Family First Estate Plan

Estate planning for a blended family can be complicated

Family First Estate Plan
You probably know that 45-50% of first marriages end in divorce! But the news gets worse, 60 – 67% of second marriages and 70-73% of third marriages also end in divorce. What those statistics mean is that there are an awful lot of blended families out there. Blended families make estate planning a bit more challenging.

There are all sorts of questions to consider:
• Will all children be treated equally whether they are his or hers, from a previous or current marriage?
• Are there children with special needs that may require more assistance than the other kids?
• Are all your children able to responsibly manage their finances? If not, how can you protect them?
• If your previous divorce was amicable, do you want your former spouse to receive any of your assets?
• Do you want to leave some of your assets to other family members, organizations or charitable groups?
• Do you and your spouse want to leave a legacy that benefits all the children and protect that legacy from creditors and predators?

One of the main mistakes couples in blended families make is to designate each other as the primary beneficiary of all assets. Upon death, the estate goes to the spouse, potentially disinheriting the previous branch of the family, especially if there are no fond feelings between the past and present family. There is also a problem if the other spouse dies first and there is not contingent beneficiary named.

A blended family situation is an ideal time to make use of trusts and subtrusts to make sure that your legacy is treated the way you intended. Doing this the right way can avoid unintended beneficiaries and avoid acrimony in a couples’ heirs.

A trust is a written agreement designating a trustee who will be responsible for managing your assets. With a trust in place, when you die, your assets are transferred directly to your heirs without the lengthy probate process. You can have multiple trusts and sub-trusts in place to divide your assets among former and current family members.

Trusts can help to minimize taxes, avoid probate, control the ways assets are used after your death, and to make it easier to handle your heirs to handle your financial affairs should you become incapacitated.

There are many different types of trusts, the most common being revocable and irrevocable trusts. A revocable trust can be changed at any times, whereas an irrevocable trust can’t be modified except under very special circumstances.

A subtrust divides a trust into several parts and helps preserve assets for specific beneficiaries, like children from past and present marriages.

Because estate planning can be tricky with blended families, an attorney with years of experience in estate and legacy creation is essential to your planning. A good attorney can offer unique ideas you might not have thought of as well as plenty of assistance with the paperwork and legal documents necessary to setting up a trust(s), sub trusts or any other aspect of protecting and dividing your assets once you are gone.

I am gay … why do I need estate planning?

Thanks to the Supreme Court ruling on the Defense of Marriage Act, same-sex married couples living in marriage equality states will now be treated exactly like all other married couples and enjoy the same estate planning benefits as heterosexual marriages. For instance, the unlimited marital deduction allows one spouse to transfer all assets to the other spouse without being hit by the federal estate or gift taxes. In addition, last week, Arizona finally passed the bill allowing marriage rights to same sex couples

In short, now that same sex couples in Arizona have the same rights as other married couples, they can now also begin estate planning to protect their loved ones and that relationship into the future.

Steps to take:
• Review all of your accounts to confirm who your designated beneficiaries are.
• Create a will. Both partners should create wills and specifically state who will inherit each of their estates and who will be the personal representatives.
• Strongly consider creating a trust to protect both your loved one and any children of the union, whether natural or adopted.
• Be very clear on naming a guardian for your children.
• Understand that the Health Insurance Portability and Accountability Act does allow you to authorize medical providers to discuss your condition and prognosis with your partner.
• Be sure to assign health, durable and financial powers of attorney to someone you trust, whether it is your partner or someone else.
• Create a living will that lets your partner know your preferences about medical treatment and the issue of heroic life saving measures and prolonging life.
• Make specific provisions in your will be your funeral and what happens to your body. Sometimes, the family of a deceased same sex partner fails to recognize the union and will try to take control of the body and bar the partner from attending the funeral. Make provisions so that this won’t happen.
• If you have sizable estates consider advance tax estate planning.

Note. The Court’s holding did not address the impact of its decision on civil unions, domestic partnerships or similar state law concepts.

I’m single. Why do I need an estate plan?

This is a little bit of a trick question because your circumstances as a single person are important to know. How old are you? Do you have children? Do you have no assets or substantial assets? What is the status of your health? The answers to these questions are the ones that a married couple or partners also need to answer in order to develop their estate plan.

