Why should everybody have a Will in Arizona?
Everybody should at the very least prepare a basic Will. In doing so, they can accomplish many goals with only one document. For instance, a basic Will can:
- Designate a Personal Representative to handle the estate.
- Appoint a guardian for minor children.
- Appoint somebody to manage property given to minor children.
- Give assets away to people and organizations.
When might people need more than just a Will to handle their estate?
Wills have the advantage of simplicity, but they are sometimes not enough to handle all of a person’s affairs. A one-size-fits-all approach simply does not exist for estate planning; a comprehensive plan must implement a variety of strategies. Among other reasons for including more than just a Will in an estate plan, Wills do not cover certain properties. For instance, Wills have no effect on pension plans, stocks, bonds, life insurance policies, jointly held property, trust assets, and payable on death accounts. Rather, all of these assets transfer to a named beneficiary immediately upon the owner’s death.
There are many other reasons why people use alternatives to a Will. For instance, assets controlled by a Will are always subject to probate, which sometimes complicates the situation. Additionally, passing assets through a Will does nothing to avoid estate taxes. And finally, it is difficult to make conditional gifts and leave funeral instructions in a Will.
How often should a Will be revised?
A Will is of little value unless it is current. Those with a Will should consider revising it after every life-changing event. The following events provide good reason for people to consider revising their Will:
- Marriage or finding a new partner
- Having a child or acquiring stepchildren
- Acquiring or disposing of a significant asset
- Deciding to leave an inheritance to somebody new
What is a living trust?
A living trust is used to transfer assets to beneficiaries upon the death of the original owner, or “trustor.” Unlike assets controlled by a Will, trust assets do not pass through probate. By avoiding probate, living trusts sometimes preserve estate funds and give beneficiaries speedy title to trust assets.
Living trusts get their name because they take immediate effect instead of springing into effect upon the trustor’s death. Trustors can place nearly any type of property in a living trust, and retain control of the property by acting as trustee until their death. Upon the trustor’s death, trust assets pass immediately to beneficiaries without going through probate. This allows trustors to control trust assets throughout their lifetime and determine how the assets will be distributed at their death.
What advantages are there to creating a living trust?
Most people create living trusts for the purpose of avoiding probate. While probate is not an inherently bad process, there are sometimes certain advantages to keeping assets outside of probate. Most notably, estate property can get tied up in probate for months after a person passes away. Moreover, certain fees and expenses are associated with probate that living trusts help people avoid.
Assets in a living trust pass directly to trust beneficiaries upon the trustor’s death. This saves time and avoids probate costs. When compared with Wills, living trusts allow for greater control over the division and distribution of assets. Living trusts are particularly beneficial for those with larger estates.
Are there any potential disadvantages to creating a living trust?
Living trusts provide many people with the perfect tool for giving away property after they die. However, living trusts are not without certain disadvantages. For instance, creditors have more time to initiate collection against trust property than with probate property. Creditors receive notice when probate opens, and are barred from bringing claims against probate property that they do not file within a brief timeframe. Trust property, on the other hand, is subject to creditors’ claims for longer because creditors have more time to initiate collection.
Trusts are not for everybody, and they are not useful in every situation. Understanding that a range of estate planning strategies exists, and that no two estates are the same, helps people arrange their affairs optimally.