Living Trusts in Arizona: What you Should Know Before Making One

A crucial part of estate planning includes simplifying and reducing the size of your estate in order to save on costs and minimize the need for probate.

Posted on December 20, 2021 by Luisa Rollenhagen
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Estate planning is an important part of life and something that should be done sooner rather than later. A crucial part of estate planning includes simplifying and reducing the size of your estate in order to save on costs and minimize the need for probate. There are many options available when it comes to doing this, and one of the potential ways in Arizona is to create a living trust.

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What is a Living Trust?

A living trust is a tool for estate planning that lets you transfer the ownership of your assets to a trust, while still maintaining control of them and having access to them during your life.

When you've passed away, your beneficiaries will have the assets in your living trust transferred to them (as long as you’ve named them as beneficiaries to the trust). This kind of estate planning helps you to make sure that your assets end up where you would like them to, while also avoiding lengthy probate court proceedings.

What are the Benefits of a Living Trust?

One of the most appealing benefits of a living trust is the chance to avoid probate fees. This is possible because the probate courts aren't required to intervene when a valid living trust is in effect. When it comes to assets that belong to the estate and aren’t held in a trust, however, the probate court oversees the settlement process of those assets, which usually results in fees having to be deducted from the value of the estate.

Another key benefit of a living trust in Arizona is the impact it can have on your tax bill. As the ownership of your assets is moved into a trust, they'll not be counted as part of your estate when tax season comes around. It's important to remember that while you technically no longer own the asset, you'll still be able to use it fully.

In the event that you become seriously ill or incapacitated, your trustee—meaning the person who’s been given the right to manage the trust on your behalf—will be able to take control of your trust immediately and ensure that the assets in the trust are distributed according to your wishes. A trust streamlines the entire settlement process in the most efficient manner - by handing over responsibility to your trustee. It also helps to keep your finances private and out of the public eye.

What are the Drawbacks of a Living Trust?

The primary downside of a living trust in Arizona is the cost that it can take to set it up. A trust doesn’t require legal assistance to set up, but it can be complex and must cover a lot of bases and long-term scenarios. A trust can also be more complex than a will, especially when handing over legal authority to a trustee, and you’ll want to ensure that everything is ironclad.

Clear Estate - Your Number One Resource

Here at Clear Estate, we understand that estate planning can be complex. Whatever the size of the estate, we can provide you with the absolute best advice on how to manage it, including assistance on trusts and other tools for estate planning. Contact us today for a free consultation.