Contrary to popular belief, estate planning isn’t a cookie-cutter process of filling out forms for the sole purpose of transferring property to heirs. When done correctly, it addresses the long-term financial and emotional needs of the person creating the will, known as the testator, as well as their family.
Each person’s goals are unique, but a comprehensive estate plan should check three boxes. First, it should protect testators and the ones they love during emergencies. Next, it should address end-of-life considerations when people lose the ability to care for themselves. Lastly, it should provide a clear plan for distributing assets after the testator’s death.
Planning For Emergency Situations And End-Of-Life Care
Sudden illness or injury can render you unable to manage your affairs, leaving you and your family vulnerable. Family members may be helpless in managing your finances or making medical decisions without proper legal authority. Likewise, if your condition is life threatening, your family may struggle without detailed instructions on your preferred medical treatment and lifesaving measures. Vital documents, such as powers of attorney (POA), can relieve those worries. These include:
- Financial POA: This document allows someone you trust to pay your rent, mortgage, taxes and other bills when you are unable to do so. This individual can also oversee stocks, bonds and other crucial investments if you become incapacitated due to injury, illness or age.
- Legal POA: Business owners and others who often face potential litigation can be highly vulnerable without having a trusted individual to handle these issues according to their wishes when they cannot. A legal POA does not require you to step down from your management duties and only becomes effective if you become incapacitated.
- Medical POA: This document allows a loved one or others to carry out your wishes, outlined in an “advance directive” – during a medical crisis when you cannot communicate in person. This saves your family from having to make excruciating choices regarding the extent of lifesaving measures you would prefer, such as CPR, defibrillation, mechanical ventilation, or tissue and organ donation.
Most people struggle with these intensely personal issues. An experienced estate planning attorney understands that grappling with one’s own mortality is hard. However, a knowledgeable lawyer also knows the right questions to ask to find out what’s most important to you. I will listen carefully to your concerns to make relevant suggestions to achieve your goals if an emergency arises.
A Customized Approach To Distributing Assets
Just as is the case when drafting a plan to deal with life’s unexpected turns, it is not a good idea to consider off-the-shelf estate planning strategies. While I gather specific financial information from prospective clients and develop potential solutions, nothing will take shape until I sit down and discuss what’s most important to you and your loved ones when drafting an estate plan.
The Difference Between A Will And A Living Trust
My philosophy is to listen to your needs, explain the options and let you decide. One of the first steps is explaining the difference between a will and a trust. Here are the basics:
- Last will and testament: A will is the final expression of affection for family, friends and groups that are important to you. It spells out who will receive your assets and how. Before they receive them, all property included in a will must go through probate in Arizona. Additionally, you will designate a guardian to care for minor children and name a personal representative, or executor, who will manage your estate.
- Living trust: Assets you include in a trust can bypass the probate process and go directly to heirs. A “living” trust simply means you create this instrument while you’re alive. Assets included can also be protected from creditors, other claimants and litigation. Certain trusts can also minimize tax consequences. You continue to control these assets until death when they transfer to heirs.
There are distinct advantages to creating a trust. However, if you are not concerned about probate, it may not fit your estate planning strategy. Even with a trust, you will need a will to distribute property not included in the trust, name your personal representative and choose a guardian if you still have young children.
A Quick Word About Probate In Arizona
Probate is a court-supervised process validating a person’s will and appointing a personal representative to oversee the estate. The personal representative files a death certificate, gathers and values all assets, pays off debts and distributes the remainder to heirs. Here are three common features of probate in Arizona:
- It will likely take a year to complete, or longer for complex estates.
- It can be expensive, typically at least $10,000, even for simple estates.
- Families usually suffer worse from the process than if assets were placed in a trust.
In addition to property placed in a trust, other assets can bypass the probate process. These include bank accounts, retirement benefits and other financial accounts with named beneficiaries. They also include property held in joint tenancy and real estate with transfer-on-death (TOD) deeds.
Elements Of Comprehensive Estate Planning
Many estate planning lawyers simply file the documents and move on. My clients benefit from the advantage of having a licensed financial professional who is also an attorney. Once you and I establish an estate plan that meets your goals, I can offer valuable financial planning advice to manage assets related to your will or trust and protect investment and retirement accounts from fluctuations in the stock market and other risks.
For instance, it may be advantageous to set up an asset protection trust for Medicaid planning. Doing this while you’re still healthy will start the five-year clock required to exclude personal assets from counting against government benefit programs. Sadly, I have personal experience, where a loved one’s assets were drained away when they were forced into assisted living. This sparked me to devote my practice to helping others avoid similar situations.
My military and personal experiences forged my dedication to clients’ well-being in all aspects of estate and financial planning. My legal team and I have been helping thousands of Arizonans achieve their goals for over a decade. Many have named me as trustee to manage the assets included in their living trusts. Additionally, a significant number have designated me as their personal representative to administer their estates. What they have come to learn is that I’m not just a document preparer; I’m also someone who focuses on the big picture and their individual needs.
The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.
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