The short answer is that everyone needs an estate plan, although for a variety of reasons. Certainly single parents with young children need an estate plan in order to appoint someone to care for their minor children or to set up a trust for their benefit. What if something happens to you that leaves you incapacitated? Perhaps more than a couple, a single person needs an estate plan to appoint a family member or trusted friend to act on their behalf in the event of incapacity.

However, there are a couple of advantages singles enjoy that couples and families don’t.

• The first big advantage is that the single person only has to please him or herself. Married couples often have different ideas on how assets should be divided and are required to make plenty of compromises along the way.
• A single person is less likely to have heirs that must be factored into the mix, and often the estate planning can focus on things like gifting. Gifting can be done by provided a yearly gift, setting up a trust that pays a yearly stipend, tuition or medical gifting and much more. Of course, this requires more complex planning than simply passing an estate along on to a spouse.

Of course, there are also some disadvantages for singles as they prepare their estate plans.

• If you’re single and die without a will or a trust, your assets will go to your relatives even if you wanted them to go to a partner, friend, or charity. Your property will pass to your children, if you have any, and then to your parents. If you don’t have any children and your parents die before you do, your estate will go to your siblings or down the line to more distant kin. In a worst-case scenario, a long-time partner will get nothing while a cousin will inherit everything.
• Failure to plan can also cause problems while you’re still alive. Typically the surviving spouse is named as the power of attorney for a married couple, however, as a single person, you have to think more carefully when naming someone to take over the health and financial decisions for you. If you don’t appoint someone – who is going to do it? If you become incapacitated, a judge might give one of your relatives the right to make medical and financial decisions for you. If you have no living relatives, the court may appoint a stranger as your guardian or conservator.
• A single person is on their own when saving for retirement. Specifically, a single person has to accumulate more income that a traditional couple because they battle higher income taxes throughout their lifetime. In addition, a single person can only contribute once to their 401K, unlike singles where both partners can put in the maximum amount.
• Just because a person is single doesn’t mean they don’t have dependents of other family members they need or want to plan for (like nieces and nephews, friends or other family members).

Both the advantages and disadvantages mean that single people need to plan very carefully how to pass along their estate. That’s why an experienced attorney can make sure your wishes are legally spelled out and carried out.

I have a special needs child. How will that affect my estate plan?

If a child with special needs is dependent on you for their care, what happens to that child when you die? Special needs kids often required different approaches to education, extra medical care, or extra assistance with the tasks of everyday living. Those needs won’t go away when you, their caregiver, passes on. That’s why you absolutely must pay close attention to your estate planning in order to protect those precious children.

Here are four things to consider when creating an estate plan that includes a child (or children) with special needs:

Fair Treatment
How should you divide your estate between your children? This is a particularly sensitive subject if a family has one child with special needs and other children who are able to care for themselves. It can be as simple as sitting down with the kids and explaining your estate plan and your calculations for the care of the child with special needs (if they are old enough, of course).

What is Enough?
How do you know how much financial support a special needs child will require? You will need to carefully calculate the about of finances necessary to support the child over his or her lifetime. Take into account worst case scenarios to your child will never be left without the financial wherewithal if something goes drastically wrong. Plan for medical emergencies, health decline, the possible need for assisted living as the child ages, and for the longest lifespan you can image.

Protect Your Child’s Benefits
Many children with special needs receive benefits from the government — things like Supplemental Security Income, Medicare, etc. You’ll need to make sure that the money you leave them won’t disqualify them from these programs (and that often means setting up a Special Needs Trust).

Ensure Your Estate Plan is Properly Managed
The last thing you need is for an unscrupulous family member, executor or trustee to divert funds away from your special needs child and his or her care. Nor do you want the executor to pass away and leave that child without support.

An attorney skilled in estate planning in a must in these situations, where precise planning is critical to making sure your special needs child is well cared for when you are gone.

Estate Planning and Vacation Homes

With its mild climate and warm winter sun, Arizona is a mecca for snowbirds who want to get away from the freezing temperatures, snow, cold rain and storms during the winter months. Many of these people end up purchasing a second or vacation home right here in the Valley of the Sun. As for Phoenix residents who live here year around, well, they want to get away from the blistering summer heat. Again, many of them purchase vacation homes in cooler areas of the state or in other states.

The question is how these home owners handle their vacation homes in their estate plan?

