Avoiding Probate

Probate.  Just mention the word, and chills run up the spine. Some businesses are even targeting seniors to scare them into purchasing expensive estate plans to avoid probate. They hold luncheon seminars telling seniors that a Will won’t avoid probate, and then try to sell the senior a Trust for thousands of dollars. Just because a person has a Will does not mean that probate will be required.  In many cases, there are other, less expensive options that would also avoid probate.

What is probate?

First, let’s define probate. Probate is a court proceeding to transfer assets and settle the debts of a deceased person.  At a minimum, a simple probate in Arizona takes at least 4 months to complete and can cost $1600 or more. A probate proceeding may also be opened if the Trustee of the deceased person’s Trust is not performing his or her duties, or if someone disagrees with part of the Trust.  

What is the best way to avoid probate?  

Stay alive.  Seriously, it depends.  Most Arizona real estate can be transferred with a Beneficiary Deed for less than $200.  That is substantially less than the cost of a simple probate.  If a person owns real estate in multiple states, it may be better to use a Trust to manage the transfer of property.  Depending on your unique situation, a Trust may be the best solution, or there may be other less expensive ways to transfer your assets upon death without a probate.

What type of assets require a probate to transfer?

In general, if property requires the signature of the owner to transfer title or access it, then it may require probate for transfer after death, unless a non-probate transfer device has been put in place before death.

What are some simple ways to transfer property without probate and without a Trust?

This table shows typical assets and ways to transfer without a probate. Some actions must be taken before death.

Property	Signature Required	Non-probate transfer options (MUST be done before death)	Small estate transfer options (After death)
Financial Account	Yes	Name a POD or TOD beneficiary	Affidavit of Collection if less than $50,000
Real Estate	Yes	Beneficiary Deed	Affidavit of Transfer of Real Property if less than $100,000
Motor Vehicle	Yes	Beneficiary Designation Form	Affidavit of collection if less than $50,000
Grandma’s Dishes	No	Give them to the person listed in the Will

How can I decide the best solution for my situation?

You can ask an attorney to decide for you, or you can get information from an estate planning professional like Prescott Tax & Paralegal and make your own decision about what is best for you.

Will having aTrust avoid probate?

Usually. However, if there is a disagreement over distribution, the Trustee acts improperly, or assets were not placed into Trust ownership, a probate may be opened. In a recent case, a probate was opened because the bank incorrectly titled the money market account as The Smith Trust instead of the The Smith Family Trust. When the original trustee died, the bank refused to release funds to the successor trustee because the name on the account did not match the name on the Trust document. The bank refused to pay for the proceeding, and refused to admit their error in incorrectly titling the account. Ultimately, we were able to obtain a court order forcing the bank to release the funds, but not without cost to the heirs was in time and money.

If you have questions about avoiding probate, estate planning, or how to transfer assets of a deceased loved one, call Prescott Tax & Paralegal at (928) 778-3113.

Prescott Tax and Paralegal, your estate planning experts in Prescott, answers the question: What property may need probate?

Thinking about your estate plan or lack thereof? There are ways to transfer property upon death that do not require probate. Prescott Tax and Paralegal shares with our Prescott clients what assets may need to go through probate.

A colleague asked if I would briefly discuss what assets require probate to transfer title. Briefly? I’ll try. In general, if property requires the signature of the owner to transfer title or access it, then it may require probate for transfer after death, unless a non-probate transfer device has been put in place before death.

The following table shows some typical assets, and one possible non-probate transfer option.  (I’m trying to be brief.)

Property	Signature Required	Non-probate transfer options	Small estate transfer options
Financial Account	Yes	Name a POD or TOD beneficiary	Affidavit of Collection if less than $50,000
Real Estate	Yes	Beneficiary Deed	Affidavit of Transfer of Real Property if less than $100,000
Motor Vehicle	Yes	Beneficiary Designation Form	Affidavit of collection if less than $50,000
Grandma’s Dishes	No	Give them to the person listed in the Will

Just because a person has a Last Will and Testament does not mean probate is required. If the only property is Grandma’s dishes, a probate court proceeding is generally not required.

Even when there is no Will, a probate proceeding may need to be opened if there is real estate which needs to be transferred. For those who think, “Ha, I’ve got a Trust!” Even a Trust may end up in probate court if there is a disagreement over distribution, if the Trustee acts improperly, or if assets were not placed into Trust ownership.

In a perfect world, no one would end up in probate court. Until then, probate provides the way to transfer property that requires a signature, when the owner dies before choosing a non-probate transfer.

If you are looking for help protecting your assets, choose the professionals at Prescott Tax and Paralegal. To obtain legal advice on the best solution for your situation, you should contact an attorney. To schedule a consultation, or if you are in need of an estate or trust plan in Prescott, contact the experts at Prescott Tax and Paralegal at 928-778-3113. For more information on services we offer, please visit http://www.PrescottTax.com.

