Estate Planning in Phoenix, Arizona involves two (2) principal objectives: (a) articulating your wishes as to medical care or end-of-life care and authorizing others manage your affairs during periods of incapacity; and (b) specifying your wishes as to the distribution and management of your assets after death; using the strategies and legal documents discussed below.
Durable General Power of Attorney
Authorizes another person, called an attorney-in-fact, to act on your behalf as to your financial — non-healthcare — affairs should you become incapacitated and unable to do so yourself. In order to be valid, a durable general power of attorney created pursuant to Arizona law must meet the requirements set forth in A.R.S. § 14-5501.
Healthcare Power of Attorney
Authorizes another person to make medical treatment decisions on your behalf, even if you are not incapacitated. In order to be valid, a healthcare power of attorney created pursuant to Arizona law must meet the requirements set forth in ARS § 36-3221.
Sets forth your end-of-life medical treatment desires. Specifically it allows you to designate those treatments that you would or would not like given to you if you become incapacitated, i.e. are not capable of directing your medical care. In order to be valid, a healthcare power of attorney created pursuant to Arizona law must meet the execution requirements set forth in ARS § 36-3221.
A will allows you to designate those beneficiaries who will receive your probate assets upon you death. In addition, a will allows you to nominate guardians for your children who are minors.
What is Probate?
In Arizona, probate is a judicial proceeding during which a personal representative – usually nominated in a will: (a) is appointed by the court, (b) gathers the decedent’s asset which are subject to probate, (c) pays valid creditor claims against the probate estate, and (d) distributes the probate estate in accordance with the terms of the decedent’s will or, if the decedent did not have a will, Arizona’s intestacy statute.
After a person’s death, property that is not held in joint tenancy or as community property with right of survivorship, does not include successor designation, or does not include beneficiary designations, generally becomes property of a fictional construct called a “probate estate”.
There are numerous ways to structure an estate to avoid probate, including the following, discussed below: revocable “living” trust; joint ownership; beneficiary deed; payable on death accounts, and beneficiary designation.
Revocable “Living” Trust
Not to be confused with a living will, a revocable living trust is a arrangement whereby you transfer ownership of your more valuable property, such as a house, to the trustee or trustees of your revocable living trust, often you and your spouse. Upon your death and if your living trust has been funded with your assets, a personal representative is not required to be appointed by the court to oversee the payment of your debts and distribution of your assets; rather, a successor trustee, nominated by you, is authorized to do so automatically.
Property, such as real estate or bank accounts, held in joint tenancy or as community property with right of survivorship, does not require probate; rather, the ownership rights of the decedent are automatically extinguished and transferred to any remaining joint tenant without the need for probate.
A beneficiary deed is used to automatically transfer title to real property upon a person’s death. Arizona’s beneficiary deed statute, A.R.S. § 33-405, requires that a beneficiary deed must be recorded prior to the death of the person who made the deed, called a “grantor”.
In addition to transferring title to real property, a beneficiary deed can be used to transfer title to motor vehicles as set forth in A.R.S. § 28-2055(B).
Payable on Death Accounts
Bank accounts can include designations that allow you to designate who will become the owner of the account upon your death. Such designations are generally revocable.
Retirement account, brokerage accounts, securities, and other assets governed by federal law generally allow you to designate who the beneficial owners of those accounts upon your death, without the need for probate.
It is important to note, however, that while retirement accounts, which are not held in trust, are potentially susceptible to the creditors of those who you designate as your beneficiaries since the Clark V. Rameker, 134 S. Ct. 2242, decision in 2014.
We meet with clients at our Phoenix, AZ satellite office — located at 2375 E. Camelback Road, Suite 600, Phoenix, Arizona, 85016 — on an appointment-only basis.
This brief overview of some important considerations associated with estate planning in Phoenix, Arizona is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.
Steve Cook is a Phoenix, Arizona estate planning attorney at Cook & Cook. Steve assists clients with nearly all types and aspects of estate planning ranging from drafting and funding revocable living trusts to developing sophisticated estate tax planning strategies such family limited partnerships. Born and raised in the Phoenix area, Steve is a graduate of the Sandra Day O'Connor College of Law at Arizona State University.