Here are some things to consider…
• Does the property need to remain in the family? Is it a legacy for generations to come?
• If your children don’t get along now, and you leave the property to them jointly, do you think they’ll get along any better co-owning property. The answer is probably no.
• Will your children view the second home as a burden rather than a gift? Will they be able to pay taxes? Insurance? Handle the maintenance and upkeep costs? Pay the mortgage?
• Would it be better to leave the property to one or two children, while recompensing the others with additional money?
• Would it be better to sell the property and invest the money for your loved ones?
• If something happens to you before you complete an estate plan, do your children know your wishes regarding the property?

A great use of a trust
A trust can be very useful when it comes to helping your heirs with a vacation home. It can name the beneficiaries and those who will have the use of the property, as well as naming the terms of use and even naming the dates and times when your heirs can use the property. The trust will also appoint a trustee(s) to make decisions about the home. This person will pay the bills, arrange for property management, property rental if the heirs aren’t using it all the time, and oversee the usage schedule.

Even more important, a trust can be used to create a fund that will pay for taxes, insurance, mortgage, upkeep and maintenance. It is important to take into account unusual expenses and future cost of living when creating a fund like this, so a professional estate planning attorney with years of experience can be very helpful. The fund should also include a fee for the trustee who is managing the property. A trust fund can relieve your heirs of the financial responsibility, leaving them free to just enjoy the vacation home.

Sell it
Whether or not the property passes to your heirs, there should be guidelines in place for the sale of the property. Let’s assume two children have inherited the property. What happens if the economy tanks, they both lose their jobs, and they need to sell the property to stay afloat? A good estate plan will take into account the unexpected and allow for the sale of the property with fair division among the heirs.

A second or vacation home can either be a joy or a burden to a family, so it is important that you plan now to make it as easy as possible for your heirs.

Estate Planning is Not Just for the Wealthy

More often than not, people hear the words “estate planning” and immediately presume that if they don’t have a lot of money they don’t have to think about it. You might call that the albatross-style of estate planning.

It is true that for most people, estate taxes and even probate are not a major consideration. Sadly though, nearly 60% of people don’t even have a will.

However, even if you don’t have a lot of money or assets, there are other reasons for creating an estate plan. For instance, if you have assets (any assets) or minor children, you probably still need an estate plan, even if you don’t have to worry about estate taxes. While no one wants to dwell on their death, if you postpone planning until it is too late, you run the risk that your intended beneficiaries — those you love the most — may not receive what you would want them to receive whether due to extra administration costs, unnecessary taxes or squabbling among your heirs. Estate Planning affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion

Typically, an estate plan includes several elements, including a will, assignment of power of attorney, and a living will or health-care proxy (medical power of attorney). For some people, a trust may also make sense.

Here is an explanation of some elements that can make up an estate plan:

Will — A will is a legal document that sets forth your wishes regarding distributing your property and the care of any minor children. If you pass away without a will, your assets will go into probate, where the courts will decide how they will be distributed according to the laws of your state. This may or may not be what you planned with your last wishes.

Health Care/Medical Power of Attorney — This is a document that allows a person of your choosing to make medical decisions on your behalf should you have an accident or become incompetent.

Durable Financial Power of Attorney — This is a document that allows a person of your choosing to make financial and legal decisions and financial transactions on your behalf. Unlike other powers of attorney, which are in effect only while you are of sound mind, a durable power of attorney will still be in effect even if you become incompetent

Trust (Irrevocable or unbreakable and revocable or breakable) — A trust is a great way to control your assets in many situations. If set up in the right way, a trust can be used to provide asset protection for you and your heirsfrom creditors and predators.

While it is possible to pass your estate to your heirs through joint accounts and without an estate plan, there are potential traps you may not even have considered. For example, what happens to those joint accounts if you fail to name a beneficiary or if you have failed to redo the paperwork if the beneficiary predeceases you. Your assets go into to probate, that’s what happens.

Another major issue you should consider for estate planning is taking care of you and your loved ones if you become incompetent or mentally disabled. A proper estate plan can help take care of those issues in an efficient and less costly manner by using such tools as a quality durable power of attorney and health care power of attorney and HIPPA authorizations. You may also require a living trust, which can help you and your heirs avoid the need for guardianship or conservatorship. Using these tools can keep your family affairs private and if needed will save you a lot of money, time and aggravation.

