ESTATE PLANNING ARIZONA

A Will is a set of instructions to a “Personal Representative” who after you have died collects your assets of your estate, pays debts and expenses, and distributes your remaining assets to your beneficiaries as directed by the Will. In some states the Personal Representative is called the executor or administrator. For most estates, the Personal Representative must use the power of the probate court to administer your estate

A trust can be thought of as a legal entity, similar in many ways to a corporation or limited liability company. Trusts are usually created by a written trust agreement or declaration by the “Settlor,” the person or couple who creates the trust. Trusts created while the Settlor is living are commonly referred to as “Living Trusts.” Living Trusts are commonly used to manage property for the benefit of the Settlor while living and for controlling who receives the assets in the Living Trust after the Settlor has died. Because trusts can perform may of the same functions as a Will, but without involving the probate court, they are sometimes referred to as “Will Substitutes.”

One or more persons or a company called the “Trustee” is appointed by the Settlor to manage the trust for the beneficiaries designated by the Settlor. In many instances, the Settlor is the initial Trustee and the sole initial beneficiary of the Living Trust. A successor Trustee appointed in the trust agreement takes over the management of the trust assets if the Settlor dies or becomes incapacitated.

After a Living Trust has been created, assets can be transferred to it. Special Wills sometimes referred to a “Pourover Wills” transfer any assets that weren’t transferred to the to the trust during his or her lifetime to the Living Trust.

A Living Trust can usually be amended or revoked for as long as the Settlor is capable of doing so. After the Settlor has died, the Living Trust becomes irrevocable and the Trustee distributes the assets of the Living Trust to the beneficiaries designated by the Settlor. Because trusts don’t die or get sick, they simplify the administration of your property because they can avoid having to involve a court when you die or if you become incapacitated. Because the probate court is not required for Living Trusts, they can help maintain privacy by helping to avoid pubic court proceedings.

Contact us to discuss if a Will or Trust should be a part of your estate plan
What are beneficiary designation assets?

Some assets such as pension plans, IRAs, Roth IRAs, annuities, and life insurance pass after death to a named beneficially designated by the owner of the asset. These assets are sometimes referred to as beneficiary designation assets. A Will or Living Trust will not control who receives these assets upon death, unless your estate or the Living Trust is the named beneficiary or if you don’t name a beneficiary, in which case your estate is often the default beneficiary. It is important to coordinate beneficiary designations with your other estate planning documents. Severe adverse tax consequences can result if proper care is not exercised in naming beneficiaries for beneficiary designation assets.

Contact us to discuss who the optimal beneficiary should be on your beneficiary designation assets.

Under a power of attorney, a person, referred to as the principal, signs a document that gives power to someone else, called an agent, to do things for the Principal. When acting under a power of attorney, an agent is a fiduciary, which means he or she must act in the best interest of the Principal. A power of attorney can be an immediate, meaning the power of attorney becomes effective upon its being signed by the Principal, or springing. A springing power of attorney becomes effective when an event specified in the power of attorney occurs, such as the principal being declared to incapacitated by a doctor. By law, nearly all powers of attorney terminate at the death of the principal or upon his or her becoming incapacitated, unless the power of attorney is a “durable power of attorney,” in which case the agent’s power will remain in force even if the principal becomes incapacitated. A springing power of attorney that becomes effective upon the principal becoming incapacitated is a type of durable power of attorney.

Under a Financial Powers of Attorney, you give your Agent power over your finances. A general financial power of attorney generally gives the agent power over all aspect of your finances. A specific power of attorney gives power to the agent to handle a specific transaction or account for you. An agent under a financial power of attorney is sometimes referred to as your “attorney-in fact.” One need not be a licensed attorney to serve as your Agent under a financial power of attorney.

Under a Health Power of Attorney, you give power to your agent to make health care decisions for you. By statute, Health Powers of Attorney are springing, which means the Agent may only act for your if your medical providers determine that you are incapacitated. Your agent can be given to power to consent to medical procedures for you such a surgery, check you into a nursing home, or implement end of life decisions such as withholding or withdrawing a feeding tube.

A living will (also known as an "end of life directive"), is often used in conjunction with a health powers of attorney. A living will gives you the opportunity to express your specific wishes regarding end-of-life decisions. For example, you can direct that no life sustaining measures, such as feeding tubes, be used for you if you are in a persistent vegetative state.

Contact us to discuss powers of attorney and living wills.