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How to Help Your Estate Planning Attorney Set Up A Living Trust

One of the most important duties performed by estate planning attorneys is to help you set up a living trust. It’s not an easy task, but there may be significant advantages in doing so.

There’s a catch, though. You’ll need to be able to supply your attorney with a variety of important information, and you’ll have to do it in a timely, organized fashion.

Start with your assets. At first glance this task seems deceptively easy, but quite often it’s not. The most common assets are your savings, your home, and investments, and there may be many secondary assets as well, including your vehicle, some high-value possessions, keepsakes, jewelry, etc.

Others aren’t as readily apparent. These include life insurance, retirement funds, ancillary accounts and other similar sources of value that may not seem immediately obvious.

Your estate planning attorney will need to know about them, though, so make sure you can give a thorough accounting of their value.

It’s just as important to find the paperwork for everything mentioned above. This includes car titles, certificates pertaining to investments, jewelry appraisals and so on. Getting these things to your estate planning attorney in a prompt, efficient manner can make all the difference in the world.

The next area in which information is important pertains to the beneficiaries. They must be carefully chosen, and you also must give your attorney a thorough account of who gets what and why. Background information on these beneficiaries can be helpful as well, and make sure their names aren’t already on existing financial documents. This can create conflict that can delay the distribution of assets, which is the last thing you want given how complex the process can be even under the best of circumstances.

If you’re naming yourself as the trustee of a living trust, this will give you control over your assets over the course of your life. But you’ll also need to name a successor trustee to follow your instructions after you’re gone, and this person will be charged with the task of finishing the process when it comes to paying your debts and distributing your assets.

There’s another important reason the successor trustee must be reliable with an impeccable track record, though. That person will be charged with carrying on if you’re incapacitated, so a high level of trust is an obvious requirement.

If children are involved in your situation, the process of creating a living trust becomes even more intricate. You won’t be able to name a guardian for your children via a living trust, but you should still know who you’d want to take care of them after your passing.

This issue can be handled through the creating of something called a “pour-over will.” This is basically a catch all document that accounts for the distribution of assets that are acquired after the trust has been created but before your death. It also includes any assets that have inadvertently been excluded from the living trust.

Above all, make sure you get the best possible estate planning attorney in the Arizona area. This will produce the best outcome for you and your family, and it’s the soundest way to preserve and maintain your legacy as well.

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What Happens In Probate When A Will Is Contested?

It doesn’t happen very often, but when it does a disputed will can generate plenty of drama. Disputed wills have been the subject of movies, books and TV shows for decades, and there’s almost always plenty of finger-pointing as folks take sides.

In the middle of it all stands the probate lawyer, who is often a key figure. Probate lawyers make sure proper procedures are followed, and they can save both parties of a ton of money and aggravation if they do their jobs correctly.

So what exactly does happen in probate when a will gets contested? First off, the circumstances have to be specific. Wills can only be contested by spouses, their children or parties there are either mentioned in the current will or a previous will if there is one.

Next restriction-there must be a genuine, valid question or issue about the legal process used to create the will.. If those conditions are met, the fun starts. There are four specific reason for which a will can be contested, and they’re very different.

The first is the actual execution of the will. This pertains to the signing and witnesses, and the expertise of the probate lawyer is pivotal.

The witnesses must be legitimate, their signatures must be valid and two witnesses must be present for the signing. If anything is bogus or questionable, the dispute may be upheld.

The second reason for a dispute involves the person who made the will, who is known in legal terms as the testator. That person must have testamentary capacity, which is known in the real world as mental capacity.

This is where things can get tricky. The standard for capacity is lower than 100 percent in most states, and it only requires that the testator understand the nature of the assets, what is being given away, who the heirs and beneficiaries are and what the effect of the will is likely to be.

Even people in the early stages of dementia are sometimes capable of doing this, hence the often fiery nature of the disputes.

The third valid cause of dispute is fraud. There are many variations on this particular theme, but one common one would be misrepresenting a key document, e.g., giving the testator a real estate document or a health care form and presenting it as part of the will.

The fourth possibility is about being under the influence, but this doesn’t necessarily pertain to substances.

A valid example of this phenomenon would be a caretaker who controls assets and day-to-day decisions and uses that power to influence the testator to sign a document that goes against his or her best interests.

