AZ Estate Planning News

AZ Estate Planning News

Knollmiller and Arenofsky Trust and Estate Planning

Posts filed under trusts

Will My Heirs Have Hurt Feelings Over My Personal Items? Short Answer: Probably

English: Antiques being sold on Colaba Causeway

“The biggest estate-planning mistake is that people think it’s only about the money,” said Marlene Stum, a professor at the University of Minnesota and author of the “Who Gets Grandma’s Yellow Pie Plate?” workbook and website. “When it comes to their personal possessions, they say, ‘It’s just stuff.’ ”

In my opinion, the personal items in a home is often the biggest source of unhappiness among families when a loved one dies.   Without taking the time on how to resolve the distribution of personal possessions, you can unwittingly leave a legacy of rancor and resentment.

Baby boomers surveyed by Allianz Life Insurance Company selected personal possessions six times more often than financial inheritance as important in legacy planning.

Okay, where do we start?  How about asking your heirs what items mean something to them?   Then keep a list and resolve any overlapping interests.

Next, on a sheet of paper, titled Personal Property Distributions, and upon completion attached to the back of your Will, list who gets what and sign, date and number the sheet(s) 0f paper.  While writing the names on the pieces themselves seems like a great idea, it is unlikely supported in the law if there is  a dispute on who gets which items.

If you have a lot of sentimental items, and you do not want to list who receives them, perhaps a third party executor or successor trustee that will distribute the personal items will work better since their decisions will not be treated as biased or personal.
Starting the process early leaves time to work out ground rules and deal with different assumptions and opinions.  And it can be a chance to see the pleasure your treasures can bring to their new owners if you choose to give them the items you do not need now.
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“Only Older People Need Estate Plans”

Français : Enterrement à

Français : Enterrement à (Photo credit: Wikipedia)

It isn’t a surprise to anyone that those typically motivated to do estate planning are those that have their mortality staring back at them.  Examples include clients preparing for travel, life challenging illnesses or individuals in advancing years.

I don’t need to remind anyone that life can be cut short since all of us have been affected by a passing that came too soon and too fast.   In my practice, I’ve had parents pass without making their choice be known for a guardian of their children and recently an individual passed and because she didn’t have a will, it passed to an individual that the rest of the family kept shaking their heads saying “she must be turning in her grave that so-and-so inherited her estate.”

Sure, very few of us like planning for our passing.  But often, it is the things we least want to face that end up giving us the greatest peace once faced, tackled and then resolved.

Give us a call and we will be happy to assist you with the process, make the planning and implementation of your estate plan as simple as possible and will guarantee that the burden that gets lifted off your shoulders will give you great satisfaction.

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“I don’t need an estate plan since I’m unaffected by the estate tax”

Tax

coffin

While this is a common misconception, I believe it mixes up two ideas, estate planning and estate tax planning. Estate tax planing is actually a small, but important, part of the overall estate planning process.

Estate planning is about making sure your estate is in order and passes as you wish.  Estate tax planning is making sure the government gets as little of your estate as you can.

Estate planning uses a trust, or a will, to organize your affairs and distribute it to who you care about when you die.   Estate planning is for tax and non-tax reasons.   Of course no one is required to have an estate plan. Many would be unhappy to know that our legislature in Arizona has written an estate plan for everyone that hasn’t written an estate plan themselves.

Kevin P. McFadden, Knollmiller & Arenofsky, LLP

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How Much Does the Government Take When you Die?

Arizona State Capitol Museum

This question gets asked a lot.  Sometimes it is asked if the Feds or Arizona tax you when you die?  Sometimes it is asked if the State gets part of your estate when you die?  Mostly it is thought of in terms of probate whether you have a Last Will & Testament or not.

The short and simple answer for almost everyone is zero, the Feds and Arizona gets absolutely nothing when you die. Of course there are exceptions, but they are very limited.

One exception is if your total estate is over $5,250,000 at least for year 2013.  If a married couple have done proper estate planning they can pass $10,500,000 this year estate tax free.  And no, the State of Arizona does not have an inheritance or death tax.  Some states do but Arizona does not.

Another exception is if you do not have a Will or Trust and you have no heirs.  This means no parents, children, spouse, nieces and nephews, cousins, etc. Very rare, but possible.  If this is the case, the State of Arizona takes the entire estate.

Another exception, but I don’t really think this should be thought of as an exception but basic taxation, is that if you have any assets that are pre-tax, for example an IRA, then when the funds are distributed, they are subject to income tax as they would have been if the person was still alive.

So in answer to the question, no, the Feds and the State of Arizona will very unlikely get a piece of your Estate.  Of course this doesn’t mean your Estate will go where you want it to without careful estate planning. That is a subject of another post.

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