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Prescott Tax and Paralegal, your estate planning experts in Prescott, discusses avoiding probate

Probate. Just mention the word, and chills run up the spine. Some businesses even target seniors to scare them into purchasing expensive estate plans to avoid probate. They hold luncheon seminars telling seniors that a Will won’t avoid probate, and then try to sell the senior a Trust for several thousands of dollars. In many cases, there are other, less expensive options that would also avoid probate. Prescott Tax and Paralegal wants our Prescott clients to be aware of what probate is and what you can do to protect the assets you’d like to leave to your heirs.

First, let’s define probate. Probate is a court proceeding to transfer assets and settle the debts of a deceased person. At a minimum, a simple probate in Arizona takes at least 4 months to complete and can cost $1000 or more. A probate proceeding may also be opened if the Trustee of the deceased person’s Trust is not performing his or her duties, or if someone disagrees with part of the Trust.

What is the best way to avoid probate? Stay alive. Seriously, it depends. Most Arizona real estate can be transferred with a Beneficiary Deed for less than $150. That is 1/10 the cost of a simple probate. If a person owns real estate in multiple states, it may be better to use a Trust to manage the transfer of property. Depending on your unique situation, a Trust may be the best solution, or there may be other less expensive ways to transfer your assets upon death.

The professionals at Prescott Tax and Paralegal are experienced in estate planning in Prescott and can help you protect your assets. To obtain legal advice on the best solution for your situation, you should contact an attorney. For a consultation or if you are in need of an estate plan, contact the experts at Prescott Tax and Paralegal at 928-778-3113. For more information on services we offer, please visit http://www.PrescottTax.com.

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Prescott Tax and Paralegal, your estate planning experts in Prescott, discusses when the State can get your stuff

You may have heard the myth that the State will get your stuff if you don’t have a Will.
In reality, whether or not you have a Will has little to do with when the State obtains property. Prescott Tax and Paralegal wants our Prescott clients to know what to do to protect your assets.

You may be surprised to know that you can be very much alive and the State can get your property. Arizona adopted the Unclaimed Property Act, found in A.R.S. § 44-301 through 339. The Act specifies time limits for determining when property has been “abandoned” by the owner. These time limits vary from one year to 15 years.  Three years is the most common.

For example, a money order which is not cashed within three years is presumed abandoned. The issuer of the money order then files a report with the State claiming that the property is abandoned. The abandoned property is turned over to the State.  The State must publish a list of abandoned property, and give the rightful owner roughly three years to claim the property. After three years, the State may sell the property and the prior owner can no longer redeem it.

Are you curious if you have abandoned property?  There are two good online sources where you can check:

• www.missingmoney.com (the official search site) and
• www.azunclaimed.gov (a resource for questions). When doing a search, start with your last name and your state. You can then refine that search by using your last name and first initial, and finally your last name and complete first name. If you locate property belonging to you, you can click a link to obtain the form to claim your property.

To avoid the possibility of the State becoming the owner of your property, consult with an estate planning professional to make sure your assets are protected. Prescott Tax and Paralegal has years of experience preparing estate plans in Prescott, and can help prepare the proper documentation for you and your family. To schedule a consultation, call 928-778-3113. For more information on services we offer, please visit http://www.PrescottTax.com.

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Prescott Tax and Paralegal, your estate planning experts in Prescott, dispels the myth that the State will get your stuff

Do you have a will? If not, you may be worried about what will happen to your property when you die. Because there is so much misinformation surrounding estates, Prescott Tax and Paralegal wants our Prescott clients to know the facts about probate.

When folks come to see us for a consult, they often say something like, “I better do a Will or the State will get my stuff when I die, right?”

Myth: The State will get your stuff if you don’t have a Will.
Truth: It is unusual for the State to become the beneficiary of your property when you die.

Arizona laws specifically address who will get your property if you do not have a Will. Laws covering probate are found in A.R.S. § 14-2101 to 2114.

Here’s the brief version (which does not include all the complexities):

• If you are married, your spouse and your children from a prior relationship inherit.
• If you are single, but have children, your children inherit. If a child died first, then that child’s children (your grandchildren) inherit in place of the deceased child.
• If you are single, without children or grandchildren, then your parents inherit.
• If you are single, without children, and your parents are deceased, then your siblings inherit; if they are deceased, your nieces and nephews inherit.
• If you are a single, orphaned, only child, then your living grandparents inherit.
• If you are a single, orphaned, only child, with no living grandparents, your aunts and uncles inherit; if they are dead, then their living descendants inherit.

Are there are times when the State will get someone’s property? The answer is yes, but it is unusual. Prescott Tax and Paralegal is your local Prescott resource for estate planning and we can help you prepare the right documentation to protect your assets. For legal advice, we can refer you to an attorney. For legal documentation preparation, or to schedule a consultation, call 928-778-3113. For more information on services we offer, please visit http://www.PrescottTax.com.

