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Tucson living trust attorneys

Can I Modify a Living Trust?

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Tucson living trust attorneys

A living trust is one of the most popular estate planning tools, due in large part to the numerous and varied goals that can be furthered using a living trust. One of the primary functions of a living trust is to distribute assets to designated beneficiaries. What happens though, if you want to change how those assets are distributed or to whom they are distributed after your trust is in place? To give you some idea of how you can make changes to your trust, one of the living trust attorneys at Morris Hall PLLC explain how to modify a living trust.

Trust Fundamentals

At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor, also referred to as a Grantor or Settlor, who transfers property to a Trustee. The Trustee, who is appointed by the Trustor, holds that property for the trust's beneficiaries. A successor Trustee is also customarily appointed in the trust. A trust beneficiary can be an individual, an entity (such as a charity or religious organization), or even the family pet. A trust may also have numerous beneficiaries at the same time, as well as having both current and future beneficiaries.

Is Your Trust Revocable or Irrevocable?

The type of trust you create will directly impact your ability to modify the trust. Living trusts can be sub-divided into revocable and irrevocable living trusts. If the trust is a revocable living trust, as the name implies, the Trustor may modify or terminate the trust at any time and for any reason. An irrevocable living trust, on the other hand, cannot be modified or revoked by the Trustor at any time, nor for any reason once active. It may be possible to modify or terminate an irrevocable living trust by agreement of the beneficiaries and/or by court order, but never by the Trustor.

Consequently, if you create a revocable living trust you have the ability, as the Trustor, to modify the trust at any time. If, however, you created an irrevocable living trust, you cannot modify the trust. The terms of the trust will dictate whether the trust beneficiaries are able to do so or not; however, under no circumstances may you modify the trust on your own. If the beneficiaries cannot modify the trust, you will need to petition a court for the right to modify or terminate the trust.

How to Modify Your Revocable Living Trust

Once you have established that you have the authority to modify, or even revoke your trust, you must decide which method to use to carry out the modifications. There are three ways in which you can modify your revocable living trust, including:

  • Creating a trust amendment. An amendment is your best option when the change you wish to make is minor and the trust has not previously been amended, or the previous amendment was also minor. To amend a trust, you locate the provision or term in the original trust agreement that needs to be modified and explain in detail the change you wish to make to the original agreement on a separate document. That document, known as the amendment, is then attached to the original trust agreement. State law may require you to sign the amendment in front of a notary and may require that the Trustee sign the amendment as well.
  • Creating a trust restatement. When you have more extensive modifications you wish to make or the trust has been amended several times already, a trust restatement is generally the best option. A trust restatement involves rewriting the original trust agreement with the changes included. You must be clear that you are not revoking the original trust, but simply restating it. Like an amendment, you may need to execute the restatement in front of a notary and the Trustee may also need to sign the restatement.
  • Revoking the trust. You may wonder why you would want to go to the trouble of “restating” the original trust if it effectively requires you to rewrite the entire trust agreement. Why not simply revoke the trust and start from scratch? The reason why a restatement is almost always preferable to revoking a trust is that when you revoke the trust, all assets held by the trust revert back to the original owner and must then be transferred back into the trust once again. Doing this can have a number of unwanted ramifications, including tax consequences.

Contact Phoenix Living Trust Attorneys

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about creating or modifying a living trust, contact the experienced Phoenix living trust attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.

Estate Planning Must-Haves With COVID-19

By | Estate Planning, Healthcare documents | No Comments

COVID-19, social distancing, and sheltering-in-place brought new changes to our perspectives and the need to re-evaluate current estate planning documents (or lack thereof).  What many people don’t realize is that there are a couple of must haves for everyone, not just clients, with COVID-19 that everyone should know about and consider implementing now.  With those thoughts in mind, let’s look at these must haves.

  • Immediately review healthcare documents.

Everyone, particularly those age 60 and over or with a chronic underlying condition should immediately review their healthcare-related documents including: living will, DNR, healthcare proxy (a.k.a. healthcare power of attorney), and HIPAA release.  Additionally, everyone should immediately consider these documents for themselves if they do not have them.

