What is Estate Planning?
Estate planning is the process of organizing and planning financial and personal affairs for the possibility of disability and the eventuality of death. Basic estate planning involves the preparation of powers of attorney and a Last Will & Testament. More extensive estate planning may involve using devices to reduce or eliminate federal estate taxes, make charitable gifts, and/or avoid probate.
Minimum Recommended Tools
At a minimum, we recommend that every adult Arizona resident consider the following estate planning tools:
Last Will & Testament; Durable Power of Attorney; Medical Power of Attorney; “Living Will.”
Arizona residents who have assets worth more than $75,000 for an individual or $150,000.00 for a married couple should strongly consider a revocable living trust.
Arizona residents who have assets worth more than $1,500,000.00 for individuals and $3,000,000.00 for married couples should strongly consider an Irrevocable Life Insurance Trust (“ILIT”).
Last Will & Testament
Unless both you and your spouse have a Last Will & Testament that appoints a guardian for any minor children, upon your death the State of Arizona will decide where your children will live. Even if a parent, brother or sister steps in to take care of your children, there will be a period of uncertainty without a valid Last Will & Testament.
A Last Will & Testament, or “Will” for short, is a writing which expresses the signer’s intention as to what should happen to the signer’s assets after his or her death. Although a Will does not always have to be in writing to be valid, a Will must always comply with the statutory requirements. Thus, even though a writing may accurately express the intention of the signer, if the writing does not meet all of the statutory requirements, it is not valid.
A “holographic” Will is one which is entirely in the signer’s handwriting (or printing) and which is dated and signed at the end of it. A holographic Will must contain a “testamentary disposition” (a statement disposing of one’s property or assets) or name a personal representative (executor).
Does a Will Avoid Probate?
Having a Will does not either avoid probate or require a probate. The primary purpose and perhaps the only purpose, of most probates is to enable the beneficiary of property to show that he is the legal owner thereof so that he can deal with it as he sees fit. Whether a probate is necessary depends upon the value of the estate and the nature of the assets held in the estate.
Title to assets such as real estate and stocks and bonds usually must be probated to change the title from the decedent to the beneficiary. The probate court gives the personal representative the power to change titles.
A Will does not increase or decrease the need for a probate. A Will expresses your intention and lets YOU control what happens to your assets when you die.
Should I Have a Will?
The answer is almost always, “Yes.” The reason for this is that a Will reflects your intentions. Without a Will, your estate will pass according to the laws of the State of Arizona. Without a Will, the State of Arizona (and not you) decides what happens to your estate, or who your executor will be. People with children under the age of 18 should have a Will so that they can nominate a guardian for the children.
What Information Should I Bring to the Lawyer’s Office?
When you come to the lawyer’s office to discuss estate planning, please be prepared to discuss the following:
1. What should happen to your assets upon your death (should they go to your spouse or if the spouse has predeceased you in equal shares to your children)?
2. What should happen to you minor children (if any) upon your death (who should be appointed to take care of the children and raise them)?
3. Who do you want to administer your estate (follow the directions in your Will, pay your debts, file your tax returns and distribute your assets)?
4. If you are disabled or incapacitated (but not dead), who should handle your financial affairs?
5. If you are disabled or incapacitated (but not dead), who should make medical treatment decisions concerning you?
6. If the person you have selected to administer your estate, or handle your financial affairs while you are alive, is not able to do so, who do you want as an alternate?
7. Do you want to be kept alive artificially (on a respirator)?
8. Do you want to make a donation or all or any of your organs?
You should bring ALL of the following with you to the appointment:
1. Every prior Will and power of attorney you have made;
2. A copy of the deed to your house (if available);
3. Information about EVERY life insurance policy on you and your spouse;
4. A list of the names, addresses, dates of birth and Social Security Numbers (if available) of all children, if any;
5. A summary of the assets you own including your estimate of the value of each major item (house, cars, bank accounts, IRA/401(k), stocks & bonds, etc.).