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Your local Prescott paralegal experts, Prescott Tax and Paralegal, explain the importance of powers of attorney, including mental health powers of attorney

Often as parents age, children become concerned because the parent may become forgetful, or worse, be diagnosed with dementia or Alzheimer's. Both dementia and Alzheimer's fall under the umbrella of ailments that may require a Mental Health Care Power of Attorney. Being prepared to help loved ones who are suffering from dementia is often easier when they have properly prepared their Estate Planning Documents prior to being diagnosed.

A Durable Mental Health Care Power of Attorney is a legal document that names someone as the “agent” to take care of these matters. Having this power of attorney in place will save your loved ones money and difficulty down the road.

The first step is choosing an “agent” to care for you if you can no longer make decisions for yourself. You need to make sure whoever you choose to act on your behalf has your best interest at heart. This person(s) has the authority to decide if you need to be in a facility or if you can live outside of care, so it is very important.

There are two different POAs in the state of Arizona. One deals with mental health issues and the other deals with health care. Just having a Health Care Power of Attorney will not be enough if the person needs to make mental health treatment decisions. In that case, they will also need a Durable Mental Health Care Power of Attorney. In the Durable Mental Health Care Power of Attorney, you can authorize your trusted agent to give you treatment that you say you don't want, and to place you in a level 1 facility which is a locked facility. 

Those two choices frighten many people. However, the reality is that when a loved one is diagnosed with dementia at some point it may become necessary to place that person in a locked facility to keep your loved from wandering and dying from exposure. As the condition of a person with dementia worsens, so does troubling behavior such as agitation and paranoia. Patients are often prescribed anti-anxiety medication to relieve the symptoms, however because of the paranoia, they believe that someone is trying to poison them and state that they don't want the necessary medication.

The implications of not preparing with a Durable Mental Health Care Power of Attorney would be putting your family in a position to secure treatment through an emergency guardianship which can be very expensive and a hassle, at the least.

Rememberyou must create the Durable Mental Health Care Power of Attorney while you are still able to make decisions. A big mistake people make is trying to do it after a diagnosis of dementia, which is generally too late. The best thing to do is to have one, and hope it is never needed.

If you believe it wise to look at your estate planning and make sure that a Durable Mental Health Care Power of Attorney is included, Prescott Tax & Paralegal is here to help. We are your local paralegal experts in Prescott, we prepare legal documents for any legal matter, and offer assistance in filing documents with the appropriate agency. We also provide procedural information for our clients, and can refer you to an attorney when needed. To set up an appointment, give us a call at 928-778-3113. Learn more about all the services we offer at http://www.PrescottTax.com.

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Prescott Tax and Paralegal Looks at Pros and Cons of a Living Trust in Prescott

Most of you have probably been invited to one or more estate planning seminars discussing living trusts. Like everything in life, one size does not fit all. Prescott Tax and Paralegal would like to look at some items that need consideration when working on your personal estate planning in Prescott.

First, let’s talk about what a living trust actually is and what it does. A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust. A "living trust" is simply a trust you create while you're alive, rather than one that is created at your death under the terms of your will. The main advantage of making a living trust is to spare your family the expense and delay of probate court proceedings after your death. But do you really need a trust? Let’s look at the pros and cons.

Pros:

• First of all, should you become incapacitated, you have spelled out how the trustee should manage your trust assets in the terms of the document. Managing your assets this way is far superior to relying on a power of attorney document because:

• It will be recognized in all 50 states

• If the original trustee has died or become incapacitated, it will contain detailed provisions for who should be the successor trustee and how they are to be selected

• It will be recognized by banks and brokerage houses as valid, unlike many powers of attorney (which are frequently challenged or ignored by such firms, rightly or wrongly).

• Upon your death, the trust acts like a will and spells out who gets the trust assets, but it avoids the probate process.

• This ensures privacy of your distribution choices, usually avoids dealing with the court system and saves on attorney fees.

Cons:

• If your assets will avoid the probate process as they currently stand, then this approach may be redundant for your situation.

• Many people pay thousands of dollars to an attorney to draw up a detailed living trust for them, but then they fail to transfer title to their assets into the name of the trust (called “funding” the trust), or they fail to keep up with the proper titling after they purchase new items or real estate. In such cases, they are not taking full advantage of the benefits of the arrangement.

• Trust administration can be time consuming and costly depending upon the complexity of the distributions after death.

• After the Trust creator dies, the Trust pays income taxes at a higher tax rate than individuals and reaches the highest tax bracket of 37% when the Trust income reaches $12,501 (2018 tax rates)

Successful estate and trust planning is crucial to offering your family and loved ones financial security and peace of mind during a time of loss. In order to eliminate complications and ensure your wishes are followed, it's important to have a detailed plan as to how your assets will be distributed. For help in this process, or if you have questions about living trusts and estate planning in Prescott, contact Prescott Tax and Paralegal at 928-778-3113. To learn more about the services we offer, please visit our website at http://www.PrescottTax.com.

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