Wills and Trusts – Some Frequently Asked Questions
J. Emery Barker
- What is a living trust?
A living trust is an estate planning tool used to avoid a probate, save estate taxes, manage an individual's assets during life, and distribute the assets upon death. A living trust is flexible and can be changed by the maker. Assets and funds can be put into or taken out of the trust by the maker, beneficiaries can be changed, etc. However, at death, the trust becomes irrevocable and cannot be changed. There are various types of trusts and each has its own advantages and disadvantages.
- Does an attorney have to prepare a trust?
Trusts are sold by insurance agents, tax and financial planners, banks, investment managers, and others. These people may not be qualified to assess a client's needs and give them legal advice. Many clients receive misleading information from well-meaning salespeople. A trust is an important document with legal and tax implications. If it is not prepared properly, problems could arise in the future that would involve time, money, lawyers, and maybe even court action to straighten things out.
- Are bank accounts and safe deposit boxes seized by the bank when the customer dies?
The decedent's last will and any insurance policies may be removed from a safety deposit box by the personal representative appointed by the will or court. An inventory is taken of box contents and that inventory is provided to the Arizona Department of Revenue. Once that has been done, an authorized personal representative, trustee, or other person may have access to the contents. If an account was jointly held, then the other owner(s) may still access the account. If an account was held only in the name of the decedent, then the funds in that account can be made available to the personal representative.
- How long does it take before assets are distributed?
An informal probate can be started within a week after death. Probate is the legal establishment of the validity of a will. Before assets are distributed, the personal representative must be sure that certain expenses and taxes are paid. The law provides four months for people to make a claim against an estate, but it is not always necessary to hold off on distribution for that long. Some assets may be liquidated, rather than distributed. Some assets may be divided instead of distributed as a whole. Every case is different.
- Can my relatives or others contest my last will or my trust?
Yes. A trust or a will is not a guarantee. That's why it is important to have competent attorneys prepare the documents to help avoid possible problems in the future.
- Will I have to go to court?
Informal probate procedures are used by most estates in Arizona, and these do not require formal court approval. There is always a chance that the courts may become involved if a trust or will is contested.
- How do I know whether to do a trust or a will?
You should consult an attorney and/or accountant experienced in estate planning to determine what planning devices are best for your situation. If you use services from someone not trained in estate planning, be aware that you may later have to fix any problems they create for you. Giving advice on trusts and preparing trusts constitute the practice of law, and a non-lawyer cannot obtain malpractice insurance for practicing law, which may leave you without recourse if serious problems arise.
When you discuss estate planning with an attorney, be sure to disclose all of your assets. This information is protected by attorney/client confidentiality. However, if you talk to trust salespersons, they are not obligated to keep your financial information confidential.
Estate planning must be individualized for your needs. Be wary of "generic" plans. Ask a lot of questions and if they are not answered to your satisfaction by a salesman, insist on speaking with an attorney.
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