Scottsdale Arizona Estate Planning Law Firm
Scottsdale Arizona Estate Planning Law Firm
Our Scottsdale Arizona estate planning attorneys understand our clients’ lives are filled with things they own, people they love, people who rely upon them, and their own need for financial security and good health.
Our days are typically so consumed by the demands of work, personal relationships, family and other obligations that we rarely consider what would happen to ourselves or those that love and rely upon us in the event we unexpectedly became disabled, incapacitated, or worse.
You already began your own estate planning process, albeit on a very limited basis, if you ever thought about your financial future, your retirement, your future health care, or about how your loved ones will be cared for in the event you were unable to do so.
In a few words or less estate planning in Arizona is the process of planning for your financial future and health care, as well as the financial security of your loved ones.
Estate planning in Arizona necessarily requires making judgments and decisions about the future – a future which is not always entirely clear and which may, and often does, change. The potential for change, however, should not prevent you from establishing an estate plan now based upon what you currently know and can reasonably expect regarding your future, as well as the future of your loved ones because you can, and likely will, make changes to your Arizona estate plan as time goes by and changes in your life or the lives of your loved ones occur over time. Such is the nature of an estate plan – it should and likely will change over time.
One of the many reasons you should have an estate plan is to avoid probate of your estate, along with the potential significant cost and stress on your family associated with a probate case.
Documents in an Arizona Estate Plan
A properly drafted Arizona estate plan will help you avoid probate in Arizona and will typically contain documents that each serve a separate purpose, such as a Wills and Trusts in Arizona, Durable Powers of Attorney in Arizona allowing others to act on your behalf, and Living Will With Advanced Health Care Directives in Arizona establishing what medical care you do or do not authorize in the event you are unable to make those decisions.
You should be aware you are not required to have each and every such document included in your estate plan. For example, you could choose to have a Last Will and Testament only or you could choose to have a Last Will and Testament with a Medical Power of Attorney to allow others to make medical decisions on your behalf without also having all of the other estate planning documents. However, failing to have a complete estate plan could result in difficult legal issues arising that would likely have been avoided if a comprehensive estate plan was created in the first place.
Your Current Financial Situation
The current financial condition of the individuals to whom you may wish to provide an inheritance.
The conditions, if any, under which you want to grant your heirs their inheritance, which is particularly important when you have minor children who may not responsibly manage their inheritance if they were to receive it all at one time.
Provisions for your care in the event you were to become disabled or incapacitated, including appointment of a person who may make medical decisions for you in the event you are unable to do so, advanced medical directives, and powers of attorney to manage your financial affairs.
Considerations of purchasing life insurance to provide for your heirs, disability insurance to provide for the support of your family in the event you become disabled or incapacitated, and the purchase of long term care insurance to provide financial assistance for your care when you are older.
Provisions for the management of your business, including appointment of individuals with proper powers of attorney to manage your business and distribute income from that business to your estate.
Evaluation of the effect of gift tax, estate tax, and generation skipping tax issues with your Certified Public Accountant.
The person(s) to whom you will delegate the authority to administer your estate, handle your financial matters, and, ultimately, distribute your estate, pursuant to your directives.
Please contact our Scottsdale estate planning lawyers today if you have any questions regarding an Arizona estate plan.
Scottsdale Arizona Estate Planning Attorneys.
Estate Planning in Arizona | Gifts, Devises and Bequests
Understanding Gifts, Devises, and Bequests in Arizona
There are a couple ways people handle their estate in Arizona. Some choose to either give gifts of income or property while they are alive, while others want to transfer their property upon their death through what is called a “devise” or a “bequest”. The two terms are used interchangeably to mean a transfer of the property in a Will or Trust.
Gifts Made During One’s Lifetime
Taxes may be imposed on such “gifts”, “devises”, and “bequests”. Those taxes are imposed at the time the property is transferred to another person. Not all estates, nor their grants of property or money, during lifetime or upon death are taxable. For example, gifts of under $14,000.00 per year are not taxable. Gifts over that exemption limit are taxable.
Some people with estates over the exemption limit choose to make gifts during their lifetime to try to bring their total estate value as close to the $5,000,000.00 plus overall exemption amount. The federal exemption amount in 2016 was $5,450,000.00.
Devises and Bequests Upon Death
Some estates are exempt from taxation if the estate is worth less than the exemption amount. The exemption amount changes and is currently over $5,540,000.00. So, estates worth less than $5,540,000.00 are not taxable. If the total of the gifts, devises and bequests is greater than that amount, an estate tax will apply.
