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How Does Revocable Trust Work in Chandler, AZ?

How Does Revocable Trust Work in Chandler, AZ | Citadel Law Firm

Read our blog to understand how a revocable living trust work in Chandler, Arizona.

Is a revocable living trust the correct estate planning strategy for you in Arizona? Read our article to understand how a revocable trust works.

Arizona is know for having some of the best revocable living trusts laws in the whole country. When we talk about creating a trust in Chandler, AZ we will follow Arizona laws. That applies for Chandler and all cities in the state of Arizona.

In Arizona, a revocable living trust operates similarly to revocable trusts in other jurisdictions. A revocable trust, also known as a living trust or a revocable living trust, is a legal arrangement in which a person (known as the grantor or settlor) transfers their assets into a trust, which is managed by a trustee of their choosing. The grantor retains the right to make changes or revoke the trust during their lifetime, which is the opposite from irrevocable living trusts.

Here are some key points about how a revocable living trust works in Arizona:

  1. Creation and Funding: The grantor creates the revocable living trust by executing a trust document and then transfers their assets into the trust. This involves changing the ownership of the assets from the grantor's individual name to the name of the living trust.
  2. Grantor's Control: As the name suggests, a revocable living trust can be modified or revoked by the grantor at any time during their lifetime, as long as they are mentally competent. The grantor can amend the trust document, add or remove assets, change beneficiaries, or appoint a different trustee.
  3. Trustee and Successor Trustee: The grantor appoints a trustee, who is responsible for managing the assets according to the grantor's instructions. The grantor can initially serve as the trustee, and they can also appoint a successor trustee to take over the management of the trust if the grantor becomes incapacitated or passes away. This quality making managing revocable living trusts easier. As people age, and sometimes lose mental capacity, they may need to have a the next trustee step in to manage their living trust. That can keep you our of probate court and avoid a lot of unnecessary legal process.
  4. Incapacity Planning: One of the significant benefits of revocable living trusts in Arizona is its ability to provide for management of assets in the event of the grantor's incapacity. If the grantor becomes unable to manage their affairs, the successor trustee can step in and manage the trust assets on behalf of the grantor, avoiding the need for a court-appointed guardian or conservator.
  5. Avoiding Probate: A revocable living trust is often used as an estate planning tool to avoid probate, which is the court-supervised process of administering a deceased person's estate. By holding assets in a revocable trust, those assets can pass directly to the beneficiaries named in the trust without going through probate. Revocable and irrevocable trusts when properly drafted and funded will avoid the probate process.
  6. Privacy: Unlike a will, which becomes a public record upon probate, revocable trusts allow for privacy. The distribution of assets and the beneficiaries' identities remain confidential, as the trust administration is generally conducted outside of the public court system. You do need to transfer assets to the trust to make sure probate is avoided.
  7. Trust Administration: Upon the grantor's death, the successor trustee is responsible for administering the trust according to the grantor's instructions. This may involve distributing assets to the beneficiaries, paying off debts and taxes, and handling any ongoing management or investment of the trust assets. If minor children is involved, or special needs individuals, the trust may create an irrevocable trust to make sure their assets are protected.

It's important to note that while a revocable living trust can provide many advantages, it may not be suitable for everyone. It's recommended to consult with an estate planning attorney in Chandler, Arizona to understand the specific legal requirements and implications of establishing revocable trusts based on your individual circumstances.

Working with an estate planning attorney will make the process of creating a revocable living trust, as well as managing it along the years much easier. Please keep reading to understand the most common asked questions related to revocable living trusts.

Revocable Living Trusts in Arizona - Frequently Asked questions

What are the disadvantages of revocable living trusts?

Revocable living trusts offer several advantages, such as avoiding probate, providing privacy, and allowing for flexible asset management during the grantor's lifetime. However, they also come with some disadvantages that individuals should consider before deciding to establish one.

Revocable living trusts can prevent you from applying for government benefits like Medicaid. They can also not work well if not properly funded. They also offer potential for oversight or negligence. Trustees, who may be family members or professional fiduciaries, could mismanage the trust assets, act negligently, or even commit fraud. The grantor may not be aware of these issues if they become incapacitated or are no longer actively managing the trust.

If you anticipate needing Medicaid to cover long-term care costs, placing certain assets into a revocable living trust could affect your eligibility. In such cases, an irrevocable trust may be more appropriate for Medicaid planning purposes.

It is essential to consult with a qualified estate planning attorney to assess your specific circumstances and determine whether a revocable living trust aligns with your estate planning goals and needs. While they can be beneficial for some individuals, they might not be the best option for everyone.

What is the difference between a family trust and a revocable living trust?

A family trust and a revocable living trust are two different types of trusts used for estate planning purposes, but they share some similarities.

A revocable living trust is a legal arrangement where the grantor (the person creating the trust) places their assets into a trust during their lifetime. The grantor can retain control over the trust and its assets, and they have the ability to make changes, amend, or revoke the trust at any time during their lifetime. The primary purpose of a revocable living trust is to avoid probate, provide for asset management during incapacity, and ensure the efficient transfer of assets to beneficiaries after the grantor's death.

The term "family trust" is a more general term and can refer to any trust established for the benefit of a family. It can encompass various types of trusts, including revocable living trusts. The main purpose of a family trust is to protect and manage assets for the benefit of family members, such as children or grandchildren. Family trusts can be a revocable living or an irrevocable living trust, depending on the specific goals and needs of the grantor.

Should bank accounts be in a trust?

Whether or not to place bank accounts into a trust depends on your specific estate planning goals and individual circumstances. Placing bank accounts into a trust can offer several advantages, but it may not be necessary or appropriate for everyone.

We do recommend clients sometimes to add beneficiaries to their bank account, instead of adding it to their trust. That is specially important sometimes for blended families.

What is the difference between a revocable and irrevocable trust?

A revocable trust can be changed or canceled by the grantor during their lifetime, while an irrevocable trust cannot be modified or revoked once established. Irrevocable trusts are usually used for asset protection or for special needs situations. An experienced estate planning attorney Chandler should be able to recommend the correct strategy for your family and your needs.

What assets Cannot be placed in a revocable living trust?

While many types of assets can be placed in a revocable living trust, certain assets should not or cannot be included due to legal restrictions or practical reasons. Here are some examples of assets that generally cannot or should not be placed in a revocable living trust:

  • Retirement Accounts: IRAs (Individual Retirement Accounts), 401(k)s, and other qualified retirement accounts cannot be owned by a revocable living trust.
  • Health Savings Accounts (HSAs)
  • Life Insurance Policies: although the trust may be added as a beneficiary in some specific cases.
  • Certain Qualified Annuities
  • Foreign Assets: Placing foreign assets in a revocable living trust can lead to complex legal issues and may not be recognized in other countries.

It's crucial to consult with an experienced estate planning attorney to determine the best approach for your specific assets and estate planning goals. They can help you identify which assets should be placed in the revocable living trust and which ones should be handled through other means to ensure a comprehensive and effective estate plan. Come see your revocable trust lawyer chandler or irrevocable trust lawyer chandler today.

Do you want to set up a revocable living trust in Chandler, Arizona?

Call Citadel Law Firm today if you want to set up a revocable living trust in Arizona. Our law firm is specialized in estate planning services in Chandler. We can help you set up or trust document or a last will.

Call (480) 565-8020 to schedule you free estate planning consultation. If you prefer to schedule your free consultation online, click here. Our estate planning lawyers will be pleased to help.