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There are countless reasons for every adult in America to have an estate plan. Estate planning is for everyone, regardless of age or net worth. An estate plan is a set of documents that control what happens to you, your assets, and even your loved ones if you become incapacitated or when you die. Failing to plan your estate, even if your assets are very modest, leaves a large mess for your family and loved ones to clean up after you die. Simply put, an estate plan is not really for you, it is for your family and loved ones. It is important for every adult to plan, otherwise, the State of Arizona and the Internal Revenue Service (IRS) will have a plan for you that your family probably will not like. The state’s plan is typically expensive, takes months and months, and is stressful and emotionally draining. Often, failing to plan costs far more money than actually completing a quality estate plan. Though the legal mechanics of estate planning documents can be very complicated, Woods Law Group will make the process simple and understandable for you so that you can have peace of mind. All at an affordable price.
Probate is the process by which a court distributes assets after someone dies. Unfortunately, probate proceedings are public record and often cost a great deal of money (typically a few thousand dollars, if no one is fighting and there are no problems or complications), take a minimum of 5-6 months to complete, and cause substantial hassles and family conflicts, on top of losing a loved one. That means that your family or other loved ones may have limited access to your money and assets after you die for at least 5-6 months! Thankfully, appropriate trust-based estate planning can help avoid probate entirely. It is important to note that Wills do NOT avoid probate – dying with a Will but no trust ensures probate.
If you do not create a will that names who you want to take care of and raise your minor children, the court is going to decide for you. Thankfully, you can decide who will raise your children if you plan appropriately.
If you do not create a proper estate plan, the state of Arizona will decide who will inherit your assets and in what percentages after your death through a probate.
Through a proper plan, you can protect your hard-earned money and ensure that it not only goes to whom you want, but when you want, and how you want. Additionally, you can help protect the assets from future lawsuits, creditors, bankruptcies, and even marriages or deaths. How can you protect your money against marriages or deaths? Imagine that after your death, one of your four children, your 20-year-old son, gets married to someone you wouldn’t have approved of. Five days after the big wedding, your son is killed in a tragic auto accident. Without additional planning, your new daughter-in-law is going to inherit all of your son’s assets, including the inheritance you left him at your death. Many people would prefer that their life savings would go to their surviving children in such a scenario, rather than the new spouse. The only way to protect against this type of scenario is to establish a quality estate plan.
Unfortunately, there are many people who see new widows and widowers are targets that can easily be taken advantage of. A newly widowed spouse has often received large infusions of cash because of life insurance or retirement account payouts. Meanwhile, they are often suffering from grief, shock, and vulnerability because of the death of their loved one. Such a combination can make them an easy victim for those who may which to con, cheat, or use them for their financial gain. A well-thought out estate plan can help protect against that by instilling provisions that limit how much the money the surviving spouse has access to at any given time. Of course, the surviving spouse must have sufficient means to provide for him or herself, but the ability to say “I cannot access all that money now” may make all the difference in the world.
Without a proper plan, a person with special needs risks being disqualified from receiving social security or Medicaid benefits (ALTCS or AHCCCS). Proper planning can help them stay qualified for such benefits, and can protect the assets you leave behind at the same time. Even if a child or other family member does not have special needs now, such provisions are typically included in many of our estate planning documents just in case the need arises later. Special needs may include, but is not limited to, the following conditions: autoimmune disorders; autism spectrum disorder; cancer; cardiovascular disorders; heart attacks; dementia; diabetes; liver disease; end-stage renal disease; hematologic disorders; HIV/AIDS; chronic lung disorders such as serious asthma or emphysema; chronic and disabling mental health conditions such as bipolar disorder, major depressive disorders, or schizophrenia; neurologic disorders such epilepsy, paralysis, Huntington’s disease, multiple sclerosis, Parkinson’s disease; and strokes.
Families that have children from prior relationships have special concerns that traditional families simply do not share. It is crucial for blended families to plan so that children and current spouses are provided for as you want. Failing to plan here will nearly always result in unintended and undesired consequences, such as the disinheritance of the children from prior relationships.