Attorneys and advisors understand the need to have current documents reflecting the client’s current wishes, and an agent capable of and willing to act in addition to successors.  Apart from the obvious concerns, there are several critical issues with respect to these documents that may warrant immediate revision of these documents for many clients. These issues are specific to the current circumstances of the Coronavirus pandemic.

  • Consider changes to your document if the agent cannot be present.

Prior to COVID-19, very often an agent would physically be in the hospital or medical provider with the healthcare proxy in hand with the individual appointing them going into the hospital. Now, with social isolation and quarantines, physical presence might be impossible.

Consider adding language to all healthcare related documents where the client executing the healthcare power of attorney or proxy expressly authorizes the agent to direct medical providers by telephone, Skype, Zoom, FaceTime, email and other manner of communication.  COVID-19 is an unprecedented situation that is not contemplated in many of the forms and documents currently in use.  Adding this language should help the agent more effectively act and interact with the medical providers.

  • Review intubation prohibitions in health care documents.

Often, standard documents and forms include an absolute prohibition of intubation.  This can prove fatal if that person contracts COVID-19.  In most cases, clients’ intentions when signing these documents was that if they are in a terminal condition and there is really no hope of survival they do not want to be “hooked up to a bunch of tubes” while being kept artificially alive.  People over age 60 or with an underlying medical condition such as diabetes or COPD who contract the virus it would almost assuredly want to be intubated if it meant they would survive COVID-19.

Consequently, many people age 60 with COPD or diabetes might be very likely to survive COVID-19 if they are intubated. This situation differs from those contemplated in many living wills and other healthcare documents.  People with documents barring intubation in all circumstances should immediately revisit those documents and execute new documents that (1) expressly superseding the old documents, and (2) contain more reasonable intubation language are based upon the current circumstances.

As you can see, these must haves apply to everyone, and can help families and those affected with COVID-19 more effectively make health care decisions and obtain care.   As we’ve mentioned previously, hopefully, this “Brave New World’ is temporary, and we can all get back to our regular lives.  These must haves will allow more effective health care decision making in any event going forward.

 

Phoenix estate planning attorney

Why Should I Execute an Advance Directive?

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Phoenix estate planning attorney

A well thought out and properly drafted estate plan can go a long way toward protecting you and your assets while you are alive along with providing for the distribution of your estate after you are gone. Furthermore, it can provide you with the peace of mind that comes with knowing your wishes regarding end of life medical treatment will also be honored through the use of advance directives. A Phoenix estate planning attorney at Morris Hall PLLC explains why you should execute an advance directive.

What Is an Advance Directive?

An advance directive is a legal document that allow you to plan and make your own end-of life wishes known in the event that you are unable to communicate those wishes at some later time. State law dictates which type of advance directives are recognized in a particular state; however, there are three types of commonly used advance directives that might be recognized in a particular state, including:

  • Living Will – lets you state your wishes about medical care in the event that you develop a terminal condition or are permanently unconscious and can no longer make your own medical decisions. Your Living Will may control or guide your Agent's decisions regarding your health care treatment.
  • Health care power of attorney – allows you to appoint an Agent to make decisions about your medical care—including decisions about life sustaining treatments—if you can no longer speak for yourself.
  • Do not resuscitate order (DNR) – instructs emergency responders to not use lifesaving treatments or tools to resuscitate you if you are found, outside a medical facility, and you are not breathing.

Reasons to Execute Your Advance Directive

In case you need any additional incentive to incorporate an advance directive into your estate plan, consider the following five reasons you need one:

  • Maintaining control -- In the absence of an advance directive, someone not of your choosing could end up making critical health care decisions for you.
  • Preventing litigation -- Without an advance directive in place, your loved ones could wind up in a costly – and ultimately divisive – court battle over the right to make health care decisions for you.
  • Ensuring that your wishes are honored -- If you have strong beliefs about receiving life sustaining medical care at the end of your life, the only way to ensure that those beliefs will be honored is to have an advance directive in place that legally requires them to be honored.
  • Making things easier on loved ones -- No matter how often you have discussed the matter, your close loved ones may genuinely not remember what your wishes are regarding end of life medical treatment given the stress they are under. Moreover, if you do not wish to receive life sustaining treatment or care, your loved ones may not be capable of following those wishes because they do not want to let you go. In that case, only an advance directive can override their wishes.

