Arizona Estate Planning: Living Trusts
One of the main reasons to develop an estate plan is to ensure that your wishes are honored upon your death. There are many tools you can use to create a comprehensive estate plan — everything from a standard will to various types of trusts and powers of attorney documents.
One of the most popular tools is a living trust, which is a document that outlines your wishes regarding the distribution of your assets once you pass away. A living trust is managed by the person you appoint, known as the trustee. This individual has a fiduciary duty to manage the trust in the best interest of the beneficiaries. The person who sets up the trust is known as the trust settlor, or the grantor. Once the grantor passes away, the trustee will ensure that the assets are transferred to the beneficiaries according to the grantor’s wishes.
Living trusts can be named beneficiaries of some asset types, as well. Rather than naming someone as a beneficiary on your life insurance or 401K plan, you could choose to name your living trust as the beneficiary. This is an option for payable-on-death accounts like the aforementioned account types.
Living Trust Packages
At Arizona Statewide Paralegal, we offer different packages that can help you prepare a living trust for your estate. Some of the documents we can prepare include:
- Revocable living trust
- Living will
- “Pour Over” will
- Durable power of attorney
- Healthcare power of attorney
- Personal property list
- Schedule “A”
- Assignment of Personal Property
- Procedure at Death instructions
- Affidavit of Trust Existence (additional charge for recording fees)
- Quit Claim Deeds for Real estate (additional charge for recording fees)
Avoiding Probate with a Valid Trust
Aside from ensuring that your assets and personal property are distributed according to your wishes upon death, you may opt to create a trust in order to avoid probate. If you pass away with a last will and testament, it will need to be validated by a probate court judge. Probate is the process of the state supervising the distribution process. However, when you have a valid trust in place, your estate will not pass through probate, which can save time, money, and headaches for your family.
Frequently Asked Questions About Living Trusts
There are a number of common questions we receive in regard to preparing a living trust for clients. Some of these are:
- How does a living trust avoid probate? The laws do not require probate courts to intervene when someone has a valid trust in effect, whereas they are required to with a last will and testament.
- Am I required to file a separate tax return for the trust? There is no separate Tax ID number for your living trust. You would file taxes with your social security number just like you have always done in the past.
- Am I giving up control of my assets if I make a trust? With a revocable living trust, you will retain full control over your assets. Once you die, the control is passed on to someone else, known as the successor trustee. Before you pass away, you can legally do anything with your assets that you would if they were not in the trust.
- I am married, do I need multiple trusts? No, you really only need one trust, and both of you will be the creators (trustors) and the trustees. Once one spouse passes away, the other spouse will maintain authority and retain control over the trust’s assets.
- Will a revocable trust offer asset protection while I am alive? Unfortunately, no. The reason is because you maintain control over the assets as if you held them in your own name. If you want to have asset protection, you will need some type of irrevocable trust and have an attorney prepare it for you. We can refer you to an experienced estate planning attorney in your area.
- What do I do with my house for a trust? We would prepare a Quit Claim Deed that would transfer your home into the trust. Our office will also handle filing it with the applicable Recorder’s Office.
Pour Over Will versus Living Will
We’ve mentioned both a “Pour Over” will and a living will. A “Pour Over” will is a last will and testament that names your trust as the will’s beneficiary. When you and your spouse, if married, pass away, then anything acquired during your lifetime that was not placed in the trust will be “poured over” or added to the trust.
A living will is a document that will let your family and friends know what your wishes are in the event you become incapacitated or seriously ill and are unable to make decisions for your healthcare. It also states whether or not you want to be kept alive by artificial means.
What is a Power of Attorney?
There are multiple types of powers of attorney documents you may want or need. One is a healthcare power of attorney that gives someone the authority to act on your behalf in the event you become seriously ill and incapacitated. The difference between a healthcare power of attorney and a living will is that the living will spells out your wishes via a written statement. The power of attorney actually appoints the person. Neither the living will nor the healthcare power of attorney has anything to do with distributing your assets after you pass away.
Another type of power of attorney is a durable power of attorney that gives someone you name, called an agent, the authority to conduct financial transactions on your behalf in the event you are unable to due to serious injury or incapacitation.
Revocable versus Irrevocable Trusts
Revocable trust is another term for a living trust, and it means that the terms in the trust can be changed at any time. With an irrevocable trust, the trust cannot be modified once it is created, unless there is consent from the beneficiaries. The reason someone might choose to set up an irrevocable trust is for asset protection from creditors.
