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.

Four ways to shield and protect your assets

If you have substantial assets, come into sudden wealth, or are in a risk prone business you really should consider protecting your assets against possible lawsuits. And there are several ways you can keep your financial holdings secure.

First, make sure you have liability insurance. Your first line of defense against any type of litigation is to have insurance that covers claims. They we recommend that you have a personal umbrella liability policy in the amount equal to your net worth. This may provide another big layer of protection if your primary coverage is not enough. If you own a business, the business should also carry adequate liability insurance to protect those assets.

Review all jointly held accounts. Any money you deposit in a joint account with children, elderly parents, roomates, business partners or spouse can be at risk. In short, if the joint owners of any of your accounts file for divorce, incur tax liens are involved in a lawsuit, your account is vulnerable. Depending on your family or martial situation, you might want to keep your assets separate from your spouse. In many states, a joint account becomes joint property. If you wish to ensure that only your children from a previous marriage inherit, then a separate account is in order. In the case of a divorce, you could lose a substantial portion of those assets should the money be comingled.

Protect and formalize your informal partnerships. You are responsible for the actions of your business partners, so be sure a lawsuit against a partner can’t put all of your assets at risk. You’ll need to create business entities that shield assets. It is also not a bad idea to compartmentalize your assets. We call this the “silo” technique. For example, an owner of rental properties (rental properties generally carry a high risk of liability) can place each separate leased property in a separate LLC or corporation. If one rental results in liability, a creditor will be forced to pursue liability against only one entity, and will not be reach either the owner or her other properties. Keep in mind though that this technique will not shield you from your own personal liability, which is another reason why you need insurance.

Finally, every state shields certain classes of assets through property exemption laws. The property exemption laws serve a dual purpose. First, they denote types and amounts of property that are unreachable by creditors. Second, these statutes also denote types and amounts of holdings that cannot be lost by a debtor in bankruptcy. Learn the laws in Arizona and shield as much as you can. Before thinking about “off shore” trusts and other such exotic ideas, you should be funding retirement plans and life insurance policies as a first stage in shielding assets.

CAUTION. Taking care of protecting your asset now is critical. Too often attorneys get a call from a client or potential client who has been sued or is about to be sued. It is often too late as any transfers at that point are subject to being set aside as a “fraudulent conveyance” Unless you receive good value for a transfer, if you do it to avoid having to pay a judgment, it is unlikely to stand up in court.


Steps To Properly Plan Your Estate

Cute-older-coupleNo matter how large or small your estate, your assets and your family should be protect when you die. There are some easy steps you can take to ensure your estate plan is in place, your assets will be protected and passed on appropriately, and for your peace of mind.

1. Create a basic estate plan — an estate plan should include a will, assignment of powers of attorney, a living will (medical power of attorney), and for some people, a trust might also make sense.

2. Take inventory of your assets — create a list of your investments, retirement savings, real estate, business interests, insurance policies and property assets. Figure out which family members and friend you want to inherit each asset.

3. Create a will — a will tells your family and friends where you want your assets distributed when you die. This is an important document if you have young children because you will name guardians for your children here.

4. Determine if you need a trust — you may require more than just a will to protect your assets. Trusts allow you to put conditions upon how and when your assets will be distributed. For example, a child might receive maintenance fees until the age of 30 when he or she will inherit the management of the trust.

5. Discuss the plan — be sure your heirs understand the estate plan. This may help prevent disputes or confusion later on.

6. Be aware of federal estate tax exemptions — In 2013, estates under $5.25 million are exempt from the tax. Amounts above that are taxed up to a top rate of 40%.

7. Tactics — will you may leave all your assets to your spouse tax-free, this may not be your best option. It could mean your children will likely play more when you spouse dies and in many cases just defers the decisions about inheritance and distribution of assets.

8. Tax-free gifts — take advantage of tax free gifts. You may give up to $14,000 a year to an individual (or $28,000 if you’re married and giving the gift with your spouse). You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred.

9. Charitable giving — a donation or charitable gift fund or community foundation can be create to that will invest your funds and allow distributions to various charities each year.

Should College Students Have Powers of Attorneys and Health Care Directives?

What if you have to step in?

This is a commonly overlooked item in estate planning. Most people think about taking care of their children financially, but almost never think about if something bad happens to their adult child. If you have a child or children over 18, if you are not named as their power of attorney or as a decision maker in health care directives you may be blocked in assisting your child in their medical, education and legal issues.

You may not have the rights you think you do.

People assume they have more rights to their student’s information than they really possess. Even though your student is on your health insurance plan and you pay all of his or her medical bills, that does not entitle you to make medical decisions for them in case of an emergency or to get full details of their health crisis or injuries. You are probably not entitled to any information about their medical records – even for such things as a claim dispute. If you pay all of the costs of a child’s college expenses, that does not entitle you to see their grades or discuss their education with a counselor. If your child is out of the country or just a long distance away, you probably cannot act in their behalf.

What documents should you have?

Without these documents, you may not step in when your child needs you most. Se encourage your child to get the following documents before heading off to school:

  • Durable Power of Attorney: The Durable Power of Attorney will allow your child to authorize you to manage his or her financial affairs either immediately or in the future should he become mentally or physically unable to do so. This would authorize you to handle tasks such as paying bills, applying for social security or government benefits and opening and closing accounts.
  • Medical Power of Attorney: The Medical Power of Attorney allows your child to authorize you to make medical decisions if he or she is incapacitated and unable to do so. An agent acting under a Medical Power of Attorney may see the principal’s medical records to make informed medical decisions on his or her behalf.
  • HIPAA Release: HIPAA (the Health Insurance Portability and Accountability Act of 1996) requires health care providers and insurance companies to protect the privacy of patient’s health care information. Those who violate HIPAA are subject to civil and criminal penalties, including jail time, which makes them reluctant to share protected health information without an authorization.
  • FERPA Release: You also might want a FERPA release, which allows your child to get access to educational records.

What do you say to your now, Adult, child?

You child is transitioning into adulthood and therefore may be reluctant to provide what they perceive as continued authority. They are adults and treat them that way. Talk to them like an adult and explain what might happen if they have a medical emergency or need you to help with financial matters. Tell them they can revoke these documents. Lastly, discuss with them how and why such documents will be used.

Putting these documents in place can be one of the best things you can do for your child. It does not have to be expensive, but it must be done correctly.

Legal Forms on the Web – Do you really need an attorney?

A weak maybe? There are, no doubt, situations where a simple form obtained free or at minimal cost on the web will suit your purposes. Caution is the watchword here. While there are many legal forms available on line, you have no assurance about the quality of these documents. They are often created to cover every conceivable situation and as a result, instead of being complete, leave many important issues unaddressed which can and, often do, come back to haunt you.

Having said that, reviewing these on line forms can save you money when you do meet with an attorney. If your situation calls for something other than a simple straightforward matter, maybe these simple forms will be sufficient. Before you use such a form, however, spend a little time considering any legal implications and potential liabilities if the form is inadequate. If you are thinking that you probably need to have an attorney review the documents, then you should be listening to your inner voice. The money you are saving now could be very costly

Saving Legal Fees with on line forms Using online forms can actually be a good way to reduce your legal fees when you do consult an attorney.

  • A good way to use on line forms is to use them to focus your attention on the issues that you should be discussing with the attorney. That way, you can give the attorney direction about what you want to accomplish.
  • Using an on line form can help you also think about answers to questions that the attorney might have which will result in an more efficient (and less costly) meeting.
  • If you have an outline or form that you think is appropriate and the attorney confirms that it is the correct form for your particular situation, you won’t have to pay the attorney to draft the agreement from whole cloth.