Where There’s a Will There’s a Trust

Estate planning is a general concept involving the transfer of or control of property and assets to the proper beneficiaries and heirs in the event of death, incapacity or for a myriad of other objectives that may include asset protection, estate tax elimination/ reduction.  Transfer may occur during lifetime or death. 


When should young couples consider Estate Planning? What is it and what will proper planning do for us? Without planning or, at least some knowledge of the laws, an unforeseen catastrophic occurrence may cause avoidable financial and personal hardship.


Level I Planning  The least expensive planning is titling property as Joint Tenants with Right of Survivorship.   The Spouse is protected in the case of death.  Property transfers automatically upon presentation of a death certificate as is available only to married couples.  Otherwise known as the “poor man’s will” there is no need for an attorney.  However any asset that is “sole and separate” property may be subject to probate which can last an average of 13 or more months.  At the second death, the State has a will for you that may have no relationship to personal objectives and is often very expensive.


Level II Planning   If there are children, the minimum planning advisable involves simple wills.  Sometimes referred to as “I love you wills”, each spouse will transfer his or her assets to the other in case of death or incapacity.  The parents will also name guardians and or conservators (to handle the insurance and other assets) in the event of a common disaster.  Simple wills are also “invitations to probate” as the court must determine the true intent of the Testator (will maker) should there be any questions.  Probate costs in Arizona generally run between 3% and 5%.


Level III Planning   Initially the most expensive, this planning involves the drawing of a Trust Document.  If there are children by a previous marriage who will need protection, if there are assets or business interests that may be exposed to creditors, if you are concerned that children may enroll in Harley Davidson instead of Harvard if they receive too much money at once, this may be a more prudent approach.  Trusts are flexible, private (as opposed to simple wills) and will, if properly drawn, avoid probate.


Which strategy is right for you?  Talk to your advisors and parents.   For example, what have your parents done?  If they have put off discussing these options or strategies, perhaps just such a discussion is in order.  After all, like it or not, eventually you will be the ones who will have to deal with their issues whether they’ve been resolved or not.



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