Greg Poulos is an estate planning attorney in Phoenix, Scottsdale and Paradise Valley, and has over 25 years of experience helping families protect their heirs and their assets. For more information, you can visit his website at or call 623-252-0292 for a complementary consulation.

Should my Health Savings Account (HSA) be part of my Trust?

If you have an HSA or MSA (medical savings account) there is a possibility that funds might be in the account when you die. How do you plan for the distributions of those funds? In terms of estate planning these accounts are like a hybrid.

While you are alive, the account functions like an ordinary bank account except that you can only make withdrawals for qualified medical expenses. Upon your death, however, the account is treated more like a retirement account.

If you have a living trust, your question should be how do you deal with this issue. First, be aware that you cannot name the trust as the owner of the account. What you can, and should do, is name one or more beneficiaries to receive the balance of the account when you die.

How you do that is a function of your intentions, your marital status and the size of your estate.

• If you’re married and your estate isn’t taxable, which now is true for almost everyone who has an HSA or MSA, then the beneficiary should be your spouse unless there is some other reason not to do this. If there is anything left in the account at the time of your death and your spouse, as the primary beneficiary, can chose to treat the account as his or her own HSA or MSA. This avoids having the balance of the account included in your taxable income on your final income tax return and allows your spouse to use the account for their own qualified medical expenses.

• If you’re married and your estate is taxable, then you should name your Revocable Living Trust as the primary beneficiary of your HSA or MSA. This will insure that your separate estate tax exemption can be used to fund the AB Trusts created under the terms of your trust for the benefit of your spouse. The fair market value of the account will be included in your final income tax return less any qualified medical expenses paid in the year after your death.

• If you’re in a second or later marriage, then you should consider naming your children or other beneficiaries as the primary beneficiaries of your HSA or MSA. This will insure that the account passes to your chosen beneficiaries. Keep in mind though that the value of the account that they received will be included in their taxable income (less any qualified medical expenses as above).

• If you’re single, then you have two options for your primary beneficiary: your Revocable Living Trust or individual beneficiaries. If any of the beneficiaries of your Revocable Living Trust are minors, then it makes sense to name your trust as the primary beneficiary. That insures that the account doesn’t become subject to a court-supervised guardianship on behalf of a minor.

What happens to your body if you leave no instructions?

The State of Arizona has several laws that helps determine what happens to your body when you die. Arizona law states that the surviving spouse may make final decisions about your body and funeral services. If your spouse has passed away before you or you are divorced, then the right is granted to family members in an established order … agent under health care power of attorney, adult children, parent, and so on.

But what happens if your children or parents don’t know your wishes ahead of time? What happens if your mother wants to ship your body out of state to be close to be buried next to your father, but your daughter wants you to buried close to her? You can imagine the family disharmony that would occur under already trying circumstances. That’s why part of your estate plan should address your wishes regarding your funeral and burial.

Specifically, you require a will with a named executor — someone who has the authority appointed by the court to carry out your written instructions regarding your funeral arrangements and the disposition of your body. You might even consider including instructions on what you want your obituary to say.

Other things to note about Arizona burial laws…
• Your family members are not required to hire a funeral director, meaning your body can be brought home or taken directly to the cemetery. However, family members will be required to fill out a death certificate, which must be filed with the state registrar within seven days.
• Arizona law requires that a body be embalmed or refrigerated only if final disposition does not occur within 24 hours.
• Arizona law also requires a permit to transport the body — either to the home, the cemetery or out of state.
• If you have choosen to be cremated, your family must hire a funeral director as required by Arizona law.
• If you need assistance selecting a funeral home or cemetery, you might look at the Arizona Funeral, Cemetery, and Cremation Association website at or look at — one of the oldest and most comprehensive dedicated funeral home directories in the country.
• In an odd side note, you’ll be glad to know that Arizona Governor Jan Brewer signed emergency legislation in 2011 that bars protests within 300 feet of a funeral and within an hour from its beginning or end.

Top 5 Estate Planning Mistakes to Avoid

Passing on your estate and assets to your heirs is serious business, and there’s very little room for error. For instance, what happens if your executor or trustee passes away before you do and you didn’t update your estate plan to reflect that? What happens if you remarry and your ex-husband is still named in your estate plan but your current spouse is not? Generally, mistakes like these end up with your heirs and beneficiaries fighting in court over the problems your carelessness caused.

