Arizona Wills and Trusts
Regardless of the value of assets and possessions you want to leave, estate planning is of paramount importance. You can distribute assets in the best possible way and you can even help your heirs avoid certain taxes. A good decision is based on having enough information about the possibilities. Understanding the difference between a will and a trust is one of the first essentials to tackle.
What Is a Will?
In Arizona, your will is defined as a set of instructions in a written form that determines how your estate will be handled upon your passing. The will features an executor or a personal representative that will be responsible for the management and the distribution of assets.
A will is easy to draft and also easy to change upon necessity. An amendment known as a codicil will have to be added.
In Arizona, you can set alternative ways for the management of your assets. The will is going to affect those that aren’t been handled in another specific manner. Beneficiary designations, transfer of death accounts, community property with right of survivorship and beneficiary deeds for real property rank among the most popular automatically enforceable alternatives to a will.
There’s one more document that has to be discussed – a living will. The living will is used to make end-of-life medical assistance decisions.
Click here for more information on the various estate planning tools in Arizona.
What Is a Trust?
The trust (living trust) is a device that’s also used for estate planning. In this case, a trustee will take the title to designated assets. The trust becomes effective immediately upon its signing and your estate will be distributed before your death.
The trust will cover solely property and assets that have been specifically transferred to it. In contrast, the will covers all your assets and property at the time of your death. There’s one more important difference between the two – a will has to go through probate and the court oversees the process. A trust will fall outside the probate process.
Is a Will or a Trust Better for You?
People who want to avoid the probate process will typically opt for a living will. This decision could be administratively better and simpler for heirs.
Usually, heirs will have to wait up to six months in order to receive their inheritance if you leave a will. In the case of contesting, the process could be prolonged even further. Transferring assets to a living trust eliminates the entire probate procedure and the waiting period. Even if you opt for a trust, you’re still in control of the process. You can have certain conditions like withholding access to the assets until the beneficiary turns 18.
Estate taxes should also be considered. These can be significant whenever the assets surpass a specific amount (5.49 million dollars). In such instances, estate taxes will be a major problem for heirs because the value of assets will be inevitably eroded. When assets are transferred to a trust, they will be removed from your individual estate. The estate tax burden will be minimized.
While these considerations make it seem like the living trust is a superior option, this isn’t necessarily the case. A will has a number of advantages – it is cheaper to create and the process is also simpler than setting up a trust. For people with a small estate, setting up a trust could be way too costly. A will also makes sense in situations when you’re worried about the execution. An Arizona court will oversee the process and ensure fairness.
If you’re hesitant about estate planning and the best way to do it, get in touch with an attorney today. You will have a deeper look at the features of wills and trusts and you’ll also get to make a decision that’s specifically tailored to your situation.