Trust Law Attorney in Arizona
Arizona Trust Lawyers
After a loved one’s death, the probate process in Arizona can be emotionally exhausting and financially draining. Even if you go through the informal probate process, you will have to fill out the paperwork, collect the assets, and notify any creditors. If you use the formal probate process, expect to see a significant percentage of the estate’s assets eaten up by legal fees and other expenses.
One way to minimize or avoid many of these hassles is by utilizing a trust. However, if you are unfamiliar with trusts and do not know how they work, you may feel intimidated as you try to set one up.
The Arizona trust attorneys at Brown & Hobkirk, PLLC are here to help. Our experienced team has more than 20 years of experience with Arizona wills and trusts. We can walk you through the advantages of a trust versus a will. We can explain how to create a trust in Arizona, and we can explore the right kind of trust for your situation. We will listen carefully to your questions and concerns, and we will ensure all of your legal needs are met.
What Is a Trust?
The various kinds of trusts and the rules surrounding them can seem complicated. But a trust is simply another tool you can use when planning your estate. A trust is a legal document that allows a third party, known as a trustee, to manage your remaining assets after you die.
What Are the Advantages of a Trust?
You may be asking yourself: Do I need a trust in Arizona? You may decide that you do after considering the ways that a trust can help you and your family.
- You can help your family avoid costly probate proceedings by setting up a trust for your estate before you die.
- A trust can also minimize the tax burden on your remaining assets.
- Trusts give you more options for handling your assets after your death. Those options include donating your assets to charity, passing them on to your children or other heirs, or allocating them in some other way.
Common Types of Trusts
After a discussion about your personal goals and circumstances, an Arizona trust lawyer may recommend that you set up one of these kinds of trusts:
- Revocable or “living” trust – Revocable trusts, also called living trusts, are the most common type of trust. Revocable trusts are usually created by the head of the estate (sometimes called the “trustmaster”) during his or her lifetime. While the trustmaster is alive, the trust can be altered or revoked entirely. Usually, the trustmaster transfers title to property and other assets to the trust before death. The trustmaster often serves as the first trustee. When assets are transferred to the trust before the trustmaster’s death, they are not subject to probate proceedings. Assets can be removed from a revocable trust as long as the trustmaster is still alive.
- Irrevocable trust – An irrevocable trust is similar to a revocable trust in terms of its contents and the manner in which it is set up. However, assets cannot be removed from an irrevocable trust once the title has been transferred. Revocable trusts are often converted to irrevocable trusts once the trustmaster has died.
- Special needs trust – Special needs trusts can be useful if a family member is disabled or receiving government benefits for another reason. A large inheritance or gift often leads to someone’s government benefits being reduced or eliminated. However, as long as that family member cannot control the distribution of assets or revoke the trust, the family member can enjoy the benefits of a trust without losing the government benefits.
- Charitable trust – Charitable trusts allow a trustmaster to donate some or all of the assets from the estate to the charitable organization(s) of his or her choice. Charitable contributions can help reduce the tax burden on the trustmaster’s heirs.
- Marital trust – Marital trusts are irrevocable trusts designed to protect a couple’s assets and shield some assets from tax liability when one spouse dies. The marital estate is split up when one spouse dies. Some assets are transferred to the surviving spouse and some assets are designated for other beneficiaries. This helps the surviving spouse avoid some transfer tax penalties and makes it easier for that spouse to claim any remaining assets.
- Spendthrift trust – Spendthrift trusts are set up in such a way that beneficiaries cannot sell or pledge interests in the trust. This way, any assets in the trust are protected from the beneficiaries’ creditors until the assets are distributed to beneficiaries.
- Testamentary trust – A testamentary trust is a trust that is established upon the death of the trustmaster. Testamentary trusts are usually outlined in the trustmaster’s will.
- Qualified Terminable Interest Property Trusts (QTIPs) – QTIP trusts are similar to marital trusts in that they protect marital assets from estate taxes and ensure the surviving spouse and any children are taken care of. However, in a QTIP trust, the surviving spouse can only utilize the trust’s profits once the spouse is in control of the trust. Any originally intended beneficiaries of the trust can take advantage of the trust’s principal investments or assets. Most importantly, the surviving spouse cannot change the terms of a QTIP trust, ensuring that any beneficiaries named in the trust will get the assets they were supposed to receive.
- Qualified Personal Resident Trusts (QPRTs) – Qualified Personal Resident Trusts let you transfer ownership of your home into a trust, thus lowering the value of your estate for purposes of estate taxes. These trusts are useful if you have a family home that you want to keep in your family for many years. However, these trusts have complex tax trade-offs. Talk to an Arizona trust lawyer if you’re considering a QPRT.
- Generation-skipping trust – A generation-skipping trust grants control over any trust assets to the trustmaster’s grandchildren (or anyone 37 ½ years old or older) instead of the children. This can be useful in cases where trustmasters do not trust the judgment of their children and want to look after their younger heirs.
- Irrevocable life insurance trust – An irrevocable life insurance trust determines who will claim the benefits from the trustmaster’s life insurance policy upon the trustmaster’s death. These trustmasters cannot serve as their own trustees for an irrevocable life insurance trust. Once the life insurance policy has been placed in the trust, the trust cannot be revoked.
Frequently Asked Questions (FAQs) About Trusts
Our skilled trust attorneys will listen to your needs and answer your questions related to trusts. In the meantime, we have provided answers to the questions that our clients often ask about trusts in Arizona.
The difference is fairly simple: A revocable trust can be altered or revoked while the trustmaster is alive, meaning, assets can be added to or removed from the trust. Irrevocable trusts cannot be altered or revoked. An attorney can work with you to make sure any decisions regarding these trusts are made carefully.
Being a trustee is a tremendous responsibility. A trustee must be capable of understanding and performing numerous legal duties. Choose a trustee with financial experience who is honest, trustworthy, organized and dependable.
Reasons or circumstances for changing a trust include a marriage, a divorce, the birth of a child, the death of a previously named beneficiary, and a change in your financial situation. While you can usually change a trust for any reason, be certain to consider the potential consequences.
Some people dislike trusts, because they believe they take too much control over their assets. Other persons do not like them, because many trusts cannot be easily revoked. Trusts are complicated legal instruments that require careful planning and record-keeping, which can be daunting. Overall, though, we believe the benefits of a trust outweigh the disadvantages.
How Our Arizona Trust Lawyer Can Help You
No one type of trust is ideal for every situation. Every family’s finances are unique, and different people use trusts for different purposes or goals.
Regardless of your needs or financial situation, the Arizona trust lawyers at Brown & Hobkirk, PLLC can help you find the right trust for your circumstances. We can walk you through the different kinds of trusts and the different benefits they offer. We can also help you file the necessary paperwork to establish your trust.
If you try to set up a trust on your own, you may run into legal or tax trouble. Instead, get help from our experienced and knowledgeable Arizona trust attorneys. Schedule your confidential initial consultation today by calling us or visiting our online contact page.