McDonald Warner - Probate, Elder Law, & Special Needs

Phoenix Estate Planning And Probate Law Blog

Including charitable gifts in an estate plan

Some Arizona residents thinking about the future may want to make charitable giving part of their plans. Many people include donations to charity as part of their annual routines, donating around the holidays or another significant event or volunteering to help a cause they support. One of the most common types of charitable contribution is often made on death as part of a will or other bequest, but some people may be unsure about how they can best make their plans a reality.

Even people of modest means can include charitable giving as part of an estate plan. When making out a will, people can simply direct a bequest to a specific organization. This can also help out other beneficiaries by reducing the estate tax burden for a large estate. Whether a small gift or a large sum, a will can be an excellent place to specify a contribution to an organization. For people with retirement accounts or other investment funds but few close loved ones who need to benefit from those accounts, naming a charity as the payable-on-death beneficiary can also be an easy way to make a valuable gift.

Estate planning resolutions to consider during the new year

Some people in Arizona are fairly non-nonchalant about their resolutions for a new year. After all, it's often easy for individuals with good intentions to justify not being able to commit to daily gym visits beyond the first month of the year or not sticking to a diet that ends up being too restrictive. But a resolution that could have a long-term impact for anyone wishing to pass along certain assets to heirs or make important decisions in advance is a commitment to make estate planning a priority during the new year.

At the very least, it's typically advised that individuals over eighteen have a will. It's a document that allows a person to dictate who gets what while also naming a preferred guardian for any children they may have. A power of attorney, which can be specific to financial matters, is an additional document that may come in handy should a living individual become incapacitated and need someone they can trust to make important decisions.

What is the best age to first create an estate plan?

It is never too early to create an estate plan. While you will need to update it throughout your life, you should initially create one when you are still fairly young. Despite this, roughly 60 percent of Americans have done nothing with their estate plans. 

It would benefit all people to create an estate plan as soon as they turn 18. At this point, your parents are unable to make any financial or health care decisions on your behalf, so you need a plan in place just in case the worst happens. You can continue adding to your estate plan or changing it over the years. However, here are the points in life when you need to look at your estate plan. 

Using more than one trust in estate planning

When people in Arizona think about how to care for their loved ones after they are gone, they may be drawn by the flexibility and higher level of control provided by trusts. In addition, using trusts allows people to inherit outside the probate process. While they are less necessary for tax purposes than in the past given the large increases in exemptions from federal estate taxes, there are a number of reasons why people may opt for trusts to pass on their property.

Some people may wonder if it is possible to have more than one trust. People can definitely create several trusts, but these are generally better intended to address different types of assets and distributions rather than the same type of property distribution. It is possible to amend, revoke or completely replace a trust by executing a new document that replaces the original trust completely, but this is an amendment to the initial trust rather than a second trust. In most cases, if people simply want to pass on a specific asset to a particular person, they can create a provision beside the general distribution paragraph that specifies which person will receive that property.

How to revoke a power of attorney in Arizona

In Arizona, some estate owners grant powers of attorney to designated people to help them to manage their finances. A power of attorney could be immediately effective, or it may only come into effect if the grantor is found to be mentally incapacitated.

In some cases when granting of a power of attorney is immediately effective and does not depend on mental incapacitation, the grantor may later decide to revoke those powers. This might occur when the grantor no longer needs help or has grown to distrust the attorney-in-fact.

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.

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