Here are 5 mistakes many people make when creating their estate plan. While your estate plan doesn’t have to be perfect, the closer you can make it, the less likely you are to disturb your family’s harmony.

1.Failure to Update Beneficiary Form
Life changes happen to all of us … marriage, divorce, birth of children, loss of loved ones, etc. Once the joy or grief has passed, it’s time to think about updating all your beneficiary forms as needed. IRAs, retirement plans, annuities and life insurance policies aren’t controlled by your estate plan, but by the beneficiary designation forms you completed. Fail to update these and it is possible the wrong people could inherit your estate. Just as important is completing the alternate beneficiary designation section of these forms. Something could happen to your beneficiary before he or she inherits, which is why it is smart to name an alternate person. If you fail to name a beneficiary or alternate (it happens more often than you think) your estate could go into probate and take a long time to be settled to say nothing of expense.

2. Selecting the Wrong Person as Executor or Trustee
The executor (in Arizona the Personal Representative) or trustee of your estate is a key player in your legacy. He or she implements the estate plan you have created, but if that person doesn’t pay attention to details or pursues his or her own interests instead of your wishes, it could be a disaster. Find people you trust, who are honest and lack conflicts of interests. These people should understand your objectives and be willing to carry them out. Sometimes a group or professional company is better than a single person.

3. Appointing the Wrong Person for Powers of Attorney
If you become ill or unable to exercise your mental powers, your attorney- in- fact (the person you name)will act on your behalf to make financial decisions. It is no different than if you were writing the check. If you name the wrong person — a person who has his or her own agenda or is irresponsible — it is likely to upset other family member and end up in ugly court battles. Consider appointing a person who isn’t likely to collude against members of the family. Problems often arise between siblings in this regard.

4. Hiding or Not Sharing Your Estate Plans
Not knowing is the most frequent cause of family arguments over an estate. If you share your plan and intentions with your family before you pass away, they won’t be surprised and will be more accepting of how the assets are being distributed. Don’t distribute copies of your plan, but discuss it with all family members concerned. There is no need to discuss the actual money or property involved, but the general plan discussion is important. If your executor or trustee isn’t a member of the family, it might be a good idea to introduce family members to him or her well in advance — again, so there will be no surprises.

5. Failure to Update Your Plan
Failure to make updates to your estate plan can be devastating for family members. If you fail to update after a life change to account for — a divorce, death of beneficiaries, changes in net worth, changes in tax law — then your obsolete plan may end up in court no matter how your tried to avoid that. You should consider meeting with an estate planning attorney on a regular basis, but no less that every three years, just to discuss whether there has been any changes in your family, your finances or in the law.

Identify Your Assets

No one likes to contemplate their own mortality, which is why so many people fail to plan how their assets will be distributed when they pass on. However, assessing your assets and goals is critical if you don’t want your heirs to end up in probate court waiting for your assets to be decided on by the state of Arizona.
By tackling the tough job now, you get to name the people you wish to receive your assets. You can arrange your estate so that taxes do not become a burden to your family and friends. And finally, you will have the peace of mind that comes with knowing your financial affairs are in order.

Step 1
The first step is take stock of all your assets. Assets may include investments, bank accounts, retirement accounts, insurance policies, real estate, business interest, as well as personal possessions.

Step 2
Step two is to decide what your goals are for these assets and who you want to inherit them. This is also the time to think about people you would trust to handle your business affairs and medical care in the event that you become incapacitated.

Step 3
Once your created your estate plan, be sure to discuss it with your heirs. By clearly outlining your intentions, you may prevent friction between family members after you die.

Step 4
The laws governing estate planning, tax exemptions and other aspect vary constantly, which is why it is a good idea to review your estate plan with your attorney on a regular basis. You want to protect as much of your assets as you can and prevent your heirs from inheriting a huge headache.

Ethical Wills

When you get right down to it, estate planning is all about preserving family values and traditions and promoting family harmony. So ask yourself these questions:

  • If you were gone, would your family know how much you cared for them?
  • Would they know about what was important in your life?
  • Would they feel a continued connection with you?
  • Would they understand how and why you designed your estate plan?

