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

Phoenix Estate Planning And Probate Law Blog

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 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.

Emergency instructions can fill an estate planning gap

Putting a comprehensive estate plan into place can provide Arizona residents with the peace of mind that comes from knowing that their affairs have been attended to and their heirs will be taken care of, but documents like trusts, wills and powers of attorney are of little use in the hours and days following a tragedy. Valuable time can be lost while these documents are located, and it could be several weeks before matters such as the guardianship of young children go before the courts.

One way to address this estate planning gap is to draft a list of instructions that are designed to provide guidance to loved ones or emergency response personnel. Such instructions could ensure that the children of parents killed in a car accident or other tragedy are placed with a relative rather than being handed over to a state agency, but they are only useful when they are discovered quickly. Placing emergency instructions in a prominent location and letting individuals such as babysitters or trusted neighbors know about them increases the chances of this happening.

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.

Ideal time to use certain trusts

Arizona residents have many options when it comes to the types of trusts they can include in their estate plans. With the rise in interest rates that is expected to continue, individuals can reap the benefits of using grantor retained annuity trusts or charitable lead annuity trusts.

A grantor retained annuity trust, or GRAT, combines a trust created to be active for a certain length of time and an annuity from which the grantor receives a set payout for every year the trust is in use. The payout that the grantor receives is their retained interest. Any remaining value that is left in the trust when it expires is passed to the grantor's beneficiaries.

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