Estate Planning
We can help you create an estate plan to transfer your property to your loved
ones in an orderly fashion upon your death. An estate plan can help your family
avoid probate after your death, can minimize or eliminate any taxes that must be
paid upon your death, and can provide for the orderly transfer of the care of
your assets if you become incapacitated. Documents that will we consider when
preparing an estate plan for you are the Revocable Living Trust Agreement, Last
Will and Testament, General Durable Power of Attorney, Health Care Power of
Attorney, and Living Will.
If you are an Arizona resident when you die and you do not have any sort of
estate plan, state law determines what happens to your assets upon your death.
In order for you to make the decision about what should happen to your assets
yourself, you need some sort of estate plan.
Revocable Living Trust Agreement
The Revocable Living Trust Agreement is a popular estate planning tool in
Arizona. It has three primary purposes. First, it avoids probate upon your death
if your assets are re-titled into the name of the trust. Second, if you are
married, it minimizes or eliminates any estate tax that might otherwise be due
upon your deaths. Third, it provides a trusted loved one, family friend or
professional fiduciary the authority to manage your affairs while you are still
alive if you can no longer take care of your affairs yourself.
A Revocable Living Trust Agreement may have any number of secondary purposes. It
might preserve inheritances for your children until they reach certain ages or
stages of life. It might provide supplemental care to a beneficiary on public
assistance in a manner that does not jeopardize the benefits. It might protect
an inheritance from a beneficiary’s creditors and make sure that it is the
beneficiary who benefits.
A Revocable Living Trust Agreement is fully amendable or revocable during your
lifetime. You will retain full control over the trust and any assets that you
place in the trust while you are alive.
You will be the Trustor, the Trustee and the Beneficiary of the Revocable Living
Trust. If you are a married couple, you will likely be the Co-Trustors,
Co-Trustees and Co-Beneficiaries of the trust. The term “Trustor” is just a
legal name for the person who sets up the trust, but the Trustor also has the
authority to amend or revoke the trust. (Co-Trustors’ authority to amend or
revoke the trust may be limited after the death of the first spouse to die if
the trust includes estate tax planning provisions.)
The “Trustee” is the person or organization that manages and controls and any
assets that are owned by the trust. The Trustee is required to comply with the
terms of the Revocable Living Trust Agreement when exercising their authority.
You will name the person or institution who will serve as Trustee after you are
no longer able to serve yourself.
The Beneficiary is the person who is entitled to the benefit of the trust. While
you are alive, the trust will be for your benefit. After your death, the trust
will designate how the trust property should be divided and those persons or
organizations will then become the Beneficiaries.
A Revocable Living Trust Agreement is only effective to avoid probate if either
your assets are titled in the name of the trust or if the assets become subject
to the trust upon your death. For example, your home and bank accounts should be
titled in the name of the trust if probate of those assets is going to be
avoided. As an example of assets that would become subject to the trust upon
your death, we will likely recommend that the trust be named as the beneficiary
of your life insurance policies so that the proceeds are paid directly into the
trust upon your death.
The Revocable Living Trust Agreement is a useful tool, but it isn’t for
everyone. One of the objectives of our early consultations will be to determine
the right estate plan for you. We can help you review your objectives and find
the right estate plan to fit your needs.
Last Will and Testament
The Last Will and Testament is the legal document most often used in estate
planning. There are specific legal requirements governing Wills and how they
need to be signed and witnessed. In effect, the Will is your instructions to the
probate court about what you want to have happen to your assets and who you want
to wind up your affairs.
Unlike a properly drafted and funded Revocable Living Trust Agreement, a Will
requires probate to be effective. If you only have a Will and do not have a
Revocable Living Trust Agreement, it may be necessary to probate your estate.
Moreover, a good estate plan will include a Will even if you have a Revocable
Living Trust Agreement. The simple reason for this is that sometimes assets will
not be properly funded into your Revocable Living Trust during your lifetime. A
common example is the person who opens a new bank account but forgets to title
the new account in the name of the trust. In that situation, the Will will
direct that any assets that are not already in the trust will be transferred to
the trust upon your death. We call this type of Will a “Pourover Will”.
We can help you with the preparation of your Last Will and Testament.
General Durable Power of Attorney
A General Durable Power of Attorney is a document that appoints a person to
handle your financial affairs. We recommend that you have a General Durable
Power of Attorney in case you become incapacitated later in life. If you are
unable to handle your own business affairs, the person that you appoint in your
General Durable Power of Attorney document will be able to handle matters for
you.
If you do not have a General Durable Power of Attorney and you become unable to
handle your own business affairs, it will be necessary for someone to go to
Court and ask to be appointed as your Conservator. This is a time-consuming and
expensive process and the person who will be appointed as your Conservator may
not be the person that you would prefer. A Conservatorship can almost always be
avoided with a properly executed General Durable Power of Attorney.
We can help you by preparing a General Durable Power of Attorney for you and
with helping you select the right person to be your agent.
Health Care Power of Attorney and Living Will
The Health Care Power of Attorney is a document that appoints a trusted person
to make medical decisions for you if you are not able to make them yourself. We
recommend that you have a Health Care Power of Attorney in case a medical
decision needs to be made on your behalf at a time when you are not able to make
the medical decision yourself. A well-drafted Health Care Power of Attorney will
allow the person you name to make any kind of medical decision for you.
A Living Will states your decision about whether you would want life support and
other medical procedures to be started or continued if you are in a terminal
condition or irreversible coma. Many people indicate that they would want life
support discontinued if doctors found that they were in a terminal condition or
irreversible coma.
If you do not have a Health Care Power of Attorney or Living Will and medical or
end-of-life decisions need to be made for you, it will be necessary for someone
to go to Court and be appointed as your Guardian.
We can help you by helping you decide what treatment decisions should be made if
you cannot make them yourself and by preparing a Health Care Power of Attorney
and Living Will.