Estate planning is a crucial process that everyone should take advantage of. With it, you can ensure that your assets are managed and distributed according how you want after your death or incapacitation. Understanding the estate planning process in Phoenix requires understanding Arizona law, which is an effective way to protect you and your loved ones.
Estate planning is more than just writing wills. It encompasses the creation of legal documents such as trusts, powers of attorney, and healthcare directives, and our respected estate planning attorneys could assist you in all of these aspects.
The Role of Wills in Estate Planning
A will is a legal document specifying how assets are distributed after a person’s death. To create a will, a person needs to be at least 18 years or older, and of sound mind. In addition, many people believe that they need the help of a lawyer to create a will. While an attorney can help people ensure that they are using the correct language in their will so that the court will respect their wishes, the law does not require anything that formal.
A person can write out what is known as a holographic will, which must be written entirely in the person’s handwriting and signed by them. If the will is not in the testator’s handwriting, it must be in writing and signed by the person making the will, as well as two witnesses.
Any property in a will passes through a process known as probate, which administers the deceased’s estate. In Arizona, not every estate needs to go through probate—estates with less than $75,000 in personal property or $100,000 in real property may be able to avoid the process altogether. People in Phoenix can utilize the estate planning process to potentially avoid probate down the road.
How Trusts Can Protect Assets
Trusts are legal arrangements where one party—the trustee(s)—holds property for the benefit of another, which could be the trust-maker or their beneficiaries. They can help manage assets during someone’s lifetime and facilitate the transfer of assets upon death; and when properly executed and funded, trusts can even help people avoid probate.
There are dozens of different types of trusts, but estate planning often involves revocable living trusts and irrevocable trusts. In a revocable trust, the grantor—the person establishing the trust—has the right to move property in and out of the trust—or even cancel the trust during their lifetime. These trusts help facilitate the transfer of property on death and can provide some limited protections for the assets from creditors.
Irrevocable trusts are a more powerful way to protect assets. Once a grantor places assets into an irrevocable trust, they cannot remove them—however, some trusts allow grantors to replace assets with something of equal value. Irrevocable trusts pay their taxes—generally at a higher rate than the grantor would have paid as an individual. However, they can transfer property to avoid estate taxes, and offer more protection from creditors or in the event of divorce.
Determining whether trusts should be part of one’s estate planning process depends on several factors, and a Phoenix lawyer can review those factors to determine whether a trust is appropriate.
Emergency Planning
In addition to helping clients prepare to transfer their assets at death, the estate planning process should make sure testators in Phoenix are prepared for emergencies. Some of the tools people can use include:
- Financial power of attorney
- Medical power of attorney
- Advanced healthcare directives
A power of attorney (POA) allows a person to designate someone to make decisions on their behalf if they become incapacitated. There are two main types of POA: financial and medical. A durable financial power of attorney authorizes someone to handle financial matters. A healthcare power of attorney gives the person authority over medical decisions, but it is not effective unless the patient is unable to make their own decisions.
An advanced healthcare directive, more commonly known as a living will, outlines a person’s preferences for medical treatment when a person is unable to communicate. Under Arizona Revised Statutes § 36-3201, these documents ensure that medical professionals respect someone’s healthcare wishes, even if the patient is unable to convey those wishes.
Talk to a Phoenix Attorney About Managing the Estate Planning Process
Setting up your estate plan for the benefit of your heirs and beneficiaries can be surprisingly complex. You need to consider the probate process, tax implications, community property laws, interpersonal relationships, and more. A Phoenix attorney can help you keep the right perspective about decisions in the estate planning process that can be emotional and difficult to make. Schedule a consultation with the Dayes Law Firm to learn more.
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