Unfortunately, life doesn’t always go the way we want it to. Many times, people lose mental or physical capacity long before they think they will. Car accidents, strokes, and heart attacks happen every day. If you have a comprehensive estate plan, you can plan for what happens if something happens to you, including how you are to be treated, and how is your money to be spent. If you do not have an estate plan, you have likely lost that ability, perhaps forever. Additionally, your family and loved ones may be unable to care for you legally (such as the inability to access your bank accounts to pay bills, or to make medical decisions on your behalf) if you have failed to plan, so they may be forced to seek a guardianship or conservatorship from the court. Those proceedings are types of probates and can easily cost several thousand dollars, all while wasting precious time. Thankfully, proper planning can avoid those scenarios.
If you fail to plan for what happens to your business after your death or incapacity, you have likely sentenced your business to death too. Very few small businesses survive the loss of its owner unless proper planning was done beforehand. You can choose who will own and control the business.
What you would have done if someone gave you $1,000,000 when you were 18-years-old? Bought a Ferrari? Houses? Dates? Drugs? Alcohol? Gambling? More than likely, that is what your children will do with their inheritance too if they receive it too young – waste it. It takes the average recipient of an inheritance a mere 19 days until they buy a new car. One study found that 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third generation. Yes, that’s right, in 70% of cases, mom and dad’s life savings (including life insurance) is spent by their kids and nothing makes it to the grandkids. It does not matter if the inheritance is $10,000,000 or $20,000 – it is gone quickly most of the time. Do you want your life savings spent way? If not, you need to set up a trust based estate plan to ensure that doesn’t happen. There are ways to prevent children from wasting their inheritance, but they require planning. A simple Will doesn’t cut it.
Since we do not offer cookie-cutter estate plans that do not actually fit your needs, but instead offer custom plans for each and every client, the prices of each estate plan must also vary. The typical price range for a complete plan for a married couple ranges between $2300-4000, while the cost for an unmarried individual ranges between $1900-3500. Such pricing does vary and can increase above those ranges based upon circumstances, such as special needs planning, complex distribution plans, charitable giving, business interests, or real estate holdings. It is impossible to quote an exact price without first meeting with you to discuss your situation and needs. We are happy to offer a no-pressure, free consultation for estate planning clients at which time we can offer detailed pricing based upon your situation and needs.
Every adult over the age of 18 should have an estate plan. Really? Yes, really. Not everyone needs the same kind of planning though. An 18-year-old could probably get away with a basic plan, where as a young couple with children will need a different plan that takes care of their children, and retirees will have a different plan and goals too. What plan you need is dependent on your goals and what is important to you. Here at Woods Law Group, we take the time to find out what is important to you so that you get the correct plan to suit your needs. There is no, one size fits all. Each estate plan is tailored to each client’s needs.
Absolutely. Estate planning has two components. The first component is disposing of your assets after you pass away. The second component is taking care of you while you are still alive, also known as incapacity planning. For some reason, most people focus on assets and less on incapacity planning. As much as we like to help our clients with their assets, taking care clients while they are alive is far more important to us at Woods Law Group. Establishing ahead is time who will make medical decisions for you and what kind of medical care you want it is the crux of an estate plan. The attorneys at Woods Law Group will not only customize a plan to dispose of your assets, but will also make sure you are taken care of while you are alive too.
Through estate planning, there are two main ways to dispose of assets post-death, a will or a trust. A trust-based plan is more comprehensive than a plan that just uses a will, but not everyone’s situation or goals necessitate the need for a trust. We’ve had clients worth millions of dollars who’s needs were met with a will and we’ve had clients with minimal assets whose goals could only be met with a trust. Understanding the nuances of what type of plan is appropriate for what situation is the job of an experienced estate planning attorney. The attorneys at Woods Law Group are versed in these nuances and are here to match your needs and goals with the appropriate type of estate plan for you.
Who to choose as your decision makers, such as trustees or agents under a power of attorney, is the most important and for some, the hardest part of creating an estate plan. The different documents in an estate plan could have all of the same people as your decision makers, or you can choose different people for each job. Lots of people just default to their oldest child first, and then second oldest next, and so on. But each job requires a different skill set and it is important to fit the person to the right job. For health care decisions, the health care power of attorney agent, you want someone who is good in a crisis and who will follow through with your end of life wishes. For financial decisions, the financial power of attorney agent and trustee, you want someone who is responsible, understands investing, can work well with financial professionals, such as attorneys, CPAs, or investment advisors, and is capable of keeping detailed records of income and expenses. For your court representative, the personal representative (aka executor) of your will, you want someone who can meet court mandated deadlines, follow through with instructions, work with attorneys and tax professionals, and is organized. The attorneys at Woods Law Group will walk you through these decisions and help guide you through making these tough choices.
