If you have a Trust in the state of Arizona, you should be aware of the Arizona Trust Code (ATC) law change that was implemented in 2009. Although this law has been in effect for some time, we find that many individuals still have not updated their documents, and some are not yet aware of the need. While there are several changes created by the ATC, below you will find the changes that have the strongest effect upon your documents.
Unless your documents are updated, your existing Certificate of Trust will not provide you the privacy that is now available with the new Certification of Trust. Without the required changes, financial institutions, title companies and lenders can demand a complete copy of your trust, with all your personal information contained therein. They can also refuse to title assets to your trust. This can trigger the necessity, expense, delays and exposure of probate, conservatorship and guardianship.
In addition to the issue of the new Certification of Trust requirements, the ATC requires that an annual reporting be made to beneficiaries when your trust, or any portion of it, becomes irrevocable. Upon the death of a spouse, his or her share becomes irrevocable; upon the death of a single person or the surviving spouse, the entire trust becomes irrevocable. This new requirement will affect all survivors and the trustees, and it can also affect your beneficiaries and trustees if you become incapacitated. However, you can amend your trust to opt out of the reporting mandate.
The above-referenced reporting is a very detailed annual report that must include a listing of the trust property, liabilities, receipts and disbursements, including the source and amount of the trustee’s compensation, a listing of the trust assets and their respective market values. The report must be given to all the qualified beneficiaries, and if a beneficiary is a charity, it must be given to the Attorney General as well. Almost all of the clients with whom we have met do not wish to regularly disclose this information, and see this strict requirement as an invasion of their privacy.
Finally, for the positive news, the ATC allows you to add decanting provisions to your trust. This provides for much greater protection and flexibility for you and your beneficiaries when any portion of your trust becomes irrevocable. Incorporating the new provisions will allow amendments to your trust to comply with changes in the law or significant changes in circumstances even after any part of your trust becomes irrevocable.
We strongly recommend that you call 888.222.1328 to schedule an appointment to discuss the significant impact of the Arizona Trust Code on your estate plan.