The purposes of an estate plan are to: (i) plan for the management and disposition of your property while you are alive (including if you become incapacitated) and after your death; and (ii) plan your health care if you become unable to take care of yourself.

 

Before you can implement you estate plan, you must consider and answer the following important questions:

Personal Representative. Who do you want to name as your first, second and third choices to be the personal representative of your estate? Your personal representative is responsible for collecting your assets after death, administering your estate, opening a probate if necessary, distributing property to your beneficiaries, completing your last tax return and paying any taxes and other debts of your estate from your probate assets.

Guardian. If you have minor children, who do you want to name as your first and second choices to be the guardian(s) of your children? A guardian is responsible for raising and caring for the minor children.

Conservator. If you have minor children, who do you want to name as your first and second choices to be the conservator(s) of your children? A conservator is responsible for administering and accounting for any property owned by the minor children.

Title to Property. How should you and your spouse hold title to your assets? Should it be as community property, community property with right of survivorship, joint tenancy or another form?

Healthcare. If you cannot care for yourself, who do you want to make decisions about your healthcare?

Property Management. If you cannot manage your financial affairs, who do you want to give the power to manage your financial affairs and spend your money?

Beneficiary Designations. Who should receive the proceeds of your life insurance policies and your retirement benefits? Make sure you have properly designated your primary and alternate beneficiaries for all insurance policies and retirement plans.

Living Trust. Should you create a revocable trust to provide for a spouse or children, federal estate tax savings, asset management or to control property distributions until children are mature and able to manage your property? Property left to family members or your heirs in trust is one of the best asset protection methods that money can buy. A well drafted trust can protect a child's inheritance from the child's creditors, ex-spouses, and bankruptcy.

Federal Estate Taxes. Is your estate large enough to be subject to federal estate taxes? If so, what can you do to eliminate or reduce your potential estate tax liability? If your estate may owe federal estate taxes, how will the taxes be paid?

 

 

A basic estate plan typically consists of the following legal documents:

Last Will & Testament. A Last Will & Testament is the legal document in which you identify the beneficiaries who will receive your property after your death. The beneficiaries can be people and/or charities or other organizations. The Will also names a person or company to be your personal representative to administer your estate. Your personal representative manages your affairs and is responsible to see that your property is distributed as provided in the Will. The Will may also name the guardian(s) of your minor children, the conservator(s) of property that belongs to minor children, make specific gifts of property and include burial instructions.

Living Will. A living will is commonly described as the document that directs when you want to live, and when you do not. In your living will, you may declare that if you are in a terminal condition, you do not want your life to be prolonged and do not want life-sustaining treatment, beyond comfort care, if that treatment would serve only to artificially delay the moment of your death. Your Living Will may also state that if you are in a terminal condition, you do not want cardiopulmonary resuscitation, drugs, electric shock, artificial breathing, artificially administered food and fluids, or to be taken to a hospital if at all avoidable.

General Power of Attorney for Financial Matters. This a document that grants one or more people the power to manage your financial affairs if you become unable to manage your own financial affairs. The holder(s) of your power of attorney have the legal power to make binding decisions that affect your money, property, and other assets, including, paying your bills and spending your money. Without a power of attorney, your family may be required to obtain a court-supervised conservator to manage your financial affairs. A power of attorney terminates on your death. It is commonly referred to as a “Durable Power of Attorney” or “Durable Financial Power of Attorney.”

Power of Attorney for Healthcare. This document names a person or persons to hold the power to make healthcare decisions (including mental health care decisions) for you if you are unable to make those decisions for yourself. It also grants your agent permission to obtain your medical information in compliance with the federal HIPPA laws. It is commonly referred to as a “Medical Power of Attorney”.

Prehospital Medical Care Directive. This document is used to notify your doctor and emergency medical technicians or hospital emergency personnel that you do not want to be resuscitated if you suffer cardiac or respiratory arrest. It is commonly referred to as a “DNR” or “Do Not Resuscitate” or “Orange Form.” In Arizona, it is an orange form that is placed on a person’s hospital bed if in a facility or on the refrigerator if the person resides at home.

Trust. Some estate plans also include a trust. A trust is a legal entity where one person (known as the “trustee”) controls property given by another person (known as the “grantor” or “trustor”) for the benefit of someone else (known as a “beneficiary”). Although it is not a requirement, with most trusts, the grantors are also the trustees during their lifetimes, as long as they remain competent. Grantors name successor trustees to take over if they become incompetent or die, and to distribute the property after they die. This document is commonly referred to as a “Revocable Trust” or a “Living Trust.” There are many kinds of trusts and each one has advantages if used for a specific purpose.