Yes, however, you probably won’t be happy in the long run. As long as a document is legally executed, it doesn’t matter if it was created online or not. Keep in mind though, that mere legal validity does not mean the document is any good or that it is going to work the way you think it should. Estate planning documents are complex legal documents. It takes years of experience and practice even for attorneys to really understand all of the complicated concepts and strategies involved in estate planning. The problem with do-it-yourself online documents is that no legal advice can be given, nor do you have any idea if the document will work for you and your specific circumstances. You simply don’t know if the program is asking you the right questions or giving you the right answers.
The other problem with computer software or online document generation sources is that you and your family do not know if the online documents are any good until you need to use the documents, which means something isn’t going well. Unfortunately, once the emergency has begun, it is too late to go back and change or update the documents. We’ve had far too many families in our office that thought they were taken care of because there were estate planning documents in place, but we have the unfortunate job of explaining why the documents are not going to work the way they thought they would. And when families are stuck with poor quality documents, it can end up costing far more money and the situation being more complicated than if there was no plan at all. A judge in a recent case involving online estate planning forms out of Florida stated, “this case does remind me of the old adage ‘penny-wise and pound-foolish.’” Please see http://www.aaepa.com/2014/04/penny-wise-pound-foolish/ for more information on this case.
Although it is great when your financial professionals suggest you get an estate plan and then introduce you to an experienced estate planning attorney, many times these professionals are introducing you to a Certified Legal Document Preparer or CLDP, not an actual attorney. Why do they do this? Often it is because they are getting a financial kick-back. Only a handful of states recognize and sanction this type of legal service, and Arizona is one of them. Some financial institutions, including many of the credit unions around the valley, employ their own CLDPs to create estate plans for their clients. To our dismay, the worst estate plans we have ever seen are always prepared by CLDPs. The problem is similar to do-it-yourself online programs; you don’t know what you don’t know. We’ve had too many families in our office going through costly court proceedings because their loved ones used a CLDP to prepare their estate planning documents. It is important to find an experienced estate planning attorney to prepare your estate plan. Merely having documents is not the goal; having documents that work is the goal.
Comparing attorneys and their services is hard. You usually aren’t comparing apples to apples, it’s more like apples to oranges to even watermelon. First and foremost, people often see advertised low prices from certified legal document preparers and confuse these folks for attorneys. They are NOT attorneys; they cannot provide legal advice as to what you need and what options will work for you, and most do not carry legal malpractice insurance to protect you in case something goes wrong.
If you are comparing two attorneys, it is not always apples to apples. Just because someone is an attorney doesn’t mean that they are experienced and knowledgeable in the practice area of estate planning. When comparing experienced estate planning attorneys, it is important to make sure they will prepare a comprehensive estate plan for you. This means that not only are the major planning documents included such as revocable living trust, will, health care power of attorney, and financial power of attorney, but that the other supporting documents are also created as well such as living will, HIPAA release form, certification of trust, personal property assignment, and personal property memorandum to name a few. If they are not providing all of these documents, you probably are getting inferior service.
It is also important for your documents be robust. Each legal document is its own “book of answers.” If a situation arises and the legal document does not have an answer to your question, the only person who can craft an answer is a judge at a probate court. No one wants to go through the hassle or expense of going to court. Proper planning is meant to keep you and your loved ones out of probate court. For example, our revocable living trusts for a married couple are on average, 90 or so pages. This isn’t for the whole estate plan, just the trust. We can almost guarantee, if your existing trust is 20 or so pages, there is a high likelihood that a situation may arise that isn’t addressed in the document which will likely force a court proceeding. When this happens, you or your loved ones will be forced to spend substantial sums of money and time in court.
Shopping for an attorney is a bit like shopping for a car. Most people know that a Kia is going to cost substantially less than a Ferrari. A lot of certified legal document preparers (CLDP), new attorneys, or attorneys who dabble in estate planning (who aren’t experts) that are trying to drum up business and price their services like a Kia – cheap and attractive at first. On the other end of the spectrum are the over-priced attorneys that are priced like the Ferrari. We at Woods Law Group liken ourselves to Mercedes Benz that are priced a Honda Accord level: we are reliable and a great value. If estate planning services are priced very low, there is usually good reason for that: the provider is not an attorney, is simply not an expert in the field, or is provided deficient services/documents.
