How to Set Up a Living Trust in Arizona
A living trust can be a vital part of your estate planning and a solid way to protect your assets. If you live in Arizona and are concerned about protecting your assets from the probate process, a living trust may make your family’s life easier after you pass.
Whether you simply need to create a living trust or wish to learn more about how to incorporate a living trust into your existing estate planning, a professional trust attorney can show you how to set up a living trust in Arizona.
What Is a Living Trust?
An Arizona living trust is a trust created while the owner is alive. After your trust is established, you place certain assets or monies in the trust and then name beneficiaries, just as you would in your will.
There are several advantages of a living trust in Arizona. The difference between an Arizona living trust vs. will is that a will must go through probate (a court-supervised process that legally transfers assets after the owner dies) and a living trust doesn’t.
What Is a Revocable Trust?
A revocable living trust in Arizona is a trust that can be revoked or changed at any time. It’s part of a comprehensive estate plan — typically the owner of the trust is named as the trustee and is responsible for overseeing the assets in the trust. Think of a revocable living trust as having an open lid, meaning, once created you are free to place assets in and and remove assets out. In this type of Trust you maintain full ownership and control over all of your assets in the Trust during your lifetime.
The trust owner also names a “successor trustee” to take over control of the trust and manage the assets in the event the trust owner passes or is incapacitated. Spouses can establish a shared living trust, co-manage their assets, and name a successor trustee who takes over managing the trust after both spouses die.
Irrevocable trusts, on the other hand, cannot be modified or revoked. The property owner gives up ownership of the property and control over the trust once the documents are signed. Amending a living trust in Arizona is only possible with a revocable format.
Pros and Cons of Living Trusts
There are several advantages to creating a living trust in Arizona, especially if you want someone to have assets without transferring them through probate. Creating a living trust for Arizona residents can also ensure they have assets to take care of themselves in old age or if they are rendered unable to manage their financial affairs.
Living trusts are just one of the estate planning tools you can draft to ensure you and your family are taken care of financially. Because they can be an irrevocable decision, knowing the benefits and drawbacks can help you and your trusts attorney make the right estate plan.
An Arizona trust lawyer can explain how the trust benefits can help you. Having this information is just as important as correctly completing the Arizona living trust forms.
Other benefits of a living trust:
- You can avoid probate court and fees and public record of the assets you transfer.
- It eliminates the need for a court-appointed conservator for minor beneficiaries.
- There is no waiting time for the beneficiaries to receive their assets after the trust owner passes.
- Assets in the trust can be disbursed on a specific schedule per the trust owner.
- It provides a steady income for dependents or relatives who may be unable to care for themselves.
- You can set stipulations for trust beneficiaries to fulfill in order to receive their inheritance.
Even better yet, Revocable Trusts maintain your privacy as they are not public record. Many people prefer to use a trust instead of a will to preserve their privacy. When you bequeath assets in a will, your information goes through probate courts and becomes a matter of public record. Anyone can see what assets you gifted to whom, along with any other aspects of the probate proceedings.
The cost of a living trust in Arizona is perhaps the greatest drawback to this type of estate planning. There’s an upfront cost to set the trust up.
Other possible cons of a living trust:
- It involves substantial paperwork, including re-titling some assets.
- Income and assets in the trust may still be taxed on the grantors’ income tax return.
- It can be complicated to ensure all beneficiaries are provided for.
- Revocable trusts offer less asset protection from creditors.
You and your estate planning lawyer can evaluate your current and projected financial situation and determine what kind of trust, if any, suits your goals.
Do I Need a Living Trust in Arizona?
When a will passes through probate, the distribution of the assets may take months or even years. If you’re concerned about your heirs’ financial stability, you may not wish to delay the transfer of assets.
Furthermore, a trust may offer some protection against an asset allocation dispute — a disgruntled heir may contest a will but could have a much harder time contesting the terms of your trust.
Arizona’s Uniform Probate Code simplifies the probate process, reducing years-long delays in processing a will and distributing its assets. And if you have a smaller estate, probate may be skipped altogether, if:
- There is no personal representative of the estate (the executor of the will).
- The total non-real estate personal property is less than $75,000.
Or your estate may go through a summary administrative procedure, a probate shortcut for estates that don’t exceed specific allowances and costs, such as the homestead and family allowances or funeral expenses and final medical bills of the deceased.
If you think your estate will be small or simple enough to qualify for a shortcut, then you may not need a trust. You can also change your property titles to add a transfer-on-death beneficiary, which automatically changes the title holder’s name after you pass. It’s a good way to prevent your home from going through probate.
What’s the Difference between a Trust and a Will?
Trusts and wills function similarly, but they have specific differences.
Living Trusts vs. Wills
In Arizona If I Make a Living Trust, Do I Still Need a Will?
Usually, yes. A living trust serves many purposes, but it doesn’t cover every eventuality that a will does. Any assets not specifically placed in the trust can be distributed through a will. Other capabilities that a will has but trust doesn’t include:
- Providing instructions for settling taxes and debts owed by the deceased.
- Naming a personal representative of the estate or an executor.
- Establishing a manager for any property bequeathed to minor children.
The most important function of a will is to name a guardian or guardians for children, wards, and dependent adults.
How Do I Set Up a Living Trust?
Working with an estate planning lawyer can ensure that the trust paperwork is complete and correct. To establish trust:
- Determine if it’s individual or shared
- Allocate property to fund the trust
- Name a successor trustee
- Name beneficiaries
- Change the title of any titled property in the trust so the owner of the property is the trustee
A common question about trusts is how the paperwork is verified. We're often asked, “Does a living trust need to be notarized in Arizona?”. Yes, it does, and after we draft the trust paperwork, you will sign it before a notary public.
How Much Does a Living Trust Cost in Arizona?
The cost of a living trust in Arizona varies depending on how simple or complex the trust will be.
Trusts containing significant and varied assets, with multiple beneficiaries and various clauses to release the assets, will take much more time and careful planning than simpler trusts. So your attorney's fees for estate planning depend on your needs.
A law firm focused on Arizona estate planning and creating living trusts — with attorneys who understand Arizona probate and succession laws — can help you create the right trusts for your needs and ensure your wishes are honored after you pass.
The Law Offices of Brandon White concentrates on detailed estate planning, including establishing revocable and irrevocable living trusts.
Contact an Arizona Experienced Trust & Estate Planning Law Firm
The Law Offices of Brandon White helps Arizona residents like you create an estate plan with trusts to protect your assets and ensure your heirs are cared for after you pass.
Estate planning can be complex, but the process doesn’t have to be difficult when you work with an experienced estate planning attorney. Our firm has the experience and resources necessary to establish even the most complicated revocable and irrevocable living trusts.
Contact us today to learn how we can help you protect everything you’ve worked so hard for.
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