An Ethical Will can help you craft a value statement to let your loved ones know your morals and values — morals and values you hope they will embrace into the future. It is where you can have the opportunity to say many things that you might not otherwise say.

Ethical Will Workbook

The first step in creating an Ethical Will helps you determine what values and traditions are important to you — values and traditions you want to pass on to your family. That’s where our unique Ethical Will Workbook can help. In it, you’ll be asked to identify the top five virtues you value, your favorite places, people, music, charities and more. These are the building blocks needed to create an ethical will. The workbook also provides several examples of ethical wills to help you get started on creating your own message for your loved ones.

Get started right now by downloading this Ethical Will Workbook!

Supporting Your Ethical Will

While most people, and lawyers for that matter, focus on estate planning “documents”, Here at the Poulos Law Firm we believe that your values and the preservation of family harmony should coordinate and be expressed in your plan. Of course, the next step is create a last will and testament, a trust, power of attorney — whatever legal documents you need to support of your morals, values and traditions (your Ethical Will). Poulos Law Firm will help you every step of the way with guidance and legal advice and documents to continue your legacy into the future.

How Poulos Law Firm Can Help

At Poulos Law Firm, it is very important for us to establish your goals and traditions first, before we proceed in creating an estate plan that will promote harmony in your family for generations to come. Once the Ethical Will and goals have been established, we then provide the following:

  • Counseling on how to set up an estate plan (and talk to your heirs) to minimize family disharmony
  • Counseling on the selection of a person(s) to serve as financial fiduciary (selecting an executor, trustee or agent with your financial power of attorney).
  • Counseling on the selection of a person(s) to serve as a health care fiduciary (medical power of attorney)
  • Creation of documents like wills, revocable or irrevocable trusts, powers of attorney, living wills and more.
  • Addressing the issue of gifting and loans

Arizona Probate Laws

Probate describes a process where the Superior Court of Arizona appoints a personal representative of the estate of the deceased person to oversee certain tasks. Under Arizona probate laws recently passed, a person who is going to serve as a Personal Representative must take an online training course before they can be appointed.

Probate is needed to certain transfer property whether you have a will or not.But before we go too far, there are a couple of definition you should understand.

Dying “intestate” means the person did not have a will. In that situation who gets their property is determined by the probate laws of Arizona, not by them. If the person had a will, that is called dying “testate” If all of the persons property is in joint names or if there is a designated beneficiary, it still may not be necessary to probate the will.

So the normal way we transfer ownership of property that comes with a title is to sign the title over to someone else. An example is signing the back of your car title to transfer it to a purchaser. After a person dies, signing their name becomes a little difficult. And so a Court must authorize another individual called a “Personal Representative” to sign transfers of titled property for the decedent.

If the deceased had no assets or if no assets remain titled in the name of the deceased, then a probate is probably unnecessary.
Second, if there are probatable assets, look at the amount. If the real property located within Arizona does not exceed $100,000 (after liens like mortgages), and at least 6 months have passed since the death the real property can be transferred by affidavit. If the personal property in the estate is worth $75,000 or less, it too can be collected by affidavit. Probate generally takes about 5 months, longer for estates that are more complicated or contested estates.

What are the duties of a Personal Representative?

Those tasks a Personal Representative must do include:

  1. Discovering, collecting and completing an inventory all of the deceased assets* (some assets may have transferred automatically upon death, but some may still remain titled to the deceased).
  2. Paying final expenses, if any
  3. Addressing any creditor claims, if any
  4. Filing last tax returns and paying taxes (if necessary)
  5. Distributing remaining assets to heirs

* Assets can include: real estate, bank accounts, certificates of deposit, stocks and bonds, membership interests in a business (like an LLC), investment accounts (like T. Rowe Price, Schwab or Etrade), retirement accounts (IRAs, 401(k)s, pension plans, profit sharing plans, retirement plans), life insurance plans, and vehicles and boats.

How long does probate take?

Assuming there is no one challenging the will or otherwise fighting over the estate, it will likely take 5 to 6 months to complete.

Is a Personal Representative paid?

The PR is entitled by law to “reasonable” compensation. This is usually done on an hourly basis, so the PR must keep track of the work they do and any expenses.

How is the probate lawyer paid?

Unlike other states that provide for legal fees as a percentage of the estate, there are no such rules in Arizona. The only restriction on legal fees is they have to be “reasonable” considering the size and complexity of the estate.

