Yahoo Finance I Live in Arizona. Do I Need a Living Trust or Will (Or Both)?
A living trust can help you to manage your assets during your lifetime and beyond. A will, on the other hand, is specifically designed to allow you to direct the distribution of your assets after your death. Where you live and the amount of assets that you have can influence whether you need to include one or both in your estate plan. Understanding how they compare can help you decide if you need a living trust vs. will in Arizona.
Talking to a financial advisor can help you create a comprehensive plan for managing your money.
Understanding Living Trusts in Arizona
A living trust or revocable trust is a legal arrangement in which one person, called the grantor, transfers assets to the control of a trustee. The trustee can be an individual or an entity, like a bank or wealth management company. The trustee’s job is to manage the assets in the trust on behalf of the trust’s beneficiaries, according to the grantor’s wishes.
To create a living trust in Arizona, you’ll need to first establish the trust on paper. That means specifying:
Who will act as trustee
Who the trust beneficiaries will be
How you would like assets held in the trust to be managed
Trust documents will need to be signed and notarized. To finalize an Arizona trust, you’ll need to “fund” it which means transferring assets to its ownership. The types of assets you might choose to place in a living trust in Arizona can include real estate, rental properties, bank accounts, vehicles, antiques or family heirlooms, artwork, collectibles and other valuables.
Once you’ve transferred assets to the trust, the trustee is responsible for managing them. In Arizona, trustees must adhere to a fiduciary duty, meaning they must act in the best interests of the trust beneficiaries at all times. A trustee who misappropriates funds from the trust or uses it for their own gain in any other way may be removed for committing a breach of fiduciary duty.
As long as you’re living you can change the terms of a revocable trust. That’s not disallowed under Arizona law. However, once you pass away your trust will become irrevocable. At that point, the trust terms cannot be changed.
Arizona Last Will and Testament
A last will and testament is a legal document that allows you to outline how you’d like your assets to be distributed after you’re gone. Every state has its own requirements for what constitutes a legally valid will.
In order for your will to be valid in Arizona, these conditions must be met:
The will maker (testator) must be 18 years old or older and of sound mind.
Wills must be written and signed by the individuals who create them.
Wills must be signed in the presence of at least two competent witnesses, preferably people who have no claim on the willmaker’s estate.
Arizona law allows for holographic or handwritten wills. For this type of will to be valid, the testator must write it in their own hand and sign it. Holographic wills can be witnessed but this is not a requirement for them to be valid.
If you choose to do so, you can make an Arizona will self-proving. That means having it notarized to attest that it’s authentic and has been executed in accordance with state law. Arizona does not recognize oral wills as being legally valid.
Living Trust vs. Will in Arizona Key Differences
There are several differences between living trusts and wills in Arizona with regard to what they’re designed to do and how they handle the disposition of your assets.
A living trust allows you to transfer assets to the control of a trustee and direct how they’re managed while you’re still living. Should you decide to do so, you could change the terms of the trust at any time. That might include adding or removing assets, changing beneficiaries or choosing a new trustee to replace the current one.
Wills, on the other hand, don’t take effect until you pass away. A will would have no impact whatsoever on how your assets are managed during your lifetime. State law does allow you to change a will, either by adding a written codicil or revoking it entirely. To revoke a will in Arizona, you can either do so in writing or by physically destroying the will and all copies of it.
Living trusts are designed to give you a greater measure of control over how assets in your estate are handled. For example, you might write provisions into the trust document stating that your children cannot receive their inheritance until they finish college or turn 30. Or you might use a trust to create a legacy of charitable giving to a favorite charity.
A trust does not, however, replace a will as it only covers property that has been transferred to it. A will could cover all property that’s held in your name when you pass away. Wills in Arizona are subject to probate, which is a court process in which a deceased person’s estates are inventoried and distributed to their heirs. Arizona trusts are not subject to probate if they are fully funded at the time of the grantor’s death.
Living Trust vs. Will in Arizona: Which One Do You Need?
Estate planning experts generally recommend having a will at a minimum to avoid intestacy. Intestacy means that someone passes away without a will. In that scenario, state inheritance laws determine how their assets are divided.
In Arizona, inheritance laws give precedence to spouses and children first, ahead of parents or siblings. A surviving spouse is entitled to the entire estate when there are no children, or the only children are those they had with the decedent. State law dictates a different division of assets, however, when there are children from another relationship.
Having a will in place can help your loved ones avoid any potentially complicated questions over who should get what when you pass away. So, if you don’t have one yet, you might consider taking the next step and making one.
A trust, meanwhile, may not be necessary if you have a fairly simple estate or minimal assets. The need for a trust increases when there are more assets at play or when you’d like to leave instructions as to how your estate should be managed during your lifetime and beyond. A financial advisor can help you to decide whether you might need to add a trust to your estate plan, based on the type of assets you have and your overall goals.
Bottom Line
Comparing a living trust vs. will in Arizona can help you put each one’s function into perspective. While financial experts generally recommend that everyone has a will, trusts are optional. Knowing how each one works can make it easier to decide if setting up a trust might be necessary.
Estate Planning Tips
Talking to a financial advisor can help you gain a better understanding of what might be lacking in your estate plan or your overall financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re ready to make a will, you could hire an estate planning attorney to help you. But if you have a straightforward estate, you might make a will yourself using an online software program. There are a number of different online will makers to choose from and comparing the features and costs can help you choose the one that best fits your needs.
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