If any of these conditions are met, it is possible that the will or certain codicils may be thrown out, and an earlier will may be substituted if one exists.

Assets may be redistributed accorded to intestacy laws, which are typically applied to an estate in which no will exists. If parts of the will are upheld, the court may make the necessary decisions about the rest of it.

The process can be emotional, but most of the time the courts tend to focus on provable facts, hence the key role of the probate lawyer. Most wills are upheld, and the arguments between siblings that caused the dispute often lessen over time. The probate lawyer may play a crucial part in the emotional aspect of all this as well, which is yet another reason to get a good one.

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How Ever-Changing Law Can For You to Update Your Will

Most of us know that you need to update your will when you get married, divorced, have children or change your mind about who you want to get your stuff. However, you may need to update your will because it is the law itself that has changed.

Federal Laws

The value of a trust goes up along with the estate tax rate. Furthermore, you may need to change your will as the amount your spouse can inherit tax-free changes. That’s in addition to the need to update the will when your estate becomes large enough to be subject to an estate tax.

If the amount you can give to your friends and family increases, you may want to give more away while you’re alive than after you’ve died. Ensure that your gifts don’t force the recipient to pay a gift tax. Aggressive charitable giving can have the same effect. Review your will with an estate planner to determine if your will needs to be updated to reflect your final wishes.

State Laws

The laws regarding wills are state specific. In some states, the most basic legal will and testament exists in the statutes themselves. In other cases, the requirements of the will from the terminology used to the number of witnesses required are outlined in the state code.

Arizona state laws regarding trusts have changed, as well. The trust code underwent a major revision in 2009. The changes that went into effect at that time include stricter reporting requirements for trustees and made non-judicial modification of trusts easier. However, the trust code was updated ten years later, too. Agents appointed by a financial power of attorney have the power you spell out in the power of attorney documents. You should determine if the power of attorney document remains valid. You may need to specifically state whether or not your agent has permission to amend a revocable trust on your behalf. This is not an issue with irrevocable trusts.

Other Relevant Laws

The laws regarding trusts are mostly set at the state level, but federal laws may affect them, as well. For example, the Secure Act eliminated the option for most heirs to take advantage of a stretch IRA. Instead, the law requires most non-spouse beneficiaries to liquidate the account within ten years of the account owner’s death. This affects nearly everyone with a retirement account that’s payable to a trust. The biggest exceptions are minor beneficiaries and disabled heirs. Talk to an attorney to determine if you need to update your will. This is likely if a trust is the primary or secondary beneficiary of a sizable retirement account.

Do you have assets held by a limited liability corporation like rental properties or a family business? Any LLC created after August 31, 2019 must comply with the Arizona Limited Liability Company Act. This means you may not need to alter the articles of incorporation for an existing LLC. However, a multi-member LLC should have an ALLCA compliant operating agreement adopted and implemented. Doctors and lawyers who have a stake in a partnership should consult with an attorney to determine if they need to modify their LLC agreement or change their will to reflect the current value of their equity in the business. If the current agreement leaves you liable for various problems, you may want to put the business or your investment in a trust to protect your remaining assets.

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Why Do People Set Up Trusts?

Trusts are a fiduciary agreement where assets are put in the trust to be managed by a third party on behalf of some beneficiary. This is where the term trust fund comes from, though trusts are not limited to managing money on behalf of an heir. But why do people set up trusts in the first place?

You Want To Avoid Probate

One benefit of trusts is that it can help your heirs avoid probate. It can also prevent many potential legal fights over your assets. However, the trust requires three to four times as much time to draft, and funding it properly may require rewriting your will and changing the beneficiaries on your accounts. A side benefit of using a trust is that it prevents the distribution of assets from becoming part of the public record.

It Can Continue Working whether You Are Incapacitated

A trust can and should be set up with secondary and even tertiary trustees. Then there is someone you’ve appointed there to manage the trust if you’re incapacitated after a stroke or due to dementia. This may be your spouse, your best friend, or your attorney. It can also continue to operate after your death, depending on the terms of the trust. On the other hand, you can set up a trust to take care of a loved one while avoiding expensive court-supervised guardianship. This is ideal if your spouse already has dementia or is otherwise disabled.

