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

Phoenix Estate Planning And Probate Law Blog

How to choose representatives of an estate

When choosing an agent, trustee or other estate plan surrogates, it is important to pick people who are qualified to act in those roles. This is true whether a person lives in Arizona or anywhere else in the country. If the wrong person is picked to serve in a given capacity, it could lead to conflicts between family members or threaten the financial security of future generations.

It is important to note that a person does not need to appoint a friend or family member to roles such as agent or trustee. Instead, these duties can be handled by a financial institution or a law firm. Choosing a professional over a sibling or spouse may reduce the odds of any conflicts of interest arising between surrogates. It can also prevent a person from choosing someone who isn't adept at managing his or her own affairs let, alone those of another individual.

Understanding special needs trusts

As the parent of an Arizona special needs child, you likely spend a good deal of time caring for him or her and providing for his or her needs. You also likely worry about who will care for your child and in what manner once you are no longer around to do so yourself.

You can ease your mind in this regard by establishing a special needs trust for your child. All you need do is think about not only what (s)he needs now, but also what (s)he will eventually need. Once you think these things through, you can draft the proper document to address those needs.

The trust is useless unless it is funded

For Arizona residents and others, creating a trust can be an effective way to create a more complete estate plan. However, creating the trust is not enough to reap the benefits it can provide. In addition, an individual must fund it either while alive or through the use of a pour-over will. Assets such as bank accounts, homes and personal property can all be put into a trust's name.

To transfer a bank account into a trust, the owner of the account will need to show the bank a certificate of trust. Once that happens, the bank will provide new signature cards that will need to be signed by the trustee. With a revocable trust, the trustee and the owner of an account can be the same person. A bill of sale or an assignment can be used to move assets such as personal property that does not have a title.

Avoiding family conflict in estate planning

When it comes time for many people in Arizona to plan their estates, they may focus on avoiding taxes and setting up an advantageous structure. However, as the estate tax ceiling has risen significantly, one of the most important parts of the estate planning process can be dealing with family dynamics and developing solutions to prevent future conflicts over the estate. Conflicts that arise among beneficiaries can be some of the most costly to the estate. In one case, a $1 million estate decreased to $400,000 following legal conflicts over the disbursement.

There are a number of cases in which some extra attention directed toward estate planning solutions can help ward off future conflict. One of the most common causes of conflict can be when blended families are involved and there are children from prior marriages. It can be important for couples to go through an estate planning process that ensures that both spouses' children are protected and provided for in the estate in a way that reflects the parents' goals.

Don't make these estate planning mistakes

Estate planning should be a priority for all Arizona residents. Unfortunately, many families don't understand the importance of estate planning until personally experiencing the headaches and court battles that come with settling the business of an estate. Here are some common mistakes that estate owners can avoid when setting up a will, trust or living will.

To avoid delays and creditor issues in probate, a contingent beneficiary should be named for all retirement accounts and insurance policies. Not renaming a beneficiary on an existing IRA after getting remarried is a common error. While a 401(k) automatically views the new spouse as the beneficiary, the beneficiary on the IRA should be updated.

Estate planning the right way

Even though many Arizona residents want to make sure their estate plans are properly planned so that the wealth they have accumulated will endure and benefit future generations, wealth is sustained in just a few cases. However, there are some steps that individuals can take beyond traditional estate planning methods to make sure their wealth can last for generations and help avoid conflicts regarding how the wealth is to be spent.

The manner in which an estate is divided should be the first consideration. According to estate planners, an estate can be divided equally, fairly or equitably. The division of an estate can be a difficult subject for estate owners to address because they are aware that their children differ with regard to being responsible and having certain prospects.

How to choose the right trust model

A trust is a common and valuable estate planning tool that allows Arizona residents to take advantage of all available tax-planning opportunities and dictate how they want their assets distributed. However, according to financial experts, many people sabotage their legacy plans by choosing the wrong administrator for their trust.

The administrator of a trust, or trustee, has many important duties, including conducting an inventory of assets, issuing monthly statements and filing notices to creditors. It is common for grantors to choose someone familiar with both them and their beneficiaries, such as a family member or a family friend, to be their trustee. However, this arrangement can present a couple of problems. The first, and most obvious, is that family members or friends may not have the expertise necessary to manage a trust. Another potential problem is that overseeing a trust may be too time-consuming or burdensome for qualified family members and friends.

Clues an aging parent may need help

As our parents age, it can be easy to overlook signs that they need a little help.

If you live some distance from a parent, checking in on their day-to-day well-being can be a difficult task. What’s more, parents may try to hide any difficulties from their loved ones for fear of being “put in a home.”

Estate planning can help avoid later disputes

For many people in Arizona, conflicts that had previously remained under the surface within a family can explode after the death of a loved one. Disputes over wills and the distribution of assets can tear a family apart. While there may be no way for a person to completely prevent the potential for such disputes, estate planning preparation can help to create clear documents and guidelines for a person's wishes about the distribution of their estate. This can be particularly important when the beneficiaries include blended families or people with long-running disputes.

When a person passes away, their last will and testament declares their wishes for the distribution of their belongings. Items that were not already distributed through other forms of non-probate transfer will be part of the estate handled in the probate court. Every beneficiary has a right to obtain a copy of the will and, if necessary, to challenge it. The probate court and the appointed personal representative are responsible for determining the extent of the estate, and paying off debts and taxes, before it is distributed to the beneficiaries.

Non-tax reasons for prudent tax planning

As the federal income tax filing deadline draws near (it is April 17 this year, by the way), it is natural for people to maximize tax savings strategies in anticipation of saving money that they may owe to Uncle Sam. Some strategies revolve around estate planning, as conscientious tax payers look to add more to their trusts, make charitable donations and maximize the gifts that they may give for the particular year.

Indeed, tax planning has its place within the estate planning realm, but there are other important non-tax reasons for having such a plan. This post will explore those reasons.

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