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For those planning their financial future and their legacy with a qualified estate planning attorney in the Arizona area, a living trust is an option that presents a variety of advantages and disadvantages. It’s important to know what they are, so here’s a rundown of the basics.
The biggest advantage of establishing a living trust is that it allows you to avoid probate. This can save up a great deal of money, and it allows certain assets to be given to your beneficiaries much more quickly. These assets usually take precedence over the property that is named in the will, hence the faster transfer.
The living trust also gives you a great deal more flexibility going forward. You can make changes or add amendments to the trust as you’d like, so you have a lot more control over your situation in that regard as well.
Living trusts also offer significant privacy advantages. In a probate process, some documents become a matter of public record, but a trust allows you to preserve whatever level of privacy you desire.
Another underrated advantage of a living trust is the ability to use it to counter any challenges to your will. A trust allows you to disinherit any family member who may challenge your wishes after your death, and that level of control can be extremely important when serious conflict is involved in establishing and settling the will.
Assets can also be grouped according to your wishes in a living trust, too. This is especially convenient for married couples, as it allows them to separate common assets from community property assets.
The level of control provided by a living trust also extends to the guardian. The guardian’s spending habits can be controlled or curtailed, which can be important to your children and heirs, and you can also authorize another person to make decisions on your behalf if this starts to happen.
The final major benefit of a living trust pertains to the growth and maintenance of your wealth. You can limit the future withdrawal of funds to facilitate growth, and in some instances the transfer capabilities provided by a living trust can be used to help minimize or eliminate estate taxes.
On to the drawbacks. The first pertains to cost. Establishing a living trust isn’t cheap-typically it costs a minimum of $2,000, compared to a cost of just a couple of hundred dollars to draw up a will.
There’s also some work involved in the record keeping as well. This isn’t always convenient, and you may also have to re-title any property you own in the name of the trust. There may be processing fees associated with this, too.
Finally, keep in mind that living trusts typically offer no asset protection if you set yours up with an ownership interest. And you may not get a tax break for all the hard work that’s required.
There are also administrative expenses that have to be met, and unexpected problems may pop up in the form of title insurance, stock and real estate issues and other issues you simply may not be able to anticipate.
Still, it’s at least worth considering. You need to talk to a good estate planning attorney if you’re thinking about establishing a living trust in the Arizona area, so make sure you do your homework and get the best possible person for your situation.
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How Much Does a Probate Lawyer Usually Cost?
One of the hidden aspects of hiring a good probate lawyer is the cost. It’s often unimportant when large estates are going through probate, but every penny counts, so it’s important to know just how the various cost factors work in the Arizona area.
Start with the basics. The fees for a probate lawyer usually are paid by the estate, and most probate lawyers charge an hourly rate that’s tied into the value of the estate, specifically or otherwise.
To be more specific, those fees are based on a gross percentage of the estate, which can make the hourly fee reasonable if the lawyer’s workload is significant or unreasonable if the lawyer’s duties are minimal. Also, the size of the rate depends on the area and whether the individual lawyer specializes in any particular aspect of probate law (e.g., real estate transactions).
Another way to gauge the potential cost of a probate lawyer is to know that the cost of the probate process is usually 3-7 percent of the overall value of the estate. This number can be used as part of the cost equation to decide if the lawyer’s fees are reasonable or not.
The lawyer’s charges can be broken down into two basic categories-the estate lawyer fees that pertain directly to legal services, and also probate costs that may or may not overlap with legal duties. These can include fees for personal representation, ancillary court fees, charges for accounting and appraisal, fees to publish notices and charges to record fees for various deeds.
Another factor that plays a part in cost is the length of the probate process itself. This may sound secondary, but the process of probating a will usually takes at least a few months, and it can actually extend for a year or more, although most estate settlements are closed within a year.
If the affairs of the deceased were disorganized or chaotic, this amount of time will play into the overall cost as well. It may take months just for the lawyer to get everything to the point where the probate process can be started in earnest, and that work doesn’t come for free.
The value of the estate plays into the legal costs in other ways as well. Larger estates often have more assets and debts, and the process of untangling them for distribution can take longer. This is especially true if there are taxes and the IRS become involved to any significant extent.
One important way to mitigate the cost of a probate lawyer is to make a smart decision about whether the probate process is even required.
Probate may be unnecessary if property is owned jointly, and if the assets being transferred include life insurance, retirement funds, bank charges, or investment money, these things can be passed on without having to go through probate.
In situations like these a probate lawyer may not be necessary, but that doesn’t mean you shouldn’t talk to one anyway. A good probate lawyer will be willing to take less money to give sound advice in situations where the need for the probate process is marginal or nonexistent, and a lawyer like this can be a valuable asset going forward as well. So, it’s worth taking the time to find the one who best suit’s your situation, financially and otherwise.
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5 Tips for Those Drafting a New Will
You’ve decided to draft a new will. It may be your first will, or you’ve decided to revise your current will. Here are 5 tips for those drafting a new will, so that you avoid the common mistakes that throw many people into turmoil or probate.
