When people hear the term “estate planning,” they may shrug it off as something that only “wealthy” people need to worry about. In practical terms, estate planning is a tool used to plan for what happens to whatever you accumulate throughout a lifetime of working. Who gets what in the long run? That’s what a simple last will and testament can do and what a living trust can do even better.
However, in broader terms, estate planning means planning for every eventuality in life, not just what happens when you pass away and how you want your loved ones to be cared for. Estate planning in this sense – to plan for any turn of events – involves more than a simple Will or Living Trust.
In case you ever become incapacitated, you should consider a Financial Power of Attorney to have someone manage your affairs for you and consider a Health Care Power of Attorney to designate someone to voice your medical treatment choices for you when you cannot. If you have minor children, you should designate a guardian to care for them if you’re suddenly gone by using a Last Will and Testament.
Estate Planning FAQs
Do I Need Estate Planning?
In Arizona, probate is generally required when a person passes away and their estate meets certain criteria. If the deceased person owned assets (real estate, bank accounts, vehicles, personal property) solely in their name without a designated beneficiary and if the total value of the assets, other than real property (real estate) exceeds $75,000, that will require probate. If the value of any real property (real estate) located in Arizona (solely in the deceased person’s name) less liens and encumbrances, exceeds $100,000, that will require probate. Probate limits are quite low in Arizona so even modest estate can require probate.
What Should I Consider Before I Start?
Depending on your age – and the earlier you start on estate planning, the better – you need to map out your goals and desires for your future, including the needs and desires of your loved ones. As your career advances, you no doubt will see your assets grow. With a will or a living trust, you can always modify it as your life and assets change.
You also should consider who will speak for you or manage your affairs if you become incapacitated. Your spouse or partner may be able to manage your personal and financial affairs if they’re on joint accounts with you, but otherwise, they would need a power of attorney. Likewise, if you become incapacitated, you should name someone through an advance health care directive to convey your medical treatment preferences if you cannot do so yourself.
If I Die Without a Will, What Happens to My Assets?
Dying without a will or trust is called dying intestate. If you do die intestate, the state, through your local probate court, will literally divvy up your assets based on Arizona’s laws of intestate succession. Generally, your spouse and children will be the main beneficiaries, but matters get more complicated if you have no surviving spouse or children.
That’s why it’s important to map out the distribution of assets in advance, so your loved ones are not left waiting on a judge to decide everything.
If I Have a Will, Does It Have to go Through Probate Court?
Yes, if you die with a will, it may have to be probated. The court wants to ensure that all your creditors are paid off before any distributions are made. The probate process also has other administrative and legal hurdles that the executor of your estate named in your will must face. The process can take months, maybe a year, or longer if there are challenges or the will is brought under question. Your loved ones will be left in limbo.
What’s the Difference Between a Will and a Trust?
A will is a document that lets you designate who gets what of your assets after your death. Through a will, you also name a personal representative – usually a family member or friend – to administer the distribution of your estate in probate proceedings. A living trust can be used to name beneficiaries as well, but unlike a will, it does not have to go through probate.
With a living trust, you place all of your personal assets into the trust, and the trustee then manages the assets. While you are capable, you manage the trust yourself as the trustee, but you also designate a successor trustee who takes over if you become incapacitated or pass away. The trustee then administers the estate and distributes the assets as designated once you’re gone.
How Often Should I Update My Estate Plan?
You should review your estate plan documents at least annually, especially if anything in your life changes. If you obtain new assets, those need to be added. If you divorce, remarry, or marry for the first time, you will need to reconsider the designation of beneficiaries. You don’t want a will or trust naming a previous spouse as the main beneficiary.
Why choose a Legal Document Preparer?
Engaging the service of a Certified Legal Document Preparer, can save you money compared to hiring an attorney to prepare your documents. Law firms are typically organized around partners, associates, and a variety of staff providing paralegal, clerical, and other support services. As you can guess, this system can significantly add to the overhead and expenses of legal document preparation.
A legal document preparer is an individual or small team of people whose main job is to prepare your legal document preparation in a more cost-effective and timely manner. Also, the time of getting your legal document preparation is shorter, including notarization since most document preparers are also notaries.