Generation Skipping Transfers
There are some transfers that will not be immediately made upon death because they apply to, for example, future grandchildren; know as a generation skipping transfer. Taxes may also be levied against those transfers if the total estate is worth more than the $5,540,000.00 current exemption amount.
Unlimited Marital Deduction
The Unlimited Marital Deduction provides a way to transfer money to family members during a person’s lifetime without incurring tax liability. For example, the payments of college expenses, medical bills, and even transfers from one spouse to the Trust of his or her Wife or Husband may be made completely tax free. These unlimited marital deductions from the estate do not count towards the federal exemption amount.
As of 2016, Arizona does not impose a state inheritance tax.
Joint Property and an Arizona Will
There are several ways two or more people can own property together. Once such manner is to hold title to property as Joint Tenants With a Right of Survivorship. This form of title means that the ownership interest of a person automatically transfers to the other owners upon death. As a result, that prior ownership interest is no longer a part of the estate; although the value of the interest is included for the purpose of determining if estate taxes will be need to be paid.
Another form or property ownership is when two or more people own the property as Tenants in Common. In this case, the property remains a part of the estate.
Estate Plan Administration in Arizona
Estate Plan Administration in Arizona concerns managing the estate of a person who becomes incapacitated, incompetent, or passes away. An Arizona estate planning attorney creates the estate plan with the goal of minimizing or eliminating Arizona probate court involvement in the management or distribution of an estate.
The best way to avoid the need to involve an Arizona probate court in the management or distribution of your Arizona estate plan is to simply ensure all of your property is non-probate property. Non-probate property includes property titled in the name of your Arizona Family Trust, certain jointly titled financial accounts, and beneficiary designations on retirement accounts, annuities, and life insurance policies.
Please contact our Scottsdale Arizona estate planning attorneys if you have any questions regarding Arizona estate plan administration.
Joint Property and POD Accounts
The law in Arizona allows two people to own a piece of property as “joint tenants with rights of survivorship”. The law in Arizona also allows the designation of “payable on death” (i.e., “POD” account) designations on a person’s financial accounts directing who will receive the funds in that account upon the account holder’s death.
Property held as joint tenants with rights of survivorship and POD accounts immediately pass to the joint account holder of the property or the designated person on the POD account. This property is considered to be non-probate property and will not, therefore, be subject to the probate court process. In fact, the property will automatically pass to these people even if the person who died had a Will or a Trust that purported to award these assets to someone else. It is important, therefore, to review the beneficiary designations on financial accounts and the titled ownership of assets to ensure those designations do not conflict with the terms of a Last Will and Testament or Family Trust.
Please contact our Scottsdale Arizona estate planning attorneys if you have any questions regarding non-probate property or the funding of your family trust.
Annuities, Retirement Benefits and Investment Accounts
You have an investment account or you may be entitled to receive a retirement benefit under an employee benefit plan offered by your employer or you may own an Individual Retirement Account (IRA) or a Roth IRA. Typically, investment accounts, deferred compensation accounts, and retirement benefit plans provide for the payment of certain benefits to beneficiaries designated by the owner of the account in the event of the person’s death before his or her eligible retirement age.
After retirement, an employee may elect a benefit option that will continue payments after his or her death to one or more of the designated beneficiaries. It is sometimes advantageous to have these plan assets paid to a Family Trust, but naming a Family Trust as the beneficiary of such plan assets raises a number of complex income tax, estate planning and other issues. Naming the surviving spouse as the beneficiary of certain retirement plans and spousal annuities is mandated by law and may be waived only with his or her properly signed consent.
If you are entitled to begin receiving retirement benefits, the various payment options will be treated differently for income tax purposes. You should seek competent advice as to the payment options available under your retirement plan and the tax consequences of each option.
Please contact our Scottsdale Arizona estate planning lawyers if you have any questions regarding funding your Arizona estate plan with your annuities, retirement accounts, or investment accounts.
If you own life insurance on your own life, you may either:
(a) designate one or more beneficiaries to receive the insurance proceeds upon your death, or
(b) make the proceeds payable to your Trust created by you during your lifetime.
If insurance proceeds are payable to your Trust, they will be distributed according to the terms of your Trust.
Contact Our Estate Planning Lawyers
Our Scottsdale Arizona estate planning lawyers pride themselves on providing outstanding personalized estate planning service to every one of our clients. When you work with our Arizona estate planning professionals, you will be left assured you and your family’s future will be protected.
Please contact our team of Arizona estate planning attorneys today if you have any questions regarding estate planning in Arizona by calling us at (480) 305-8301.