizona estate? This blog discusses five things you need to do when closing an Arizona probate case.
1. Decide Whether to Close Formally or Informally. A probate proceeding can be closed formally (i.e., after notice and hearing) or informally (i.e., without a hearing). An informal closing is done with the filing of a Closing Statement by the personal representative. Specifically, the Closing Statement is required to include the following avowals in a verified pleading:
A formal closing is required if there is no waiver of accounting or if there are objections or other grumblings regarding the accounting, the distributions, or the administration of the estate. A formal closing requires a hearing before the court, with all parties being given an opportunity to appear and object. In contrast, an informal closing does not require a hearing, and, except for fraud, misrepresentation, and inadequate disclosure, parties have a 6-month period of time after the filing of the Closing Statement to bring an action against the personal representative.
2. Pay All Final Expenses. After the assets of the estate have been fully administered, the next step is to make sure that all valid claims and all remaining administrative expenses are paid. Administrative expenses include personal representative fees and expenses, attorney’s fees, accounting fees, taxes, and other expenses related to the administration of the estate.
3. Complete Final Accounting. Regardless of the closing method, the personal representative must prepare a final accounting in writing. Note that there is no requirement of a court-approved accounting although an accounting in some form must be provided to all distributees. Typically, a waiver of accounting is obtained from each beneficiary/distributee that accompanies the accounting. The waiver is then filed with the court and accompanies the Closing Statement. If a waiver is not forthcoming or if there are objections from the beneficiaries, then a formal proceeding with a court-approved accounting should be initiated. At the present time, court approval of an accounting can take several months. While there is no statutorily mandated format, the Maricopa County probate courts will insist on an accounting with excruciatingly strict compliance with the “guidelines” of the probate court accountant. Those “guidelines,” which do not correspond to any GAAP formats, are available online at:
4. Prepare a Proposal for Distribution (for Informal Closings). A proposal for distribution is a document that sets forth the proposed distribution to each of the distributees. Under Arizona law, if the personal representative gives a complete accounting and a proposal for distribution to each of the distributees, then the distributees have thirty (30) days to object to the proposed distribution, or they waive their right to object. This requirement needs to be specifically set forth for the distributees in writing. In probate cases that close informally, I always recommend sending out a proposal for distribution to the distributees, so that, if the distributees do not object within such 30-day period, they are barred from doing so. Of course, if a distributee has legitimate questions about the proposal for distribution, then I recommend modifying it appropriately to see if the personal representative can get all of the distributees to agree to the proposed distribution. Finally, if a distributee objects to the proposed distribution, and there is no way to resolve the dispute, the personal representative will need to close the probate case formally by filing a petition with the court, so that the judge can rule on the matter at a hearing.
5. Consider the Statute of Limitations for Claims Against Personal Representatives. If a probate case is closed formally, then all claims against the personal representative are barred after the judge enters the final order approving the proposed distribution and dismissing the personal representative. However, if a probate case is closed informally by filing a Closing Statement, there is still a 6-month period in which the personal representative can be challenged, exclusive of fraud, misrepresentation, or inadequate disclosure.
As you can see, there are several things that the personal representative needs to do to administer an Arizona probate case. That is why I always recommend seeking the help of an experienced Arizona probate attorney in completing these tasks.
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