Contact a Arizona or New Mexico Estate Planning Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about executing an advance directive, contact an experienced Phoenix estate planning attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

Tucson trust administrations

Trust Administration Mistakes to Avoid

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Tucson trust administrations

Although a Last Will and Testament surprisingly remains the most common method of distributing estate assets after death, the wisest choice for most people is a Trust.  The Trust, if properly created and maintained, protects against conservatorship, guardianship and death probate, saves time and money, provides privacy, and protects your beneficiaries from creditors, ex-spouses, spendthrift tendencies and other issues that can cause waste to the estate for those who create the Trust and for their beneficiaries.

When a Trust is used, the Trustor (creator) of the Trust must appoint someone to be the Trustee.  This is the person or entity that manages all the affairs of your Trust, and is almost always the Trustor who created the trust.  A successor Trustee is named to function in the event that the original Trustee cannot function.  If you find yourself in the position of Trustee, you may feel a bit intimidated at the prospect of the responsibility thrust upon you.  To help you avoid making costly errors, the Mesa Trust administration attorneys at Morris Hall PLLC discuss some of the most common Trust administration mistakes.

What Is Your Job as Trustee?

Many spouses, parents, and adult children, and others end up as Trustee without knowing anything about the job. If you have never before served as a Trustee, a good place to start is to learn some of the basic duties and responsibilities you will have as Trustee, such as:

  • Managing and protecting Trust assets
  • Abiding by the Trust terms unless they are impossible, illegal, or unconscionable
  • Investing Trust funds using the “Prudent Investor Standard”
  • Monitoring Trust investments
  • Communicating with Trust beneficiaries
  • Resolving conflicts among beneficiaries
  • Making discretionary decisions
  • Distributing Trust funds to beneficiaries
  • Approving or denying distributions if given discretionary authority
  • Keeping detailed Trust records
  • Preparing and paying Trust taxes

Trust Administrations Mistakes to Avoid

Despite the best of intentions, it can be very easy to make costly mistakes during the administration of a Trust, particularly if it is your first time serving as a Trustee. Knowing what to watch out for may help you avoid making one of these mistakes. The following are some common Trust administration mistakes you should avoid making:

  • Violating Fiduciary Duties – As the Trustee of the Trust you have a fiduciary duty to the beneficiaries of the Trust. In essence, this means that you must put their best interests first when making decisions related to the Trust assets. Not only is it a violation of your duties as a Trustee to do otherwise, but a violation of your fiduciary duty can even lead to legal action against you.
  • Creating a Conflict of Interest – The Trustee is often personally acquainted with the beneficiaries of the Trust. Make sure you do not create a conflict of interest as a result of those relationships. Keep your job as Trustee separate from your personal relationships with the beneficiaries.
  • Failing to Keep Adequate Records – A Trustee is required to keep very detailed and thorough records of all Trust business. One common mistake is for a Trustee to not take this requirement seriously because the Trust is rather informal. You never know, however, when a Trust might be involved in litigation which is why it is so important to keep records.
  • Not Retaining the Services of an Attorney – Administering a Trust often involves complex legal and financial concepts with which the average person is not familiar. For this reason alone it is always wise to retain the services of an experienced Trust administration attorney if you have been appointed the Trustee. Not only is it best for the beneficiaries of the Trust, but it is also best for you as the Trustee because you could be held personally liable for mistakes you make if you forego the assistance of an attorney.
  • Failing to Clarify Compensation – The Trustee of a Trust often puts in a considerable amount of time working on Trust duties. It only makes sense then that the Trustee is entitled to compensation for that time. Sometimes, however, a Trustee is reluctant to bring up the issue of compensation because he/she has a personal relationship with the Trustor and/or the beneficiaries of the Trust. Failing to clarify the issue of compensation in the beginning though is likely to lead to a much bigger problem down the road.

