The Law Offices of Kelly J. McDonald, PLLC - Probate, Elder Law, & Special Needs

Phoenix Estate Planning And Probate Law Blog

Common mistakes in estate planning

Arizona residents should take steps to avoid certain mistakes when developing their estate plans. Situations in which people pass away with inadequate estate plans can lead to conflicts among remaining loved ones that have to be resolved in court.

Not providing enough information in an estate plan is a common mistake. One should provide their executor and surviving loved ones with an updated and comprehensive list of their assets and how to access them. The list should include access information such as passwords and usernames for bank accounts, mutual fund holdings, brokerage accounts and more.

Avoiding celebrities' estate planning errors

Many people in Arizona admire the artistry and creativity of former Marvel chairman Stan Lee, the co-creator of Captain America and Spider-Man. However, after the 95-year-old Lee passed away, experts are urging people not to follow in his footsteps when it comes to estate planning. It is not clear whether Lee left behind any estate documents, although he is survived by his 68-year-old daughter. He is not alone; a number of celebrities with substantial estates, like Prince and Aretha Franklin, have also died without specifying how their assets should be distributed.

Some worry that people could come forward presenting documents as authentic wills on Lee's behalf. Over the years, he worked with a number of lawyers and financial advisors. However, he accused some of them of betraying his trust and putting their own interests first. Estate planning can be a challenging process, and many people don't like to think about death. However, preparing for the future can save money, time and significant emotional pain later down the road.

How does probate work in Arizona?

When your parents pass on, most of their estate is likely to go through probate. This means legally accounting for and administering the deceased's property to all relevant parties. 

The process sounds pretty straightforward and simple, and it can be, but it also can be lengthy and confusing. Understanding how probate works can help you know how to help your parents with their estate planning to ensure there are no bumps in the road later on. It can also be beneficial for you if your parents named you the personal representative or executor of the estate.

Handling hard assets in an estate plan

Over the years, many Arizonans acquire property for their own personal enjoyment. Items such as jewelry, artwork or other sorts of collectibles are some examples. In some cases, these hard assets may have substantial economic value. However, their monetary worth may be unknown. During the estate planning process, these items should be treated and assessed differently than liquid assets such as cash in a bank account.

Professional financial advisers recommend a three-pronged approach to hard assets. One should determine the asset's worth, who wants the item and the best way to accomplish the transfer. The appraisal of the asset should be conducted by a certified expert in the specific field and must be current. People should not rely on a previously made appraisal from years past.

Differences between charitable and other trusts

Charitable trusts can be useful tools for estate planning in Arizona. They often convey tax incentives and other benefits to the person planning the estate. There are a few things that distinguish charitable trusts from other trusts. First, they have a charitable purpose. Charitable purposes might include advancing religion or education, combating poverty, promoting health initiatives or otherwise benefiting the public.

Generally, charitable trusts, unlike other trusts used in estate planning, are not required to have a definite, ascertainable beneficiary. Rather, the beneficiary is assumed to be the community of people to which the economic and social benefits of the trust are conveyed. Instead of naming a specific beneficiary, the person who makes a charitable trust need only describe a purpose that has a benefit to the public.

Kids don't need to accept a timeshare from their parents

Arizona residents who inherit assets from their parents may find that they have inherited a timeshare. However, a child may not want to be responsible for an asset that may cost up to $3,000 a month in dues and other fees. Fortunately, there are some easy ways to ensure that a child is not responsible for these payments. First, the beneficiary may submit a written document saying that he or she has no interest in the property.

It may also be possible to simply not make payments to the resort that offered the timeshare. It is rare that they come after children who fail to make payments on a timeshare that they have inherited. Parents can choose to sell the timeshare or give it back to the resort prior to their passing. While this may be a drastic move, it could be put into a trust, which makes it hard or impossible for a resort to collect from a beneficiary.

Estate planning for entrepreneurs

Small business owners in Arizona should have an estate plan that will detail what should happen to their surviving loved ones, assets and business. This requires having more than just a will in place.

There are many factors for entrepreneurs to consider when planning for their estate. Disability insurance can be used to replace as much as 60 percent of their income, free of taxes, in the event of an injury or illness that prevents entrepreneurs from making their income.

3 ways to prevent your estate from going to probate

Planning for the future is an important but stressful endeavor. You want to be sure that your loved ones are cared for, but nobody wants to think about what will happen after they pass. Perhaps this is why, according to AARP, only 40 percent of American adults have started estate planning. If you do not plan your estate, though, your family will likely have to go through probate court, which can be difficult.

Probate court is dedicated to handling the property and assets of a decedent. It is typically necessary if there is no will or estate plan in place to dictate division and distribution of the property. The following are three ways to effectively prevent your estate from going to probate court:

How everyone benefits from estate planning

Arizona residents who don't have a spouse or kids may believe that they don't need a will. In fact, a Caring.com survey found that 78 percent of millennials don't have one. In addition to a will, a medical directive and power of attorney may also be worth having. A power of attorney allows another person to make financial and other decisions on an estate owner's behalf when he or she isn't able to. The medical directive enables a designated person to determine how an individual is treated while mentally incapacitated.

Creating a will can make it easier to have greater control over assets while alive and after passing on. This is true of both physical and digital assets assuming that the will is put together properly. Without a will, the state may determine how assets are distributed. In many cases, the parents of those who die intestate, unmarried and childless will receive their assets.

Prince, Aretha Franklin left many estate-related questions

Music fans in Arizona may have been saddened by the passing of Aretha Franklin. For her family, however, mourning may lead into what could be a big legal battle over her estate. Franklin died without a will, according to one of her lawyers.

This is certainly not the first time a celebrity has died without a will. Prince didn't have one either, and when he passed away a few years ago, a legal battle ensued involving his siblings and others who claimed to be his heirs.

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