The Arizona living trust is a revocable trust created by a living person (the grantor) and funded with assets in the grantor’s name. The grantor retains the right to manage and control the assets during their lifetime. The trust becomes irrevocable upon the grantor’s death and distributes all of its assets to named beneficiaries.
The Arizona living trust has several advantages over other estate planning tools. The most important benefit is that it can protect your assets from creditors, predators, and divorcing spouses. Also, you can use an Arizona living trust to avoid probate upon death.
Keep reading to learn everything you need to know about living trusts in Arizona!
What Is a Living Trust?
A living trust (also known as an “inter vivos” trust) is a legal document that establishes a separate legal entity called a trust that takes over an individual’s assets upon death. The trust is created by the individual (or individuals) and named as trustee(s) in the trust agreement. The trustees are responsible for managing the assets until they are distributed to beneficiaries.
What Is Trust Property?
Trust property includes all assets owned by the individual and placed into the living trust. This includes real property, personal property (such as cars, jewelry, and furniture), bank accounts, retirement accounts, stocks, and bonds. It also includes intangible property such as copyrights, patents, and trademarks.
What Is a Trust Beneficiary?
Trust beneficiaries receive distributions from the living trust after it has been created and funded with all of its assets. A person can be a beneficiary of more than one living trust at a time.
When the grantor dies, the trust property is distributed to the beneficiaries. You could also use a last will and testament, but wills must go through the probate process, which is the legal procedure that controls how your assets are distributed to your heirs.
Do I Need a Living Trust in Arizona?
A living trust is not required in Arizona, but it can be a useful tool for protecting your assets and ensuring that they are distributed according to your wishes.
Upon the death of an individual, their assets must go through probate, a time-consuming legal process, to ensure they are distributed according to the decedent’s intention. However, as a substitute for this, people create living trusts, so their beneficiaries do not have to undergo the probate process.
In some states, creating an estate plan can help you skip the probate process altogether, which can save a lot of time and money. Even if you don’t think you have enough assets to warrant an estate plan, it could still be worth seeking a consultation with a qualified lawyer to familiarize yourself with probate law in Arizona just to be sure.
What Is the Difference Between a Living Trust and a Will?
The main difference between a living trust and a will is that a living trust is a legal document that outlines how you want your assets to be managed during your lifetime and after your death. On the other hand, a will is a legal document that outlines how you want your assets to be distributed after your death.
Although you have great discretion, flexibility, and control over how you distribute your assets with a living trust, it does not eliminate the need for a standard will. Even if you have a living trust, you still need a will to cover any assets that may not be in the trust—this is known as a pour-over will.
Both trusts and wills have unique benefits. Below is the summary of each:
Living Trust vs. Will
|Avoids probate court
|Allows you to revise
|Depends on the type
|Names guardian for children
|Takes effect when you are alive
|Names a property beneficiary
|Requires a notary
|Name an Executor
|Asset transfer takes time
How to Create a Living Trust in Arizona?
There are a few things to consider when creating a living trust.
- Decide what type of trust you want to create: You may go for individual trusts if you’re single. However, a shared trust may be the best option for married couples or those in a domestic partnership who jointly own most of their assets.
- Make a list of your possessions and choose which to include in the living trust: It includes personal property like cash, stocks, bonds, properties, and other assets. Ensure only the major assets that would otherwise be subject to probate are kept in your living trust rather than all of your possessions.
- Choose your trust beneficiary: For most people, family members, friends, or charity organizations often inherit their property. Also, you can select additional (contingent) beneficiaries after you make your initial selections.
- Choose your successor trustee: A trustee will manage the living trust’s assets, ensuring they are distributed according to your wishes. This person can be a family member, a friend, or a trusted professional.
- Make a trust document. If you have appropriate information and assistance, you can create a living trust document with a document preparation service like Senior Planning or if you need guidance, you can work with an attorney to create a trust tailored to your unique requirements.
- Get the document notarized: Notarization ensures that the legal documents are official. It includes signing it in front of a notary public.
- Fund the trust: This includes transferring your chosen assets into the trust. It requires some paperwork, and you may need the help of an attorney to get it done.
What Is the Cost of Creating a Living Trust in Arizona?
The cost of setting up a living trust in Arizona largely depends on how you go about it, and your charges will vary depending on the service you choose.
If you hire an attorney to assist you, your overall costs will be determined by the attorney’s fees, but you may have to pay more than $1,000. So, before you agree to engage with an estate planning attorney, make sure to discuss their fees, so you know what to expect.
What Аre the Disadvantages of a Living Trust?
A living trust has its own set of issues and challenges. Although many believe the benefits outweigh the disadvantages, you should be aware of them before creating a living trust.
- Paperwork: Setting up a living trust requires paperwork, including signing in front of a notary public, which can be difficult for some people if they are not mobile.
- Record-keeping: Some regular record-keeping is needed once a revocable living trust has been established. You must keep a written record every time you move assets into or out of the trust.
- Transfer Taxes: Real estate transfers to revocable living trusts are typically excluded from the transfer taxes. However, transferring real estate to a living trust may still incur a tax in some states.
- Refinancing Trust Property Is Difficult: Some banks and title agencies can object if you want to refinance trust real estate because the legal title is kept in the trust’s name.
Do I Need Help Planning an Arizona Living Trust?
Whether or not you need help planning an Arizona living trust depends on a few factors. This includes the size and complexity of your estate and your personal preferences.
Suppose you have a large and complex estate. In that case, it could be worth your money to work with a legal document preparer to make sure the paperwork is done correctly. Although we cannot offer legal advice, setting the trust up correctly will ensure that it runs smoothly.
At Senior Planning, we specialize in helping people create Arizona Living Trusts. We can help you understand the process and ensure that all the necessary paperwork is in order.
Creating an Arizona Living Trust is a big decision, but we can help make the process easy and stress-free. Contact our legal document preparation team today to learn more about how we can help you.