Estate Planning In Arizona
More than half of Americans have not taken any estate planning precautions and only an estimated 20%
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Estate Planning Components
There are certain documents that every complete estate plan should have. Below is a list of the main estate planning documents you need with a brief description of how they work.
Revocable Living Trust
A Revocable Living Trust is a cornerstone estate planning document. It will enable your assets to avoid probate. A trust helps you to avoid probate because it holds all of your assets separate from your name. For this to work, you need to title all of your assets into the name of the trust. Even though they are in the name of the trust, you still maintain complete control.
You will also name a successor trustee that will take over after you pass or become incompetent. They will be able to manage your assets for you when you are no longer able to. Once you pass away, your successor trustee will handle distributing your assets to the beneficiaries you named. They will have to distribute the assets according to the instructions that you left behind.
A Pour-Over Will is a backup estate planning document. It is our hope that you never need to use it. However, if you fail to properly title an asset into your trust, it will “pour” the asset over into the trust. Then it will follow the provisions left in your trust.
If you feel you do not need a trust, you should at least have a Will in place. It will not help you to avoid probate, but it will allow your assets to be distributed according to your wishes, as opposed to Arizona’s Laws of Intestacy.
Powers of Attorney
Powers of Attorney are documents that provide written authorization for another person, called an agent, to act on your behalf. In most cases, this authorization is classified as a springing power. This means that the agent’s authority is only in effect when you are incapacitated. There are several different kinds of Powers of Attorney. Our estate planning packages all include the following POAs:
- Durable Financial Power of Attorney: This document allows you to name a trusted agent to take care of your financial affairs for you. Your agent can pay your bills, manage your investment accounts, manage real property, and complete Medicaid planning on your behalf.
- Durable Health Care Power of Attorney: This document grants authority to your agent to make health care related decisions on your behalf. This would include authorizing medication, treatments, and surgeries.
- Durable Mental Health Care Power of Attorney: Through this document, you name an agent to make decisions with regard to mental illnesses. This includes having access to your records, administering prescriptions, or being able to put you under 24/7 supervised care.
Living Will (End of Life Care Plan)
This document allows you to make decisions regarding treatment if you are terminally ill or in a continuous vegetative state. You will choose what life-prolonging measures you would want to accept or reject. You will also decide how you would want to be cared for at the end of your life. Decisions that fall outside of your Living Will are decided by the agent named in your Health Care Power of Attorney.
A Revocable Living Trust is not your only estate planning option. At Wealth Guardian Legal Documents, we offer several other trust options. These additional trusts can help to sharpen your estate plan by giving you the ability to avoid certain situations.
IRA Beneficiary Trust
An IRA Beneficiary Trust is a special kind of trust that helps distribute Individual Retirement Accounts in the most effective way possible. IRA Beneficiary Trusts have special provisions that Revocable Living Trusts do not.
First of all, an IRA Beneficiary Trust can help your heirs to avoid a hefty tax bill. This can happen when an IRA is distributed outright. It also allows you to have more control of the distributions. You can even name a trustee to manage the money for your beneficiaries. An IRA trust also protects your beneficiaries’ inheritance from bankruptcy, divorce, and creditors.
A Dynasty Trust allows you to provide for multiple generations. You can simultaneously protect their inheritance from bankruptcy, divorce, creditors, and their own irresponsibility.
A Dynasty Trust helps prevent outright distributions to your beneficiaries. Instead, you name a trustee to manage the money on your beneficiary’s behalf. You can choose to limit their powers completely or allow them some control over their assets. A Dynasty Trust gives you numerous options and levels of control. Your planning options are almost limitless.
Special Needs Trust
You may find a Special Needs Trust to be very beneficial. They help if you have any beneficiaries that have disabilities or receive governmental assistance. They are also useful if your beneficiary has any addictive behaviors.
A Special Needs Trust keeps all assets in trust for the beneficiary. Your trustee will have control over the assets and will pay bills directly. In a Special Needs Trust, the beneficiary cannot have direct access to the funds. This keeps them from being disqualified from receiving government benefits. It also prevents the money from being spent on a beneficiary’s addictive behavior. But still, allows you to provide for their needs.
If you would like an estate planning package that includes one of these additional trusts, check out our pricing by clicking here.
Much like the Revocable Living Trust explained above the Irrevocable trust completes all the same benefits. In addition, it can also protect assets against Creditors, Bankruptcies, Divorce and other liabilities of the grantor as long as the grantor does not have any beneficial interest in the trust. Additionally, it is important to note the nature of this trust is Irreversible, once executed and funded the grantor no longer has access to or control over the assets including making changes to the trust.
Irrevocable Life Insurance Trust (ILIT)
Much like the Irrevocable Trust explained above an ILIT is useful in removing estate tax that would be imposed on the Life Insurance benefits of a deceased individual. A common misconception is that Life Insurance death benefits are tax-free, this is only partially true, it is true that in most cases (not all) life Insurance is Income Tax-Free, but not Estate Tax-Free. To ensure that your estate is not reduced by way of Estate Tax imposed on Life Insurance benefits, you may title your life insurance in the name of your ILIT and remove the Estate Tax imposed.
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