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In Estate Planning, What is a Trust?

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Do You Need to Establish a Trust?

To set up a trust in the State of Arizona, the first step is scheduling a no-cost initial consultation with an Arizona trust attorney.

If you own a business or a home in this state, have a family, or own significant properties and assets, setting up a trust may be the best way to protect your properties and assets during your lifetime and to preserve your properties and assets for your loved ones after you’ve passed away.

Revocable and irrevocable trusts are now two of the most popular tools for estate planning. When you establish a trust, an Arizona trust lawyer can help you examine your options and help you make the informed choices that are right for you and your family.

Why Should You Set Up a Trust?

Your trust is a financial and legal document that allows you to name a trustee who will manage your properties and assets after your death and on behalf of your beneficiaries. Your trust can specify exactly how and when your assets and properties are distributed to your beneficiaries.

The terms and conditions of your trust should be spelled out carefully in the text of the document, and the document should indicate who will inherit your assets and when. While each trust is unique, every trust is either an “irrevocable” trust or a “revocable” trust.

What is Probate and Why Should It Be Avoided?

If you have prepared a trust, your beneficiaries and your estate will avoid probate, and your beneficiaries will receive their inheritances sooner than they would if you left only a will. Additionally, your beneficiaries won’t have to face any interference from a probate court.

If you have prepared only a will, a probate proceeding will inventory and evaluate your estate’s properties and assets. An estate’s outstanding taxes and debts are paid during probate, and any remaining assets are transferred to the beneficiaries in accordance with the directions in the will.

Probate should be avoided for several reasons. It’s lengthy and ties up an estate for months. It’s costly, and it can significantly lower an estate’s value. Probate proceedings are part of the public record, so if privacy is important, you should establish a trust and avoid a probate proceeding.

Should You Set Up a Revocable Trust?

With a revocable trust, your beneficiaries and your estate will avoid a probate proceeding, and throughout your lifetime, you will remain in control of the assets and properties in the trust. Revocable trusts may be revised, amended, or dissolved if circumstances or your wishes change.

You may name yourself as your revocable trust’s trustee, but you will also designate a successor trustee – someone who will manage the trust after you pass away or should you become incapacitated. Your revocable trust automatically becomes irrevocable at the time of your death.

If your current revocable trust has not been recently updated, or if the trust was prepared in a different state, an Arizona trust attorney should review your trust to ensure that it’s up-to-date, still meets your needs, and complies with Arizona’s financial laws and requirements.

Should You Set Up an Irrevocable Trust?

Irrevocable trusts shield your assets and properties from probate courts and estate taxes, but irrevocable trusts cannot be revised or dissolved after they go into effect. When you move assets and properties to an irrevocable trust, you no longer retain control of those assets and properties.

However, in some cases, an irrevocable trust will reduce the assets that may be subject to an estate tax. An irrevocable trust also relieves you of owing taxes on any income produced by that trust’s assets (although the distributions of that income may have tax ramifications).

Additionally, the assets in your irrevocable trust are shielded from any legal judgments against you. Your irrevocable trust can also direct your trustee to terminate or halt temporarily any distributions to a beneficiary who files for bankruptcy or becomes a defendant in a lawsuit.

What’s Right for You?

For most people who are planning their estates in Arizona, a revocable trust’s flexibility makes it the best estate planning tool because you retain control of the assets you place in the trust. But depending on your purposes or circumstances, an irrevocable trust may be a better option.

While every trust is either a revocable trust or an irrevocable trust, specialty trusts may be prepared to meet particular circumstances and needs. An Arizona trust lawyer can explain these various specialty trusts and suggest if one of these options may be right for you and your family:

  1.  Asset Protection Trusts
  2.  Charitable Trusts
  3.  Life Insurance Trusts
  4.  Living Trusts
  5.  Marital Trusts
  6.  Special Needs Trusts
  7.  Testamentary Trusts

Should You Have a Comprehensive Estate Plan?

Anyone in Arizona who has worked hard and saved should put a comprehensive estate plan in place. Your estate plan should protect your assets and properties, lower your taxes, help you prosper in the years ahead, and provide financially for your loved ones after you pass away.

The details of your estate plan must take into account your financial circumstances and your family’s needs. If people you love are counting on you, it’s time to consult an estate planning attorney who can provide practical advice and help you begin the estate planning process.

Depending on your situation, your estate plan may include an irrevocable or revocable trust and/or a last will and testament. It may also include financial and medical powers-of-attorney in case you are unable to make your own financial and medical decisions.

Begin Planning Your Estate Now With Turner Law Firm

Find out more about trusts and estate plans in the State of Arizona – or begin the estate planning process now – by scheduling a consultation with Turner Law Firm. We offer insights and advice based on our real-life experience preparing trusts and planning estates.

After we discuss your goals and your financial situation, Turner Law Firm can prepare an irrevocable trust, a revocable trust, or a full estate plan that protects your properties and assets and provides financial security to your family members now and for years to come.

Turner Law Firm serves clients in Phoenix, Mesa, Glendale, and across the greater Phoenix area. To learn more, to prepare a trust, or to begin planning your estate, contact Turner Law Firm now – by calling 480-618-1221 – to set up your initial estate planning consultation.

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