Take Everything into Account
Your will should outline how you want your property handled when you die. This could mean anything from giving it all to your wife to giving it all to charity. However, the document will be the most effective if it covers everything that matters. How do you do this? By creating a list of all your major assets. This list should include all bank accounts, CDs, investment accounts, retirement accounts, ownership stakes in LLCs, boats and vehicles. Don’t forget to list physical assets like gold jewelry, collectibles and art. You can assign a rough value to each of them. You can use this information to distribute items in equal shares or however else you want.
Consider What Your Heirs Would Want
This requires an honest assessment of every potential heir. It would be even better to have discussions with your heirs regarding what they want. Who wants the antique cuckoo clock in the hallway? Does anyone actually want the stamp collection you’ve acquired? Will anyone be interested in taking over the family home? Or would they prefer to sell the asset and distribute the money among themselves?
Prepare for the Disabled Beneficiary
Whether your spouse has a family history of dementia or your grandchild has been diagnosed with a severe disability, you’ll need to make legal preparations as soon as possible so that they’re in effect well before you pass away. For example, you’ll want to consult with an Arizona estate planner to set up a trust for a spouse who may spend several years in a nursing home. Or you may want to set up a special needs trust to provide for a disabled child or grandchild.
Then there is paperwork like living wills and power of attorney documents. Designate an agent who can manage the trust or simply pay the bills when both you and your spouse are incapacitated. Name someone to serve as your agent when you’re in the hospital if your spouse or children are no longer capable of making these decisions on your behalf.
Ensure that Your Partner Doesn’t Have to Wait for Probate
We often forget that probate locks everything up until the courts decide things. We’d recommend having your spouse or the future executor of your estate access to a sizable savings account. Then they can pay the electric bill, medical bills and other essential expenses during probate. They don’t have to be joint account holders. Instead, you could fill out a transfer on death or pay on death document with the financial institution. Furthermore, they can afford to hire legal counsel if problems arise. On the flip side, you’ve ensured that they don’t lose a car or other asset because they can’t pay the payments.
Don’t Lock Up Your Key Documents
A surprisingly tragicomic mistake is storing one’s will in a bank safety deposit box. While it is safely stored there, the bank may be legally required to lock up the safety deposit box until it is probated. That’s hard to do if the only copy of the will is in the safety deposit box. Furthermore, your living will and power of attorney documents are meaningless if they aren’t on file with the hospital and no one else can access them.
Create multiple notarized copies of your will. You could have one in the safety deposit box, but have a copy with your Arizona attorney, as well. Have a copy of your medical and financial power of attorney documents in a fire proof box in your home as well as with your attorney. Ensure that your immediate family knows where these documents are located so they can make use of them when necessary.
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The Most Common Types of Trusts
A trust is by definition a fiduciary responsibility on behalf of a beneficiary. The beneficiary could be anyone from you, your children, or the charity of your choice. However, there are many different types of trusts. Here are the most common types of trusts.
Type A Trusts
Type A trusts are also known as martial trusts are designed to provide a number of benefits to the surviving spouse. The assets in the marital trust will be part of the taxable estate of the surviving spouse when they in turn pass away. You can set up the trust to give the income from those assets to the spouse but have the assets themselves go to another heir. These types of trusts are commonly used in blended families.
Credit Shelter Trusts
Credit shelter trusts are designed to help couples maximize their estate tax exemptions, especially under the federal tax code. Assets above the estate tax threshold are held in the credit shelter trust. The still-living spouse can receive income from the trust until they, too, die. Then the trust beneficiaries receive the assets themselves. This has the side benefit of allowing you to control the distribution of assets to your heirs after your surviving spouse has died. That is typically tax-free.
Charitable Remainder Trusts
A charitable remainder trust contains most or all of your assets. You receive a percentage of the income for a defined period of time. The income above these thresholds goes to the charity. And the assets will go to the charity when you die. This approach allows you to receive a regular stream of income from investments without having to legally own the assets. Note that you can have the trust divide up the assets between multiple charities. Know that resident doesn’t have to leave money to a charity in Arizona.
Living trusts are ones where you retain control over the assets as long as you’re alive and competent to make decisions. You can alter the trust, whether you want to add assets or change beneficiaries. You can even dissolve the trust. This type of trust typically helps your heirs avoid probate, but it won’t eliminate estate taxes or inheritance taxes. However, it will dramatically reduce the risk that your will is contested.
Living trusts have a number of additional benefits. If you put your interest in a business into a trust, you can have someone else manage it on your behalf. If you are disabled or die, there is then no interruption to the business as ownership is transitioned to your heirs. The trust is far more effective than a financial power of attorney, since that terminates when you die. The living trust is far more effective when it is drawn up in the state you live in and the trustee is close to the assets you want managed, assuming it isn’t a stock portfolio.
Irrevocable trusts are not revocable. This means the trust terms cannot be changed once you create it. You give up control over the trust. However, this type of trust offers the greatest protection from estate taxes and probate. For example, the trust removes the assets from your estate. The irrevocable trust is then taxed as an independent entity. If you own quite a bit of income producing real estate, this could lower your personal income tax rate as you receive income from the trust. Irrevocable life insurance trusts are a good way to help your heirs pay inheritance taxes, too.
