A last will and testament is one of the most powerful tools for ensuring that your wishes are carried out after you pass away. It allows you to dictate how your property will be distributed; name guardians for your minor children; and even provide for charitable causes. However, despite its importance and utility, a will is not a catch-all solution. To create an effective estate plan, you must understand how state laws apply. Below are the limitations of a will in Arizona: 

Override Beneficiary Designations

One of the most common misconceptions about wills is that they can control all of a person’s assets. In reality, certain assets pass outside the probate process and are not governed by the terms of a will. For instance, these assets are distributed directly to the named beneficiaries:

• life insurance policies
• retirement accounts like IRAs or 401(k)s
• bank accounts with “payable-on-death” or “transfer-on-death” designations

Let’s say you name your spouse as the beneficiary on your life insurance policy, but later update your will to leave everything to your children. In this case, the life insurance proceeds will still go to your spouse, regardless of the instructions in your will. Under Arizona law, beneficiary designations are binding unless they are formally changed with the respective financial institution. To avoid conflicts, regularly review and update your beneficiary designations to ensure they align with your overall estate plan.

Avoid Probate

Although a will allows you to specify how your assets should be distributed, it does not help you avoid probate. Probate is the legal process through which a court validates your will and oversees the distribution of your estate. In Arizona, probate can be time-consuming and costly, particularly for larger estates or those with contested issues. So, if avoiding probate is a priority, consider setting up a living trust. This will allow your assets to bypass probate entirely and BE distributed more quickly and privately.

For example, you own a home in Phoenix and want to ensure it passes smoothly to your children. You should place the property in a revocable living trust rather than relying solely on a will. Arizona’s streamlined probate process for smaller estates (those valued under $100,000) may reduce some of the burden. However, larger or more complex estates will still face significant probate hurdles.

Manage Joint Property 

Property held in joint tenancy with rights of survivorship automatically passes to the surviving joint owner upon one owner’s death. This form of ownership is common for married couples who jointly own real estate or bank accounts. For example, you and your spouse own a house in Scottsdale. The property will automatically transfer to your spouse upon your death, regardless of what your will states.

This can create issues if you intend to leave your share of the property to someone else, such as a child from a previous marriage. To ensure your wishes are honored, you might need to restructure the ownership arrangement. You may also use other estate planning tools, such as a trust or a prenuptial agreement.

Handle All Types of Personal Wishes

While a will allows you to make many important decisions, it has limitations for certain personal instructions or non-binding requests. For instance, a will is not suitable for detailing funeral arrangements. In Arizona, funeral planning should ideally be outlined in a separate document or discussed with your loved ones. This ensures that your preferences are known and can be acted upon promptly. In most instances, the will might not be reviewed until after the funeral.

Similarly, a will cannot impose legally binding conditions on inheritance that are against public policy. For example, you cannot require an heir to marry or divorce someone as a condition of receiving their inheritance. Arizona courts, like those in other states, generally invalidate such provisions, deeming them unenforceable.

Protect Assets from Creditors

Among the significant limitations of a will is its inability to shield your estate from creditors. In Arizona, debts must be settled before any remaining assets are distributed to beneficiaries. If you leave behind huge debts, your heirs may receive less than you intended. For example, you own a business and leave it to your children. If the company has outstanding loans, those debts must be paid before your children can take full ownership.

To protect your assets from creditors, you might explore other estate planning strategies, such as setting up an irrevocable trust. Unlike a revocable trust, which you can alter during your lifetime, an irrevocable trust removes assets from your estate and places them beyond the reach of most creditors.

Account for Changes in Circumstances After Death

Life is unpredictable, and circumstances often change after a person’s death. A will cannot anticipate every eventuality, such as a beneficiary predeceasing you or new laws affecting estate taxation. While Arizona law allows for contingency clauses to address some of these issues, they cannot cover every scenario. For example, you wish to leave your estate to your two children but one passes away before you. Hence, the distribution of assets may default to the surviving child unless you specify otherwise.

To address these uncertainties, you must periodically review the limitations and update your will. Moreover, supplement your will with a durable power of attorney, a healthcare directive, and a trust to create a comprehensive estate plan that accounts for various contingencies.

A last will and testament is a cornerstone of any estate plan, but it is not a universal solution. Understanding the limitations of a will is just as important as knowing what it can accomplish. Proper estate planning often requires a combination of tools, including trusts, beneficiary designations, and careful asset titling. By working with an experienced estate planning attorney and regularly reviewing your plan, you can ensure that your wishes are honored and your loved ones are protected.