Should probate become necessary, Poulos Law Firm is ready to help walk through the process step by step.

financial power of attorney arizona

Financial Power of Attorney-Arizona

financial power of attorney arizonaA financial power of attorney is a written legal document that allows you to give authority to another person to make financial and legal decisions (and financial transactions) on your behalf.

Sometimes, making your own financial decision is not possible. You might be traveling in remote areas for extended periods of time, or an illness or injury has incapacitated you. In these instances, having a designated person that your trust to make decisions for you and act on your behalf can be critical.

A financial power of attorney can be limited or general. Limited financial powers might mean your chosen person can read your mail, pay bills and sign checks on your behalf. It can also be arranged so that your designated person can conclude a single transaction for you — like a real estate deal. A general financial power of attorney gives your designee broad powers to act in any financial capacity on your behalf.

Make the selection of your attorney-in-fact (your chosen person) very carefully. Because this position is not overseen by the courts, they can be in a position to do you great harm.


Divorce? Update Your Estate Plan, Or Else

divorceOften overlooked in the divorce process is the need to update estate planning. Most people would agree that their ex-spouse is the last person they want to inherit their assets when they die—or to make life and death decisions for them. But that is exactly what can happen – and often does – when these documents are not updated.

Beneficiary Designations

Assets that have beneficiary designations (e.g., life insurance policies, employer retirement plans, IRAs, annuities, health savings accounts, investment accounts and some bank accounts) are not controlled by a will or trust. Instead they will be paid directly to the person listed as beneficiary. Since most married people name their spouse as their beneficiary, these should be changed right away. However, naming the right beneficiary is critical. This is especially true for tax-deferred plans because of possible estate and income tax issues and the potential for long-term tax-deferred growth. Be sure to seek expert assistance before naming a beneficiary on these accounts.

Children and Other Beneficiaries

If you name children as beneficiaries and they are minors when you die, a court guardianship must be established for them until they become age 18—at which time they will receive the entire inheritance. Until then, the other parent (your ex-spouse) could be named by the court to manage the funds. Naming another individual (for example, your parent or sibling) as beneficiary with the understanding they will use the money to care for your children until they are older is also risky. You have no guarantee they will follow your instructions, they may be tempted to use the money for their own needs, and the money would be exposed to their creditors.

Naming a trust as the beneficiary instead and selecting your own trustee (which may still be your parent or sibling) is a much better choice. A trustee can be held liable if he/she misuses the trust assets. An ex-spouse can be prevented from having access to the money, and you can control when your children will inherit. Money that stays in the trust is protected from irresponsible spending, creditors, and even spouses. For all these reasons, a trust is an excellent choice as beneficiary instead of an individual, regardless of his/her age.

Your Will and/or Living Trust

  • If you do not update your will or trust, your ex-spouse may inherit your assets. If he/she remarries, then on his/her later death, their new spouse and their children could inherit your assets, leaving your children and family with nothing. If you provide support to your parents or others, be sure to include them in your estate plan.
  • If you have minor children, you need to name a guardian for them in your will. Even if you have a living trust, a simple will is required to name a guardian and to direct any forgotten assets into your trust. Upon the death of one parent, usually the surviving parent will become the sole guardian, but if your ex-spouse has also died, had his/her parental rights terminated, or becomes an unfit parent, the court would have to appoint a guardian and would appreciate knowing your choice.

Powers of Attorney

Powers of attorney allow someone else to carry out your wishes in your name. Most married couples give each other the power to make health care decisions, including those regarding life and death. Financial powers are also usually given to each other so that one can manage the other’s financial affairs without interruption. These are often quite broad, including the ability to buy and sell real estate, open and close financial accounts, change beneficiary designations, collect government benefits, etc. Instead of your ex-spouse, you can name a parent, sibling, close friend or adult child to have these powers and act for you when you cannot.

Wills Vs Trust

Which should you choose? A will or a trust? What is the difference between the two? Both a will and a trust protect assets and indicate who will receive them upon your death, however, they work very differently. Let’s take a deeper look at wills vs trusts.

