The Church continually warns members about the difficulties that lie before us and the importance of being prepared for whatever the future may hold. This is the essence of self-reliance—taking the initiative to prepare now in order to avoid pitfalls in the future. The goal of estate planning is to transfer the most assets as quickly and as stress free as possible to your loved ones. Upon your passing, the last thing your children need to worry about is being tied up in lengthy court proceedings while having to pay attorneys thousands of dollars out of the estate. While estate planning can be somewhat complex, the basis of estate planning can be summarized into two main categories: Wills and Living Trusts.
The most basic (and necessary) estate plan is a simple Will. Essentially, the Will designates who the personal representative will be as well as how the property will be distributed. The Will can also designate a guardian for any minor children. In the Will, you can even designate who will inherit specific items of personal property. Everyone, no matter the size of the estate, should at least have a simple Will.
If there is property that will go to minors (perhaps your children or grandchildren), you can create a Will that includes a testamentary Trust. A testamentary Trust is a Trust that comes into existence once you pass. Anything that is in your estate that is going to any minor children can be held in Trust for their use when they reach a specific age (which you can designate). If a Trust is not created, then the personal representative may be required to petition the court to appoint a “conservator” for the benefit of the minor child. In order to avoid the need to go to court, a Trust can be set up in the Will in the form of a testamentary Trust.
The best option for most estates is a living revocable Trust. In Arizona, if someone has at least $100,000 of equity in their property or they own at least $75,000 of personal property (furniture, cars, jewelry, etc.), the estate must go through a lengthy and costly court procedure known as probate. In order to avoid probate, you must remove the property from your estate and place it in the Trust. Doing so will ensure that the estate does not reach these threshold amounts that require probate.
Most people believe that living Trusts are only for the wealthy who have substantial assets or complicated estates. Under current Arizona laws, a Trust would likely be beneficial for anyone who owns a house, multiple vehicles, property in other states, or has young children or grandchildren. A living Trust accomplishes the same goals of the testamentary Trust discussed above, but with the added benefit of avoiding the expense and inconvenience of probate.
It is understandable that many people avoid the topic of estate planning because the thought of preparing for their passing is difficult. At our firm, we have unfortunately seen the effects of waiting too long to set up an estate and the family then having to pay thousands of dollars in attorneys’ fees and court costs to navigate through probate. Your self-reliance and preparation now will have a major impact on the well-being of your children and grandchildren in the future.