Why Nonprobate Transfers Matter
A significant portion of most estates never passes through probate. Life insurance policies, retirement accounts, pay-on-death bank accounts, trusts, and beneficiary deeds all transfer directly to the named recipient at death. These are not probate assets. This statute provides the legal foundation for treating those transfers as nontestamentary. They stand on their own and do not need to follow the rules that govern wills.
A provision for a nonprobate transfer on death in any insurance policy, contract of employment, bond, mortgage, promissory note, certificated or uncertificated security, account agreement, custodial agreement, deposit agreement, compensation plan, pension plan, individual retirement plan, employee benefit plan, trust, conveyance, deed of gift, marital property agreement or other written instrument of a similar nature is nontestamentary.
A.R.S. § 14-6101(A)The practical effect is straightforward. If you name a beneficiary on your life insurance policy or retirement account, that designation controls who receives the asset. It does not matter what your will says about the same asset. The beneficiary designation takes priority.
What Makes an Instrument Nontestamentary
The statute lists three types of provisions that qualify. First, any written instrument directing that money or benefits be paid after death to a designated person. Second, any instrument where payment ceases if the promisee or promisor dies before payment. Third, any instrument where real property or other assets held in the decedent's name pass to a designated person at death.
This covers a wide range of arrangements. Community property agreements, separate property designations, and assets held in trust all fall under this statute. Even a deed of gift that takes effect at death qualifies.
This section does not limit rights of creditors under other laws of this state.
A.R.S. § 14-6101(C)That last line is important. While nonprobate transfers skip the probate process, they do not necessarily escape creditor claims. Separate rules govern when creditors can reach nonprobate assets. This is especially relevant when the probate estate is not large enough to pay outstanding debts.
For the surviving spouse and other family members, understanding which assets are probate assets and which pass outside probate is essential to effective estate planning. Keeping beneficiary designations current helps ensure that assets go where intended.