For many people, whether a will and power of attorney or a revocable living trust is best for them is their first consideration in Estate Planning. Most want to know which one is better at accomplishing their estate planning goals. In almost every case the trust will handle each of those tasks better than a will and powers of attorney. However, the decision of which one to use in most situations is resolved by looking at the cost versus the benefit. Will the extra upfront cost of creating a living trust generate enough savings of time or money for you or your heirs it is the right choice.


A will spells out how your property will be distributed when you die. It cannot make any provision if you become incapacitated. It can be revoked or amended any time before your death. A will still requires a family to go through a court process known as probate, which can take time and be expensive.


A trust is a written agreement designating a trustee who will be responsible for managing your property. If you are healthy, generally you remain the trustee, but you can name another to fill in at any time should you become ill or become incapacitated. When you die with a trust in place, the assets are transferred directly to your heirs without the lengthy probate process.

Most people do estate planning for one or more of these four goals:

  • To minimize taxes. Usually, but not always, that means estate taxes.
  • To avoid probate, or to simplify matters for their heirs or successors.
  • To control the way their assets are used after their death.
  • To make it easier for someone to handle their affairs if their own incapacity occurs or disability.

So how do those four estate planning goals relate to the wills vs. trust question?


Few people must worry very much about estate taxes these days. With a federal estate tax exemption set at $5.25 million in 2013, and no Arizona state estate tax at all, only a tiny fraction of clients have estates large enough to make their decisions on the basis of tax effect.

Probate avoidance

Arizona’s probate process is not nearly as complicated as people think and can often be done by non-lawyers. It is also not nearly as expensive. The main concerns with probate is that is public – everyone can see the will and assets under probate – and that it is often difficult to get this done when a family is grieving. And, of course, if someone objects and a family or creditor dispute arises, the costs and time needed will escalate.

What most clients say is that even with modest probate costs, going through the legal steps at a time of emotional upheaval is something they wish they could have avoided. In Arizona, the cost of preparing a living trust (and “funding” it — transferring all your assets into the trust’s name) will usually be less than the cost of probating your estate later. But not necessarily by much.

If you are married, you are probably comfortable putting most or all of your assets in “joint tenancy with right of survivorship” or designating your spouse or children as beneficiaries. This can lead to problems when the property goes to the next generation or, yikes, to a new spouse. Putting children or other beneficiaries on your bank and stock accounts as joint owners is almost never a good thing to do.


What you do with your assets while you are alive or what you want to happen after your death is a question of control. There are many situations where members of your family should not get outright control of their inheritance whether you are alive or not. Perhaps you wish to leave a legacy for your children or grandchildren for their schooling or other similar goals. The best way to address these types of issues is, in my thinking, is by using a trust with a trustee who you instruct on what you want accomplished.

While you can create a trust in your will — what we lawyers call a “testamentary” trust, it will cost you more than a will without such a trust, and the difference between the cost of a will (with your testamentary trust) and a living trust will shrink. So if you need (or just want) to control the uses of your funds after your death, you might be a better candidate for a living trust.

Your own incapacity

This is why you should sign a power of attorney. It is simultaneously one of the most important documents in your estate plan, and the single most dangerous one. The cost of going through the courts (in a probate-like proceeding called a conservatorship) is usually high and the invasion of privacy significant.

There are some times when a power of attorney just won’t solve the problem, though. Plus it is hard to predict when those times arise. Banks, title companies, the federal and state governments — none of them are required to accept the power of attorney and many do not. If you sign a living trust and transfer all of your assets to it, though, the problem becomes simpler and narrower: if your successor trustee can show the item the trust calls for (like a letter from your doctor, for instance), then the successor trustee just takes over. There will probably be somewhat fewer problems administering your affairs with a living trust than with a power of attorney.


So should you be considering a living trust as part of your estate plan? Each situation is obviously different, but at a minimum if you fit into one or more of these following categoris, you may be a a better candidate for a living trust rather than just a will:

  • You are older
  • You are not married or if you are married, don’t want to use joint ownership as your estate plan
  • You are wealthy and may face estate taxes
  • You have children who are not children of your spouse
  • You have complicated assets
  • You have real estate in more than one state
  • You have beneficiaries with special needs, inability to handle money or other similar considerations

Clearly, this is just a broad outline of some general issues regarding wills vs trusts to generate some thought. You should be making your decision with legal counsel about what is best for your circumstances after a full evaluation.

Call today if you have questions regarding which you should use to protect your assets.