Contact a Mesa Trust Administration Attorney

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about administering a Trust, contact the experienced Mesa Trust administration lawyers at Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.

Where Should I Store My Estate Planning Documents?

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Multiple rows of filing cabinets in an office or medical establishment, overflowing with files. Narrow depth of field to emphasize the "neverending" feeling

 

You have undoubtedly heard from friends and family members all about the importance of creating an estate plan – putting a Will or Trust in place. You listened and you are finally going to make your estate plan a reality. One thing no one explained though, was what to do with your estate planning documents once they are complete. Like most people, you probably keep other valuables in your safety deposit box, making that an obvious choice. The Arizona and New Mexico estate planning attorneys at Morris Hall explain why your safety deposit box is not the best place for your estate planning documents.

What Documents Are Included in Your Plan?

The estate plan you create should be as unique and individual as you are. Nevertheless, there are some common components, strategies, and documents that are frequently found in an estate plan, including:

  • Last Will and Testament
  • Trust agreement
  • Power of attorney
  • Life insurance policy
  • Advance directive

In many cases, an original copy (meaning one with an original signature in ink) of the document in question is required in order for the document to work as intended. For this reason, your estate planning documents should be kept together in a safe place. Understandably, the first place many people think to store their estate planning documents is in their existing safety deposit box. After all, that’s probably where you keep valuable jewelry, deeds to property, stocks and bonds, and other valuables. At first glance, it makes perfect sense to put your estate planning documents in your safety deposit box as well. On closer inspection, however, your safety deposit box is not the best place for your estate planning documents.

Your Safety Deposit Box

To understand why putting your estate planning documents in your safety deposit box may not be the best choice, you need to understand some probate basics. Shortly after your death, your estate needs to go through the legal process known as “probate.” Probate serves numerous purposes, including:

  • Identifying and securing your assets
  • Authenticating your Will
  • Paying debts of the estate
  • Litigating any claims against the estate
  • Paying estate taxes
  • Distributing assets to beneficiaries and/or heirs

If you executed a Will prior to your death, you appointed someone to be the Executor, known as the Personal Representative in Arizona and New Mexico, of your estate. Your Executor is responsible for overseeing the probate process. To perform that job as intended, your appointed Executor must initiate the probate process with the appropriate court and petition the court to be officially appointed as your Executor. If the court approves the appointment, the court will issue Letters Testamentary which provide proof that the Executor has been appointed by the court and therefore has the authority to act on behalf of the estate.

The problem is that in order to initiate the probate process and secure the appointment as your Executor, an original copy of your Will must be submitted to the court. If your Will is in your safety deposit box, however, the bank won’t allow access to the box without proof that the individual seeking access is the Executor of your estate. This becomes a “chicken and egg” problem. Your chosen Executor cannot secure the necessary Letters Testamentary to act as your Executor without your Will – but he/she cannot access your Will without the Letters Testamentary.

Similar problems can crop up with other estate planning documents as well. For example, an Agent under your Power of Attorney may have the legal authority necessary to access your safety deposit box; however, if the POA document granting your Agent that authority is in the safety box, your Agent has no way to prove that he/she is your Agent.

Where Should I Put My Estate Planning Documents?

Now that you understand why your safety deposit box may not be the best place to keep your estate planning documents, the question becomes “where should I keep them?” First, it is always a good idea to let your Agent(s) and Executor know where you keep your important papers. Your estate planning attorney should keep a digital copy as a back-up. Second, your original set of documents should be kept at home in a fireproof safe (with the combination or key accessible by your trusted fiduciary) or given to a trusted family member.  Finally, where possible, copies of the documents, such as the Advanced Medical Directives and Power of Attorney, can be submitted and put on file with your doctor, hospital, and financial institutions (though, it becomes even more imperative to inform those with copies if there are changes to your documents).

Contact a Arizona or New Mexico Estate Planning Attorney

For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about what to do with your estate planning documents once they are prepared, contact an experienced Arizona or New Mexico estate planning attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.