 

 

Almost everybody should have a Will and/or a revocable living trust. There are many reasons to have a Will. A Will allows you to direct where your assets will go when you die. You will also be able to select a personal representative to pay your final bills and taxes and distribute the assets to your beneficiaries. Another important reason to have a Will is to protect minor children. A Will can include direction for the appointment of a guardian for a minor child or children. A Will can also include a trust with a named Trustee to receive and administer your estate for the benefit of minor children or disabled beneficiaries who are unable to manage their funds and/or who may be receiving needs-based public benefits such as Medicaid (ALTCS) or SSI.

If a person dies without a Will, Arizona law dictates where your assets will be distributed. This is called the law of intestate succession. In Arizona, if a married person dies without a Will, the deceased spouse’s estate will pass to the surviving spouse if the decedent’s surviving children were all born of the most recent marriage. If there are surviving children who are the decedent’s children from a former marriage, then all of the decedent’s children receive an equal share in one half of the decedent’s separate property and all of the decedent’s share of the community property. The remaining one half of the decedent’s separate property passes to the surviving spouse, but none of the decedent’s community property goes to the surviving spouse.

 

A Will prepared in another state, known as a foreign Will, is valid if it complies with the Arizona requirements for a valid will or it was a valid Will under the laws of the state where it was executed. A Will executed in Arizona is valid if it is a written document signed by the creator of the Will who is at least 18 years old, and is witnessed by at least two people within a reasonable time after the Will was signed.

A “holographic” Will is also valid if it is in the testator’s handwriting and signed even if it is not witnessed.

 

A revocable living trust is a legal document into which you transfer the title of all your major assets, such as stocks, bonds, and real estate. The revocable living trust names you as the trustee and beneficiary, thereby allowing you complete control of all your assets. Upon your death, there will be no need for probate because, with all of your assets in the name of the trust, there are no assets left in your name to probate. The person named in your trust as successor trustee will gain control of your assets and distribute them according to your instructions. With a revocable living trust, your family will not have to endure a probate.

 

It depends.

A revocable living trust is a document in which you as the creator of the trust, called the trustor or settler, appoints a trustee (usually you) to manage the trust assets for the beneficiary (also usually you until you die). If your assets are properly titled to your trust, your loved ones can avoid the court probate process when you die. A trust also can avoid estate taxes for larger estates for married persons. Finally, a trust provides more protection than a power of attorney provides from financial exploitation if you become incapacitated.

 

A financial power of attorney is a document that appoints a person to conduct your financial affairs for you, while you are alive. When you sign such a document, you, the principal, must have the mental capacity to understand the document at the time you sign it. The person you appoint to handle your financial affairs is the agent. The power granted to your agent is limited by the terms of the document.

The document can be “general” which gives the agent broad authority regarding many different financial matters or it can be limited to specific authority. For example, a principal could grant his agent authority to sell the principal’s car during a limited time frame.

A financial power of attorney must be “durable” if it is to be effective during a time when the principal becomes incapacitated and unable to make his own financial decisions. Otherwise, the power will cease to be effective upon the principal’s incapacity. To be durable, the document must include language to the effect that the power survives incapacity or is effective even when the principal is disabled.

A financial power of attorney can also be “springing” meaning that it becomes effective only when the principal becomes incapacitated. The document must set forth the criteria for determining incapacity. Usually incapacity is determined by a physician’s evaluation, which must be set forth in writing.

 

No, only your mother can sign the Power of Attorney.

An individual must be competent to sign the Power of Attorney. If your mother has assets in her name alone it may be necessary for a conservator to be appointed by the probate court for you to gain access to her assets and otherwise manage her financial affairs.

If your mother is not competent and there are medical decisions to be made, under Arizona law you, or if there is more than one child, a majority of the children may make most medical decisions even if there is no living will or health care power of attorney, but you may not authorize the withdrawal of a feeding tube or consent to inpatient psychiatric hospitalization.

 

No, a living will gives your family and your health care providers instruction or direction regarding the type of care you want or don’t want if you cannot make health care decisions on your own. A Health Care Power of Attorney appoints an agent to make medical decision for you in the event you are unable to speak for yourself. The agent appointed under your Health Care Power of Attorney must make decisions based upon what you would have wanted as reflected in your living will or otherwise.