They’re A Standard Solution For The Incapacitated Heir

Special needs trusts are a standard solution for meeting the needs of an incapacitated heir. This is obvious when you have a mentally handicapped child. They’re often used to provide for a mentally ill relative, as well, since you can write the trust in such a way that they don’t access the money until they are proven competent. You could set up a will to dole out money on a schedule or when set conditions are met. This will prevent someone with a history of reckless overspending or constant legal trouble from waste it all. And you can spell out terms and conditions in the trust to make sure they’re ready to receive the money, whether it is five years sober or having held down a job for more than a year.

It Might Reduce Your Tax Bill

Trusts can be set up to minimize your tax bill. They may be used to maximize estate tax deductions. Or they may let you reduce the size of your estate, especially if the trust will channel the money to a charity upon your death. Note that trust beneficiaries must pay income taxes on their distributions from the trust. You could set up the trust to pay out a smaller amount over a longer period of time to reduce their tax bill. Or let the trust pay major expenses like medical bills and college so they don’t have to do so.

You Can Control Assets

A trust allows you to set any number of conditions for those who want to receive the money. You might authorize the trustee to pay for tuition, room and board for your child but prevent them from receiving the full amount until they graduate. With a trust, you can dole out a set amount each year to heirs who you don’t trust with the full amount. Or you could skip your children and leave money to your grandchildren without giving them a way to fight it.

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How Your Will May Be Affected By Medicaid

Medicaid is intended to pay the medical bills for those who lack the assets to do so. Your will is intended to distribute your assets and spell out your last wishes after you die. What many fail to realize is that these two matters often come into conflict.

The Handling Of Assets & Heirs

If you have dependents when you die, your will should discuss their care. Medicaid doesn’t care about who is asked to become the guardian of your dependent minor children. However, Medicaid may claim assets that you intended to go to your surviving heirs. Consult with an estate planner so that any life insurance money you intended to go to your children goes to them instead of being claimed to reimburse the state of Arizona for your Medicaid bills.

It is possible to set up a special needs trust for your dependents such as a disabled spouse or special needs children while potentially qualifying for Medicaid yourself at the end of life. Talk to a good estate planner to ensure that everyone is properly taken care of. And never try to sell or transfer assets to other relatives to qualify you or them for Medicaid without seeking good legal advice. The state of Arizona has a 60 month lookback period from the data you apply for Medicaid. If you sell or gave away assets for less than fair market value, you’re will be considered ineligible for Medicaid for a period.

The Impact Of Inheritance On Medicaid Recipients

If you inherit money, you are legally required to report it to Medicaid. Depending on your current income and assets, the inheritance could cause you to lose your Medicaid coverage. Fail to report the inheritance, and you will be forced to pay back everything you received during any period of ineligibility.

The income limit for individuals receiving long-term Medicaid varies from state to state, but it is around 2300 dollars a month. The limit for institutional / nursing home Medicaid in Arizona as of this writing is 2,349 a month and 2,000 dollars in assets. For married spouses, the same income limit applies if one spouse is applying, while the non-applicant spouse can maintain up to 128,640 dollars in assets. If both spouses are applying for Medicaid nursing home care, they have a combined asset and income limit equal to that of two individuals. Thus the asset limit for the couple is 4,000 dollars. This is why you may want to set up a trust to protect assets for surviving spouses long before someone lands in a nursing home. This is why Qualified Income Trusts or QITs, also called Miller Trusts or Income-Only Trusts, should be investigated as part of any long-term care plan. These trusts are irrevocable and have the Arizona Health Care Cost Containment System as the remainder beneficiary. That money goes toward the individual’s share of the cost of care.

However, there are no asset limits for the blind, regular Medicaid/aged or disabled Medicaid services. Arizona is the only state in the United States that doesn’t have such an asset limit, as long as you aren’t applying for nursing home care.

Retirement Planning & Medicaid

Individuals should consult with an attorney so that they can investigate options for spending down assets. For example, the value of a nursing home, modified car, or accessibility modifications to your home do not count toward your Medicaid eligibility asset threshold. Paying off debts and prepaying funeral expenses don’t count toward the Medicaid threshold, either.

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