AZ Estate Planning News

AZ Estate Planning News

Knollmiller and Arenofsky Trust and Estate Planning

Posts filed under trust

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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Revocable Trusts, and Living Trusts, and Irrevocable Trusts! Oh, My!

Wizard of Oz

But wait, there’s more; there’s Loving Trusts, Family Trusts,  Grantor Retained Trusts and many more.

Let’s start with revocable vs. irrevocable trusts.  These are exactly what they say.  The revocable trust can be changed, amended,  and even thrown away.  The irrevocable trust however rarely can be changed except for very limited circumstances.

The revocable trust is the most common trust, the basis of an estate plan and typically what a client uses in lieu of a Last Will & Testament for the core estate plan.  The irrevocable trust is usually a more advanced estate planning trust IN ADDITION to the client’s existing estate plan (using a revocable trust).  I will wait for a discussion on when to use a irrevocable trust for a future blog.

What about all the other names?  Family Trust, Living Trust, Revocable Trust, Loving Trust, and Grantor Trust are pretty much the same thing. These trusts are great vehicles for holding your assets so that when you become unable to take care of yourself, or pass away, someone you have named can step in and take care of your affairs in your absence.  Great tools to avoid probates, conservatorships, court involvement and the best of all, far more private than a basic will.

If we can explain more, please feel free to call our office at 480-345-0444.

Kevin P. McFadden, Knollmiller & Arenofsky, LLP

 

 

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Estate Planning Can Be Intimidating

David F. Houston  (LOC)

We avoid what we don’t know.  For many financial, insurance and accounting professionals, they feel they ought to know estate planning better than they think they do.  They also feel they should be assisting their clients in getting their estate’s in order but due to the professional’s discomfort with estate planning, put off discussing this need with their clients.  This is completely understandable but also leaves the client with an unmet need.

To be frank, most attorneys that do not practice in this area of law are intimidated by estate planning and these are men and women that learn this area of law in law school!  I am not surprised that non-lawyers often feel the same way.

I don’t want to go into a big estate  planning lesson here even though I hope through time this blog provides some education to these professionals. Instead, may I suggest various way to connect the client with an estate planning attorney.

Our office has three was of meeting the estate planning needs for the clients of the professional.  All depending on the involvement the professional wants to be in the process.

The first way is direct involvement. Our office for example has an online procedure for creating an estate plan. The process walks the client through the questions, with simple explanations, followed by a recommendation from the law firm of the appropriate estate plan.  The client will speak to an attorney, either on the phone or in person. The professional is facilitating the discussion but is protected from any suggestions that he or she is practicing law. This may be a good approach to some but most prefer the next option.

The second approach is a legal assistant that facilitates the entire process. The legal assistant meets with the client.  The client can be at the professional’s office or at their home. The client will speak to an attorney during the process and a signing appointment for recommended estate planning documents is either handled at the professional’s office or at our office. With this approach the professional and client are assisted during the entire process.

The third approach is the traditional referral to a law firm.

As you can see, at no point in time is the professional put on the spot to fully explain estate planning.   He or she merely facilitates the process and gets to choose his or her level of involvement.  Most importantly, the client’s estate planning needs are met as a result of the professional’s service to their entire financial, estate and tax needs.

Kevin P. McFadden, Knollmiller & Arenofsky, LLP    480-345-0444

 

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“I thought a trust avoided probate!”

Judge Michael Evans

This question usually gets asked by the family after a loved one has died and they are told they have to go through probate.  How did this happen?

Yes, one of the benefits of a revocable trust is avoiding probate. The explanation everyone has heard is because the assets are held in trust there isn’t an estate to be probated.  Instead, the successor trustee can access, get under control, liquidate and ultimately distribute the estate to the trust beneficiaries.  So, if this is what is suppose to work, what went wrong? These are the most common cases of probates in spite of a revocable trust being in place:

  1. Refinance.  Very often when a client has a house in a trust decides to refinance the mortgage, the house gets transferred out of trust in order to make the financing go through. Too often the title company will transfer the property out but never takes any steps to transfer the house back in or even remind the owner that the house needs transferred back.
  2. IRA or Insurance Beneficiary dies.  If you have named a beneficiary of your IRA or life insurance and they die, often the contract states it will be paid to your “Estate.”  This often means probate.
  3. Leaving checking  or investment accounts and vehicles out of trust.  While you can have up to $75,000 outside of trust and not go through probate, sometimes accounts do not get titled in the name of the trust.  If the total non-trust assets exceed $75,000, you may be in probate.
  4. Mortgages.  While a house may be in the trust, and therefore avoid probate, if you have to work with a lender, you will need to have an executor appointed to represent the decedent in all dealings with the lender. The same may apply to other debts or the IRS.

Of course most of these can be avoided with just being mindful that most assets need to be titled in the name of the trust.

Call me with any questions, 480-345-0444

Kevin P. McFadden, Knollmiller & Arenofsky, LLP

 

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If I have a Will does it means I will avoid Probate?

Courtroom in in . The Classical Revival courth...

No, a Will by its very nature implies Probate. Probate is a procedure to administer the estate of a decedent. Even if you do not have a Will, your estate will be administered according to the laws of your home state. This procedure for estates that do not have a Will is called Intestate. To avoid probate, a Trust is the recommended estate planning tool.

 

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