Yes, you can avoid death probate with the proper use of beneficiary forms. One of the main reasons people do estate planning is to avoid death probate, which is the court process to distribute your assets after death. By using the proper beneficiary forms, one can avoid court involvement post-death. There are other reasons that folks do estate plans other than just avoiding death probate though, and beneficiary forms cannot meet these other goals. Most people want to avoid not only death probate, but also living probate. Living probate is the process in which the probate court appoints agents to make your medical decisions (guardianship) for you and/or your financial decisions (conservatorship) for you if you cannot make the decisions yourself. Living probate avoidance cannot be accomplished with beneficiary forms. Only a comprehensive estate plan that includes the proper health care documents and revocable living trust can consistently avoid both living and death probate. Beneficiary forms also have another problem, everyone listed on the form gets written a check upon death: there is no asset protection. Not every beneficiary should inherit monies outright in the form of a check. Through a beneficiary form you have no control over when the beneficiary gets the money or how the beneficiary spends the money. You can have this control through a comprehensive trust-based estate plan however.
A least once a week we have clients in our office that are confident that their assets aren’t going to go through death probate because they own the asset jointly. This may or may not be true. Let’s start with the most common joint ownership; husband and wife. While it is true with joint ownership that if one spouse passes away, the other spouse gets the asset without going through death probate, but what happens if both spouses pass away at the same time? Now there is a death probate. What happens if the healthy spouse that takes care of the finances passes away and now the unhealthy spouse needs help with the bank account? Now there is a living probate to appoint a conservator to help the surviving, unhealthy spouse.
Clients also tell us that their assets aren’t going to go through death probate because they own the asset jointly with their adult child or children. This can be extraordinarily problematic. First, if the adult child is being sued, going through a divorce, or filing bankruptcy, this asset, that you consider yours, is now up for grabs by your child’s creditors. Second, the child can rightfully spend or dispose of the entire asset without your knowledge or authorization. Third, when you do pass away, the asset is just that child’s that is the co-owner on the asset. The joint, surviving owner has no legal obligation to share the asset with your other beneficiaries. If there are other children or beneficiaries, this asset will not be divided up the way you thought it would. And if they do share, they may be responsible for gift taxes. With proper, comprehensive estate planning, these types of issues can be avoided.
This question gets the stereotypical attorney answer: It depends. A validly executed trust and/or will from another state should work here in Arizona. The other documents in an estate plan are state specific and are less likely to work, including the most important documents in an estate plan; the powers of attorneys. There are health care and financial powers of attorney documents. If you’ve moved to Arizona and have these documents from another state, it is important to consult with an experienced estate planning attorney. The attorneys at Woods Law Group review many plans from out-of-state and are experienced at giving the proper recommendations of what does and does not need to be updated due to relocation.
There is no set amount of time that should pass before you update your plan. It may be good for a year or it could be fine for 8 years. Your estate plan needs to be updated when one of two things occur. First, there are changes in your life that necessitate changes in your estate plan. This could be moving to another state, a birth, death, marriage, divorce, or serious illness for you or those people named in your plan (beneficiaries, trustees, personal representatives, power or attorney agents), for example. If you’ve had life changes that affect your plan, you need to update your plan. Second, there are changes in the law. Estate planning laws do not change all that often, though they do change from time to time. Tax laws also change. In Arizona, on January 1, 2009, we had a major overhaul of our estate planning laws. If your planning documents pre-date 2009, we would recommend having them reviewed by an experienced estate planning attorney to see if they include the new, 2009 requirements. In our experience, almost all documents prepared prior to 2009 need to be updated. We do not expect any other major estate planning law changes in the near future in Arizona, however, there are never guarantees as to what our legislature will do. There are other laws that may change that can affect estate planning, such as tax laws or real estate laws, but for the most part the changes that have been happening are favorable and are relaxing the need for complex planning.
