The Importance of Establishing a Living Trust for Your Estate in Arizona
A living trust is essential for helping to protect your estate in Arizona. Learn more about the importance of setting up a living trust with an attorney.
Only one in three adult Americans have an estate planning in place -- 34 percent of the adult population, to be more precise. Even less than this has an established living trust or revocable living trust. That means that a huge majority of people are walking around without a plan as to what will happen to their assets when they pass on.
Estate planning, more specifically, revocable living trusts, is the simplest and best way to pass on your most-valued assets to those you love. It's also a surefire way to avoid financial disaster for those you leave behind.
But what is the importance of a living trust in Arizona? Learn about the benefits of a living trust and more in this blog.
What You Need to Know About a Living Trust
So, what exactly are revocable trusts?
In simple terms, it's a legal arrangement. Some people like to refer to it as the trust document. You are the grantor of the living trust that, essentially, protects your assets and directs their distribution when you pass on. It is an easy way to transfer legal ownership of your assets and avoid probate. A living trust is an important estate planning tool. It simplifies the process for family members or other beneficiaries during the probate process -- where your assets transfer to them when you die.
With a living trust in place, your loved ones/beneficiaries can avoid potentially complex, lengthy, and costly setbacks after you pass away. A trust properly funded can avoid probate, keep legal costs low, and make sure your beneficiaries receive your assets (property, bank accounts, etc). Assets held in trust in Arizona
A living trust attorney writes up the document as a legal arrangement. The trust document stipulates the legal terms of the living trust and how your assets must be assigned avoiding probate completely. You can also appoint a trustee in your living trust. This person gains control of your assets for the benefit of your beneficiaries when necessary.
There are two variations of a living trust:
1. A Revocable Living Trust
This is the more common of the two variations. Essentially, you can designate yourself as the trustee of the revocable living trust while you are alive. This gives you the power to alternate trust rules, beneficiaries, assets, and trustees as you wish during your lifetime.
You still retain control over your assets and your decisions. The successor trustee will only take over if certain circumstances are met. Revocable Living trusts can usually be changed when you are alive.
2. An Irrevocable Trust
In this case, the irrevocable trust owns the assets. This means that you cannot designate yourself as a trustee and you relinquish control over the assets owned by the trust. .
Once you create an irrevocable trust, you can name your beneficiaries, but you can do little to change the arrangement later on. Only in certain situations, once approved by a court of law (when necessary). You cannot reclaim the assets assigned to an irrevocable trust, either.
Irrevocable trusts are created for very specific reasons. Differently from an Arizona living trust or a revocable trust they usually can't be changed after they are created. An irrevocable trust offer estate planning options in very specific cases and it is not for everybody.
Why Is a Living Trust Important in Arizona?
As mentioned, a living trust is one of the most powerful tools you can have when it comes to estate planning and getting your affairs in order. It gives you full control over your assets and streamlines the process of transferring said assets to your family/beneficiaries in the event of your death.
Not only this, but a living trust helps you address a number of issues, depending on how you (and your living trust attorneys) word the document. Here's why it's important in your estate planning:
- A trust protects your assets and minor children until they become of age to manage money by themselves. You can opt to give your children access to money over staggered periods of time as well.
- You can help your beneficiaries spend or use your money wisely throughout their lifetime by keeping your assets in the trust, but distributing it as needed.
- A living trust is the best way to keep your assets in the family, i.e. your assets cannot be transferred to a child's ex-spouse during the divorce process. It offers great protection against creditors for future generations.
- Putting your assets in a living trust before you die means that your family/beneficiaries can avoid the lengthy probate process and access your assets quicker after you are no longer here. It can save you money and time, on top of saving your family a lot of stress.
- Establishing a living trust is one of the best ways to keep your affairs private. It protects your assets from the probate process which is usually a matter of public record.
Finally, a living trust is also a great way to protect yourself while you're still alive. In the unfortunate event that you become incapacitated for any reason, a successor trustee that you assign can manage your trust, for your benefit. This is a great option if you're unmarried, have not had children, or want peace of mind that someone reliable can make decisions for you when you can't make them yourself.
How Is a Living Trust Different From a Last Will?
Most people have probably heard of a will or a "last will and testament" and have a rough idea of what it is. But a revocable living trust? It's a little less well-known. The irony is that a revocable trust can actually benefit you more than a will in many cases.
But first, let's clarify what a will is. Also known as a last will and testament, it's a legal document that appoints an executor to carry out the wishes stipulated in your will when you die. In short, your will directs how the executor should distribute your assets.
You can also designate guardians for minors in your will, and outline other important instructions regarding debt payments, tax obligations, funeral arrangements, and more.
So, in essence, a will sounds very similar to a living trust. But there is a key difference -- you get to avoid the probate process when you establish a living trust.
Probate is a court-supervised process that handles the distribution of your assets. Probate can take a good chunk of time to process, it's expensive, and it's also public.
While it's less complicated and more affordable to establish a will versus a living trust, you might want to consider the benefits of a living trust and how it can serve you (and your family) in the long run.
Looking to Establish a Revocable Living Trust in Arizona?
Planning for the eventuality that you'll pass on one day may seem like a macabre idea, but in reality, it's the smartest one you could make. If you've yet to establish a living trust, there's no time like the present.
Get in touch with one of our estate planning and trust attorneys in Arizona today to get your affairs in order and have ultimate peace of mind. Our firm also handles estate planning, dynasty trusts, revocable and irrevocable trusts, living will, last wills and testaments, and more.
Call to set up your trust immediately. Call (480) 565-8020 to schedule your free consultation today or click on the link below to schedule. We will be pleased to help you.