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Morris Hall June Webinar Series

By | Uncategorized | No Comments

With so much of our time still being spent safely at home, the legal team at Morris Hall is continuing our webinar classes to help you through these difficult and confusing times. Any family or individual who has been affected by this pandemic, whether that effect is minuscule or substantial, is more than ever before pondering their future. Our lives may be filled with more than the normal amount of uncertainty, but it doesn’t mean we’re not able to find ever-important peace of mind. With proper planning and the guidance of our legal team, you can be ready for whatever life may bring. Here is a schedule of the webinars that are happening throughout the month of June.

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Albuquerque estate planning lawyer

3 Reasons You Don't Want to Die Intestate

By | Estate Planning | No Comments

Albuquerque estate planning lawyer

If you have yet to create an estate plan, you have surely had to listen to well-meaning friends and family members urge you to get started on a plan.  They may not, however, have explained to you some of the reasons why having an estate plan in place is so vital to you and your loved ones.  To remedy that, an estate planning attorney at Morris Hall PLLC explains three reasons why you don’t want to die intestate.

What Does It Mean to Die “Intestate?”

First and foremost, you need to understand some of the legal jargon related to estate planning. When someone leaves behind a valid Last Will and Testament (or a revocable living trust that directs distribution of decedent’s estate), the individual is said to have died “testate.” On the other hand, if a decedent failed to leave behind a Will, the individual is known to have died “intestate.”

Why Should I Avoid Dying Intestate?

To help provide the impetus you need to get started on your estate plan, consider the following three reasons why you don’t want to die without a plan in place:

  1. You allow the State to decide what happens to your assets. Whether you have already amassed a valuable estate, or you are just starting to acquire assets, the odds are very good that you care what happens to the assets you own. You may, for example, have family heirlooms that have been in the family for generations that you intend to pass on to someone specific. Or may you have a collection that you promised to a favorite niece or nephew. If you are a philanthropist, you may also hope to leave some of your assets to a charity that is close to your heart; or you might have strong religious beliefs and want a church or other religious organization to inherit the assets you own when you die. Regardless of how you wish to distribute your estate assets, you give up the ability to make those decisions if you leave behind an intestate estate. The state intestate succession laws determine how the estate assets are distributed. Those laws typically dictate that assets be passed down to close family members and only in the proportions established by the laws.
  2. It will take longer to administer your estate. One of the many advantages to creating an estate plan, especially a revocable living trust, is the ability to incorporate probate avoidance tools and strategies into that plan. Probate is the legal process that is generally required following the death of an individual. Probate will be costly and time consuming which is why many people actively try to avoid it. When an individual dies intestate, however, it means that no effort was made to avoid probate. Assets that could have been distributed immediately to the intended beneficiaries end up being held up in probate for months, even years sometimes.
  3. The possibility of disputes increases. Finally, leaving behind an intestate estate will increase the likelihood of disputes that could turn into prolonged litigation. When a decedent fails to leave behind even a basic Will, it is impossible to know how he intended to distribute estate assets. It also makes it impossible to know who he intended to oversee the administration of the estate. Heirs often fight over the assets and how the assets will be used. If estate assets need to be sold to pay creditors, or divided according to the intestate succession laws, heirs often disagree over which assets should be sold and how the assets are divided. Not only can these disputes be financially costly, but they can also cause a rift in the family that may never heal.

Contact a Morris Hall Estate Planning Attorney

To get started on your estate plan or if you have additional questions about estate planning, contact one of our experienced estate planning attorneys at Morris Hall, PLLC by calling 888-222-1328 to schedule your appointment today. For more information, please join us for an upcoming FREE webinar.

Phoenix estate planning attorney

Estate Planning Tips for Parents with Minor Children

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Phoenix estate planning attorney

Any parent knows that being a parent is both the most rewarding, and most terrifying, role you will likely ever undertake. The moment you became a parent your priorities undoubtedly changed. The desire to protect and provide for your children guides all your decisions, including those you make within your estate plan. To help you make the right decisions, the estate planning attornies at Morris Hall PLLC offers estate planning tips for parents with minor children.

Is a Last Will and Testament Enough?

