The Components of Arizona Estate Planning

If you are seeking to create an effective estate plan to protect yourself, your family, and your estate distribution wishes, the following are the components that need to be considered:

• A Will.  A will serves as the distribution instructions for all assets owned by the person making the will (called the “testator).  There are certain assets that may be owned by a person that not distributed by a will, such as insurance proceeds, property owned as joint tenants with right of survivorship, and pay-on-death accounts (see Assets not distributed by will).  Even if a person has a trust, a will is still necessary to distribute assets that may not have transferred into a trust. 

For more information about wills, see Oro Valley Will Lawyer

• A Trust.  A trust is considered a separate legal entity which holds assets.  Upon the death of the trustor (the person making the trust), trust assets continue to be subject to the trust until they are disposed of by the trust. 

For more information, see Do I Need a Trust?

In past years, trusts were often advisable to minimize federal estate tax; however, with the significant increase in the federal estate tax exemption, most people no longer need a trust for tax minimization purposes.  Nonetheless, trust may still be beneficial in certain circumstances, such as to make distributions over time, particularly if minor children may be a trust beneficiaries.  I will help you determine whether a trust is advisable upon learning about your circumstances and distribution objectives.

• Other Distribution Possibilities.  Often, assets are owned by a person where the distribution upon death is controlled by contract and/or operation of law.  These assets include the following:

• Property held as joint tenants with right of survivorship (“JTWROS”).   JTWROS property often includes real estate, such as a house.  When one owner dies, the other owner automatically becomes the sole owner of the property.  It does not matter whether there are provisions in a will to the contrary.

• Life Insurance Proceeds.  While a policy is owned in life by the policy holder, once the policy holder dies, the proceeds are paid directly to the beneficiary(ies).

• Pay-on-death (“POD”) accounts.  Any money in a POD account is paid to the beneficiary upon the account holder’s death.

• Other asset arrangements.  There may be other asset arrangement whereby the assets are transferred outside of a will.

• A Living Will (also called an “Advance Directive”).  The purpose of a living will is to make your healthcare wishes known to doctors and other healthcare providers if you are facing a terminal condition and are unable to communicate your wishes.  Without a living will, doctors may be forced to provide medical care that you do not want, and your family may be left in the  uncomfortable situation of having to make very difficult healthcare choices. As a result, all adults should have a living will.

• A Healthcare Power of Attorney.  A healthcare power of attorney is used to designate a person who will have the authority to make healthcare decisions on your behalf if you are unable to do so.  The powers of a healthcare power of attorney are only applicable while you are unable to communicate your wishes.  The healthcare power of attorney may apply in an end-of-life situation, or it may apply in another critical medical event, such as if a severe head injury is suffered.

Without a healthcare power of attorney, your family may have to go to court to petition for a Guardian to be appointed over your affairs.  This potentially can be a costly process, and the Guardian will thereafter be subject to court oversight and required court reporting.

How I Help

Upon meeting with you and learning about your circumstances, I can advise you as to how best to structure your estate plan.  For many people, a will, living will, and healthcare power of attorney are sufficient in order to fully protect their estate; in other cases a trust may additionally be beneficial.