Choosing Between Living Trust and Will
Determining whether to complete a living trust versus a last will and testament is entirely a personal choice. There are some generally accepted benefits that sway some people to choose a living trust over a will. Per The Balance, some of the benefits of a living trust can include:
- People who choose a living trust can avoid the stress, time, and cost of probate.
- A living trust can avoid guardianship or conservatorship hearings. When you form the trust, you name a successor trustee so someone else would step in and manage it if the time comes and you are no longer able to handle it yourself.
- A living trust can help keep your information and assets private. With probate, it goes through the courts, which means it is public record. Someone can come to the courthouse and request the court file, which has a number of documents including your will. In some jurisdictions, a complete stranger may even be able to access it online.
They also note that there are several potential cons with a living trust, as well. These can include:
- Upfront costs on a living trust are higher than with a last will and testament. You will spend more at the start to fund the trust versus writing out your will. There are also costs related to deeds to transfer ownership of assets to the trust. However, in the long run, you may find the costs and time are worth it since you are getting the benefit of privacy and no probate.
- You will still need a will in addition to your living trust. This is where the “pour over” will come into play. If you forget to put newly acquired assets into the trust, the “pour over” will would catch unfunded assets and put them into the trust. However, a pour over will must be probated.
- Heirs have a longer period of time to contest your trust. It will vary on jurisdiction, but it could be a huge difference.
- Funding a trust can be a frustrating process. You will need to contact a myriad of companies, like your bank, insurance companies, transfer agents, and investment companies. You need to update all your beneficiaries and change account and stock ownership. You would need to get new stock certificates issued. If you own a car or boat, you will need to have these assets retitled, as well. This is where you may need to speak with an Arizona estate planning attorney to discuss the type of assets you have and whether a living trust is the best option for your estate planning needs.
Learn More About Our Services
Arizona Statewide Paralegal offers document preparation services throughout Arizona. We have a workforce of skilled paralegals who have been assisting Arizona clients with legal document preparation services since the 1990s. We are proud to say that our entire staff is certified by the Arizona Supreme Court.
Depending on the complexity of your asset portfolio, you may need to retain legal counsel for advice when preparing your estate plan and trusts. However, our proficient team can handle the document preparation and even some of the less complex issues that may arise. Why spend thousands of dollars in attorney’s fees when you only need assistance drafting standard documents? We offer the same services without the hefty hourly rates. From filling out your estate planning documents and ensuring that your trust documents are filed, we can assist with all your document preparation needs within Arizona. Arizona Statewide Paralegal also offers the convenience of in-person consultations for those clients who feel more comfortable handling these types of legal matters in person.
As you conduct research online, you will see search results for many different legal businesses in the state who advertise their document preparation services. However, that is where most of their services end. These agencies offer no additional benefits beyond filling out your necessary forms. Once the preparation of your documents is completed, you will be expected to figure out how to handle everything else. This can include filing the necessary documents with the appropriate court and, in some cases, hiring a process server to serve any necessary parties. These other document preparation agencies will not assist with any other pending issues, either. This means that if you have any additional questions on a specific process or need to know how to file the documents properly, you will incur additional fees from a completely different legal service.
At Arizona Statewide Paralegal, we maintain a full-service agency and take pride in offering exceptional customer service. We will not leave you to fend for yourself with a mountain of paperwork that needs filing or make you figure out what court you need to contact, or what other follow-up needs to be done.
It is important to point out that we are not licensed practicing attorneys; therefore, we cannot legally engage in practicing law in Arizona or any other state. Essentially, this means we are barred from giving you any legal advice or telling you how to proceed with your individual case; however, we can legally prepare all your documents while guiding you through the filing process itself. If you have any specific legal questions that relate to revocable trusts, irrevocable trusts, wills, guardianships, or conservatorships, we are more than happy to refer you to a qualified and licensed practicing estate planning and probate attorney near you.
If you need someone to interpret legal language found in each paragraph of your trust documents, we cannot do so. We are not attorneys and cannot provide this type of information as it would be construed as giving legal advice.
If you need other estate planning related forms, or any other legal documents prepared, contact our skilled team at Arizona Statewide Paralegal to see how we may assist you. We take pride in providing fast and friendly service, while offering convenience, all at a reasonable low price. We have offices conveniently located in Mesa, Phoenix, Tucson, and North Tucson. Contact us today to learn more about Arizona document preparation services for your estate planning and other legal document needs. We look forward to helping you with all your document prep needs.