Your Last Will and Testament probably serves as the foundation of your estate plan. While your Will can accomplish the distribution of your entire estate, you will find that it is no longer enough once you become a parent. The reason for this is that your minor children cannot inherit directly from your estate. Therefore, assets gifted to a minor in a Will must be managed by an adult until the child reaches the age of majority, which is typical 18. The problem, however, is that you lose the ability to decide who that adult is if you rely on your Will to pass down assets to your minor children. This is the primary reason why parents of minor children choose to establish a trust in addition to their Will.

While you may decide that a Will is not the ideal tool for guarding the inheritance you plan to leave for your children, your Will remains a crucial estate planning tool for parents with young children. The only opportunity you will have to officially nominate a Guardian for your children is in your Will. A Guardian is the person you would want to take care of your children in the event something happened to you, and a court was forced to appoint someone. For this reason alone, your Will remains an important component of your estate plan.

What Is a Trust and Why Do I Need One?

At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor, also referred to as a Grantor or Maker, who transfers property to a Trustee. The Trustee, who is appointed by the Trustor, holds that property for the trust's beneficiaries. All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Trustor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Trustor. Conversely, a living trust, activates during the Trustor’s lifetime.

A trust offers a number of important benefits to the parents of young children. To begin with, as the Trustor of the trust you appoint the Trustee, and any successor Trustees, allowing you to decide who will protect and manage the inheritance you leave your children. In addition, a trust lets you stagger the inheritance you leave your children instead of giving them a lump sum. You can also decide when they receive those distributions and how much will be distributed each time. No matter how mature a child may be, handing an 18-year-old a large lump sum inheritance is rarely a wise idea. Instead, you may wish to direct the trust to distribute that inheritance in increasingly valuable disbursements over the course of several years to allow your child an opportunity to learn to handle his/her finances. Finally, unlike a Will, a trust can also help you plan for the possibility of your own incapacity. Whereas the terms of a Will only apply upon the death of the Testator, a trust can cover your incapacity as well if you create the right type of trust. This allows you to make certain that someone of your choosing takes over control of your assets in the event of your incapacity instead of leaving it up to a judge. Moreover, you can use the terms of the trust (which you create) to ensure that your children continue to benefit from the assets held by the trust during your incapacity should that come to pass.

Contact a Local Estate Planning Attorney

For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about estate planning for parents of minor children, contact an experienced estate planning attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.  Morris Hall has offices throughout Arizona and New Mexico, including Phoenix, Mesa, Albuquerque, and Santa Fe. 

3 Reasons to Create an Estate Plan

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Phoenix estate planning attorney

Have you been putting off estate planning despite listening to friends and family harp about how important it is to have a plan in place? If so, you are hardly alone. About half of all Americans do not have an estate plan, even though most of them acknowledge the important nature of estate planning. To help you find the motivation to get started on your plan, a Phoenix estate planning attorney at Morris Hall PLLC discusses the top three reasons to create an estate plan.

#1 – Protecting Your Minor Child

People often make the mistake of assuming you need to amass a fortune before estate planning become necessary; however, your most valuable assets cannot be valued in terms of money. That’s because your children are your most valuable assets. For most people, becoming a parent changes just about every aspect of their lives. If you are one of those people, you undoubtedly want to protect and provide for your child, both while you are here and in the event you are not here. Your estate plan is the best way to achieve those goals. For instance, because your minor child cannot inherit directly from your estate, you will probably want to create a trust to guard your child’s inheritance. Your Last Will and Testament also provides the only opportunity you have to officially nominate a Guardian for your minor child in the event one is ever needed.

#2 – Avoiding an Intestate Estate

Another common mistake is to assume that estate planning cannot help you if your assets are less than extremely valuable (in monetary terms). Whether you have already amassed a complex and valuable estate, or you are just starting out in life and only have simple, modestly valued assets, the assets you do own probably mean something to you. If you were to die unexpectedly without an estate plan in place, you would leave behind an intestate estate. That means the state intestate succession laws would determine what happens to those assets. Family heirlooms might be given to someone who would not cherish them as you have. Promises to friends and extended family members would not be honored. You even forfeit the right to decide who handles the administration of your estate if you die intestate.