Just make sure you set the trust up correctly and choose the right trustees, since you can’t change it.
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process depending on its complexity (particularity).
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In Arizona, we are servicing the nearby cities of Mesa, Phoenix, Apache Junction, Glendale, Gilbert, Fountain Hills, Sun Lakes and Paradise; the Counties of Maricopa and Pinal; and the local neighborhoods of Oasis Neighborhood, Las Casitas del Sur, Ocotillo, Cambric Courts, Heatherbrook, Fox Crossing, Woodglen, Downtown, Colonial Coronita, Sun Groves, Comanche Ranch, Britanny, Festival Celebration, Grand Reserve, Pueblo SantaFe, Vineyards, Windmills West, Balboa Ways, Springs HOA, Windrose East, Carino Estates, Saguaro Canyon, Crescent Village & Ironwood Vistas; attending the zipcodes 85224, 85226, 85225, 85286, 85244, 85248, 85246 & 85249.
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How to Use Trusts to Protect Your Assets from Medicaid
Medicaid was intended to provide medical care for the indigent. This is separate from the Medicare system that nearly all retirees qualify for around the age of 65. Medicaid is unusual in providing funds for long-term care for the indigent. However, it is possible for many people to end up relying on Medicaid at some point.
The Disabled Spouse
It is possible for a couple to apply for Medicaid. If both adults apply for Medicaid nursing home assistance, there are strict asset and income limits that apply. For example, the couple can only hold four thousand dollars in assets and have an income below a set threshold that varies from state to state. In Arizona, the couple can earn around 2,100 dollars a month or 4,200 dollars together. Issues arise when one person requires full time nursing home care but the other spouse is still independent. The independent spouse can retain up to about 130,000 dollars in assets while the other spouse is confined to a nursing home.
In this situation, we would recommend a Qualified Income Trust or QIT. The QIT is also called Miller Trusts or Income-Only Trusts, though the latter name is only used in Arizona. This type of trust must be irrevocable. Furthermore, it must have the Arizona Health Care Cost Containment System as the remainder beneficiary. This type of trust keeps the couple’s income below the threshold while ensuring they are properly taken care of. And it may allow you to avoid spending down assets.
Another option is a Medicaid Asset Protection Trust or MAPT. The assets put in the trust are no longer considered owned by the individual. Note that trusts like this generally need to be set up years in advance of admission to a nursing home paid for by Medicaid.
A Special Needs Adult
A special needs trust, also called a supplemental needs trust, is probably the best solution in this case. Consult with a Chandler estate planning attorney to determine the best way to protect assets and provide for an adult who will rely on care for the rest of their lives. You will want to set up trusts and guardianship for them, while wills and power of attorney documents must be drafted to achieve your final wishes, providing for their needs. Conversely, you shouldn’t assume that a will that sets up a trust will be sufficient, because your estate is liable for your long term care expenses before any assets flow to your heirs, including those who are themselves disabled.
Estate Planning when Medicaid Is Involved
Consider setting up an irrevocable trust to protect a family business, farm or home long before you require assistance with daily tasks. The irrevocable trust allows your assets to continue operation whether you’re disabled or dead. Putting assets in the trust may allow them to continue running under the supervision of the trustee during probate, as well. The trustees may be an attorney, a family friend or your family members themselves.
Don’t just set up a trust to protect assets from seizure to pay for your nursing home bills. Work with an estate planning expert so that the trust works along with other key documents like your will so that your wishes are carried out. Furthermore, your attorney can help you re-title assets to put them inside the trust so that it actually does what you want it to do.
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Scottsdale is a beautiful, bustling city, nestled in the heart of the desert in Arizona. It style’s itself as ‘The West’s Most Western Town’ and it certainly does a lot to live up to that reputation. It has a population of more than a quarter of a million, having seen huge population growth in the post-World war 2 period. In fact, in 1950 the recorded population of the town was only about 2000 people!
The city limits have expanded greatly since the 1970s, but responsible governance has meant that the original old town has been preserved. It remains one of the most vibrant, well-conserved old towns in America, boasting an array of shopping and dining experiences. The town of Scottsdale is regularly voted as one of the most desirable places to live in the State of Arizona.
There are a number of potential reasons for this popularity, but it is hard to look past the booming nightlife. The old town district is home to a number of high-end nightclubs and trendy bars, and more recently some stylish, high capacity hotels such as the Mondrian Hotel and the W Hotel have opened in the area. Although they might seem worlds apart, the Scottsdale town center has been compared to the South Beach area of Miami because of its lively, party-happy spirit.
But there is much more to Scottsdale than just nighttime entertainment. Tourists might want to pay a visit to the Great Wolf Lodge water park or the aquarium in the city. For locals, keen to enjoy a slower pace of life, there are a number of great parks and open spaces to explore. The Camelback Mountain, located just outside the city limits, is very popular with adventure seeking rock climbers. For those who prefer golf, there are a number of great courses for you to practice your putting. Scottsdale has a well-deserved reputation as one of the premier golfing resort destinations in America.
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