Probate is the legal process by which a court deals with a person’s assets after they die. If someone dies with a Will, the court will attempt to validate the deceased person’s Will. Regardless of the existence of a Will or not, the court may also make a determination as to who the deceased person’s heirs are (the people who will inherit) and who will serve as personal representative (PR). The PR is the person who is then responsible to identify and inventory the deceased person’s assets, have them appraised if necessary, sell property if necessary, pay debts and taxes, and distribute the remaining property in accordance with the Will of the laws of intestacy if there was no Will. The probate court will generally have oversight over that entire process, and may even require direct supervision and approval of each action. Part of the probate process includes publishing notice to creditors that the person has died and anyone who feels they are owed money by the deceased or their estate must come forward within four-months (providing the opportunity for all valid debts to be paid). A similar notice is sent to all of the devisees (people who inherit under a Will), heirs (people who inherit under the laws of intestacy), and other interested parties (such as people who would be heirs under the laws of intestacy but are not devisees under the terms of the Will) giving them notice of the court proceedings and inviting them to contest the Will or the appointment of the PR within four months. Such notices tend to have the effect of inviting fighting. On the bright side, such fighting is barred if it is not brought within the four-month time period. A typical uncontested probate will take at least 5-6 months and will cost at least $2500-5000 in legal fees. Any contested actions, or proceedings with irregularities, may cost dramatically more and will take an exponentially longer time period. Worst of all, probate proceedings are almost always mentally and emotionally draining on all participants.
Once you’ve created a revocable living trust, the work has just begun to make sure that your loved ones do not end up in probate when you pass away. That is because you must now “fund” your trust. Funding your trust is the process by which you re-title your financial accounts into the name of your trust. A properly funded trust avoids probate, while an unfunded trust does not help avoid probate. This means you go into your bank to convert your checking, savings and money market accounts out of your human being names and into the name of your new revocable living trust. You must also contact your brokerage firm to get any forms they may have so that you can convert your fully taxable investment accounts into the name of your trust as well. For life insurance, non-qualified annuities, and retirement accounts and plans, you contact your carrier and update the beneficiaries of the financial products to include your trust. If all of your financial institutions do not know about your trust, your loved ones are at risk of going through probate at your death.
This may seem like a silly question but many people just hear through the news and conversations with friends that they don’t want to go through probate, but don’t really know why. First, there is a tremendous emotional cost to nearly all court proceedings, but in particular with probate proceedings. When a family member or loved one passes away, the last thing you want to deal with are attorneys and court; you just want to grieve the loss. Second, there is a financial cost. Here in Arizona a typical probate where no one is arguing can easily cost between $2500 to $5000. If there are any issues, it goes up exponentially from there. Now, if there is any property in California, a small simple probate can easily cost upwards of $10,000. That is because attorneys in California and many other states are allowed to base their fees on a percentage of the value of the asset going through probate. Here in Arizona, the fees are based on a reasonable fee, usually an hourly rate or flat fee. Some cases can be done on contingency though. Remember, a probate will have to be opened up in each state where there is property. So if your loved one lived in Arizona, but had a vacation home in California, and some mineral rights in Oklahoma, and a timeshare in Missouri, you are looking at 4 probates in 4 states. Although they will all be linked together, the time for all of this to be completed and the costs associated can be very high. Third, probates take time. An easy probate will take at least 5-6 months. Believe it or not, Arizona probates are actually faster than many other states. Due to the high volume of cases in some states, a simple probate can take two plus years. If families are not getting along and are arguing, the time for completion just gets longer and longer, easily stretching the 5 to 6-month time period into two years or more. Fourth, probate proceedings are public record. There are predators out there to look through court records to find out who will be inheriting money in the near future, and they prey on those people. With some planning and proper advice, probate can be avoided in most situations. This is why is it is important to seek advice from an experienced estate planning attorney.
While the purpose of a financial power of attorney is to appoint a person to help you with your finances if you become incapacitated, that doesn’t mean it is going to work. Unfortunately, there is no legal requirement that banks or other financial institutions must except a properly executed power of attorney. If you are relying on a financial power of attorney to gain access to a financial account, it is very likely that the institution will tell you to go to probate court, be appointed the conservator for your loved one, and come back with a court appointment. This type of living probate is very costly, time consuming, and adds additional stress to an already stressful situation. Instead of relying on a financial power of attorney for incapacity planning, a revocable living trust is a much better tool for the job. The great thing about a revocable living trust is that there are legal requirements that banks and other financial institutions must accept the document. This makes the revocable living trust, the best legal document to keep your family and loved ones out of living probate for financial situations.