#3 – Planning for the Possibility of Incapacity

While planning for your eventual death and the distribution of your estate assets is an important part of estate planning, it is certainly not the only important reason to create an estate plan. In fact, planning for the possibility of your own incapacity is equally important. You might be surprised to learn that you stand about a one in five chance of suffering a period of incapacity lasting five months or more before you reach retirement age. The odds of becoming incapacitated will also increase as you age; therefore, incapacity provisions within your estate are crucial.  Without these, you have no control over who will make health care decisions for you or who will manage your assets and finances in the event you do become incapacitated. For most people, the thought of a court making those decisions doesn’t sit well. Moreover, if you fail to plan ahead, your loved ones may be forced to battle it out in court for the right to make decisions for you and/or control your assets if incapacity does strike at some point in the future.

Contact a Phoenix Estate Planning Attorney

For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about estate planning for parents of minor children, contact an experienced estate planning attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.  Morris Hall has offices throughout Arizona and New Mexico, such as Phoenix, Mesa, Albuquerque, and Santa Fe.

Phoenix trust attorney

Why Would I Want My Trust to Be a Secret?

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Phoenix trust attorney

While every estate plan should be tailored to the unique needs of the person creating the plan, there are some common components found in the average plan. A trust, for example, is among the popular of all estate planning tools – but why would you want your trust to be a secret trust? The trust attorneys at Morris Hall PLLC explains when creating a secret trust is the best option.

Your Last Will and Testament

At its most basic, a Last Will and Testament is a legal document that allows the Testator (person making the Will) to make gifts of assets owned by the Testator at the time of his/her death. Because a Will must be submitted to the court for probate, the terms of a Will become available to the public. Therefore, gifts made in a Will would not t be concealed or kept secret. For a variety of reasons, the public nature of a Will doesn’t sit well with some people. The existence of a trust, however, can be kept secret.

How Does a Trust Work?

A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust's beneficiaries.  All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Trustor and which is typically activated by a provision in the Trustor’s Will.  A living trust is a trust that takes effect as soon as all the legalities of creation are in place. Assets gifted in a trust are distributed according to the terms of the trust agreement. Although a trust agreement does not typically need to be submitted to a court, the existence of a testamentary trust itself as well as the identity of the beneficiaries of the trust, are typically mentioned or reference within a decedent’s Will so  that everyone knows how the trust assets are to be handled.

Using a Secret or Semi-Secret Trust

If you prefer to keep certain aspects or details of your estate plan secret, using a secret or semi-secret trust may be your best option. A secret trust is one in which a Testator appears to leave assets outright to someone in a Will; however, that beneficiary is really a Trustee for another beneficiary. For example, you might leave real property in your Will to your sister absolutely when, in fact, you have made it clear to your sister that the real property is intended to be used for the benefit of your children.

Another option is a semi-secret trust. In that case, the existence of the trust is mentioned in a Testator’s Will; however, the names of the trust beneficiaries and/or other terms of the trust are not outlined in the Will. Imagine, for example, that you gifted that same real property to a trust in your Will and simply stated that the property is “to be used according to my wishes.” In that case, the existence of the trust is made public in your Will; however, the beneficiaries and terms of the trust are not made public.

The creation of a secret or semi-secret trust requires an arrangement between the Testator and the Trustee of the trust. That arrangement should, ideally, be set out in a separate document to ensure that your wishes are honored and, more importantly, legally enforceable.

Why Create a Secret or Semi-Secret Trust?

Usually, a Trustor /Testator feels the need for a secret or semi-secret trust for one of two reasons. He/she either wants to keep the terms of his/her estate plan out of the public eye altogether or wants to keep beneficiaries/heirs from knowing the terms of that plan. Public figures, celebrities, and individuals with considerable wealth may simply want to avoid public scrutiny. Even if you are not in the public eye, you may not want all your heirs to know how you distributed your assets. A secret or semi-secret trust is a viable solution.

Contact a Local Trust Attorney

For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about the type of trust that is best for your estate plan, contact an experienced trust attorney at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.  Morris Hall has offices throughout Arizona and New Mexico, including Phoenix, Mesa, Albuquerque, and Santa Fe.