What is the difference between a Will and a revocable trust?

A Last Will and Testament names a Personal Representative (sometimes called an
Executor in other jurisdictions) and gives instructions for the division of your assets. Unless
your estate falls into the “small estate” category, a Will must be probated after your death.
Probate takes at least four months, usually longer, and is an expensive process wherein the court
oversees the payment of your debts, administration of your estate, your taxes, and the distribution
of assets.

A trust sometimes referred to as a revocable living trust, is similar to forming a small
corporation that you own and control. Through the trust documents, you transfer your assets to
the trust. Then, when you pass away, the Successor Trustee (a person you name to take control
of the estate) follows the instructions in the trust documents and makes sure your bills are paid
and the assets distributed according to your wishes. There is no court involvement. The trust
costs more to draft than a Will, but you avoid the considerably greater expense of probate.

Will my heirs have to pay the estate tax?

In order for you to trigger federal estate taxation, your estate must have a net worth in
excess of $5.5 million dollars for an individual, or $11 million for a married couple. This
number can change from year to year, so it is best to consult with your estate planning attorney.

What does Arizona consider a “small estate”?

Arizona does not require probate for estates with a net worth of $75,000 in funds and
personal property, and $100,000 in real property. Banks and investment firms, however,
sometimes require a court-appointed Personal Representative to collect assets held in a bank or
investments, even if less than the small estate cutoff.

What are the other advantages of a trust?

Trusts have much more flexibility than a Will. In a trust, you can leave money to a young
person so that the money can be held in trust for long periods of time– long past their 18th
birthday. You can designate what money held in the trust can be spent for; you can provide for
persons with special needs without interfering with other benefits for which they qualify. You
can have contingent gifts, i.e., if a beneficiary does “X”, the trustee will give them”Y”. You can
create trust within a trust to provide for someone. Some trusts protect the estate from creditors.
The options are just too broad to mention. Trusts keep your money from going to government
entities and attorneys, and put control of the estate in the hands of a trusted person, instead of the
court.

What about seminars that offer free trusts that I get in the mail?

Be sure that the person offering to draft your trust is an attorney that knows estate law.
Free seminars offering you a free meal at a great restaurant are selling something– sometimes
insurance, or annuities, or they want your investment business. In exchange, they offer you a
“free” trust. These trusts are fill-in-the-blank trusts that come from computer programs, not
trusts drafted by an attorney that listens to your particular family situation and drafts a trust that
really meets your needs. A poorly drafted trust can create nightmares for you and your family
after you pass on.

What information does the trust attorney need at the first appointment?

Typically, you should bring a list of your family members and other beneficiaries,
including their full names, addresses, phone numbers and email. Be prepared to discuss what
percentage of the estate each person might receive, as well as any other special bequests. With
regard to the estate, please bring a list of the assets of the estate. If that involves real estate, bring
a copy of the deed. For bank and investment accounts, bring the name of the financial institution
and the last 4 digits of the accounts. Know which accounts are pre-tax, i.e., IRA’s, 401k’s, or
taxable retirement accounts.

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