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. This statute provides the legal foundation for treating those transfers as nontestamentary, meaning 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 wins.
What Makes an Instrument Nontestamentary
The statute spells out 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 property passes to a designated person at death.
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. Arizona law provides separate rules for when creditors can reach nonprobate assets, particularly when the probate estate is insufficient to pay outstanding debts.
