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Protecting Your Assets with a Medicaid Trust

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Although you may not realize it now, there is a very good chance that you, or your spouse, will need to rely on Medicaid in the future. If that need does come to pass, and you failed to plan ahead, your retirement nest egg could be at risk. A Medicaid trust could help you protect that nest egg. To help you understand the need to plan ahead, a Phoenix Medicaid planning attorney at Morris Hall PLLC explains how a Medicaid trust can help to protect your assets.

Long-Term Care Costs and the Need for Medicaid

If  you (or a spouse) need long-term care (LTC) at some point, Medicaid may be your best option for covering the high cost of that care. Nationwide, the average monthly cost of LTC was more than $100,000 per year for 2019.

Like most seniors, you will probably rely on Medicare to cover the majority of your healthcare expenses. Unfortunately, however, Medicare only covers LTC expenses under very limited circumstances, and even then, only for a very short period of time. Furthermore, most basic health insurance plans also exclude LTC expenses. Therefore, unless you purchased a standalone long-term care insurance policy prior to the need for coverage, you will be faced with the prospect of covering your LTC expenses out of pocket. For the average person, an entire retirement nest egg could be lost to LTC costs if forced to pay for them out of pocket. This is where the need to qualify for Medicaid comes in because Medicaid will help with LTC costs.

The potential problem arises because Medicaid is a “needs based” program, meaning that Medicaid uses both an income and a “countable resources” limit when determining eligibility. Although some assets, such as a primary residence and a vehicle, are exempt from consideration, it is still easy for a retiree to have non-exempt assets that exceed the countable resources limit.  If that is the case, your application will be denied. At that point, you will have to “spend-down” your excess assets before Medicaid will approve your application.

How Can a Medicaid Trust Help?

Nobody wants to watch their hard-earned assets disappear because of the need to pay for LTC. One way to protect those assets is to transfer them into a Medicaid trust. To benefit from the protection a trust can offer, however, it must be the right type of trust. All trusts also fall into one of two general categories. The first is a testamentary trust which does not activate until a provision in the Settlor’s Last Will and Testament causes it to activate upon the death of the Settlor. A living trust, as the name implies, is a trust that activates while the Settlor is alive and as soon as all formalities of creation are in place. Living trusts can also be divided yet again into two categories – revocable and irrevocable living trusts. If you create a revocable living trust you retain the ability to modify or revoke the trust at any time and for any reason -- or even without providing a reason. On the other hand, if you establish an irrevocable living trust you can never modify nor revoke the trust for any reason. If your goal is to protect assets from the Medicaid spend-down requirement, this distinction between revocable and irrevocable living trusts is crucial.

A Medicaid trust is an irrevocable trust wherein the income is payable to you for life, but the principal cannot be applied to benefit your or your spouse. Upon your death, the principal remaining in the trust is paid to the beneficiaries named by you (usually children and/or grandchildren). This way, the funds in the trust are protected and you can use the income for your living expenses. For Medicaid purposes, the principal in a Medicaid trust is not counted as a resource for eligibility purposes if the Trustee cannot pay it to you or your spouse for either of your benefits. If you do end up in a nursing home, however, the trust income will have to be paid to the nursing home in most cases.

Contact a Phoenix Medicaid Planning Attorney

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

Estate Tax Planning Opportunities With COVID-19

By | COVID-19 | 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).  COVID-19 has created a stew of significant factors creating opportunities to maximize estate tax planning in the near term. 

What are some of these Factors?

The gift and generation-skipping tax (“GST”) exemption amounts remain high and currently stand at $11.58 million. These exemptions are temporary and will be cut in half in 2026.

Interest rates were already near historic lows but the Federal Reserve’s response to COVID has led to a reduction in interest rates that will produce perhaps the lowest rates in history for estate planning purposes.

Valuations of securities have been depressed. This has impacted valuation of a wide range of businesses and other properties because of the slowing economy due to mandatory closures and quarantines and other factors. Thus, this is an opportune time to transfer assets out of any wealthy client’s estate.

Taxes will have to go up to get the economy going so the government can spend, spend, spend no matter which political party wins in November. Higher tax rates; lower exemptions; loss of step up in basis; elimination or reduction in discounts; essentially an elimination of GRATs are all possibilities. With this background in mind, here are some options in this new environment.

  1. Grantor Retained Annuity Trusts (a.k.a. “GRATs”)

A GRAT is an irrevocable trust whose objective is to remove appreciation from the grantor’s estate. A GRAT is created when a grantor contributes assets with appreciation potential to a fixed-term, irrevocable trust. The grantor then retains the right to receive an annuity stream over the trust's term. At the end of the term, the assets are distributed to noncharitable beneficiaries — typically, the grantor's children. The amount of the annuity payment required to be paid to the grantor during the GRAT term of the is calculated by using an interest rate the IRS determines monthly called the Section 7520 rate. The section 7520 rate for May 2020 is an astoundingly low 0.8 percent. In other words, the IRS is assuming the assets will grow at just 0.8%. If they grow faster than that, the excess goes to the grantor’s children without using any estate and gift tax exclusion.

For clients that have not yet begun GRATs, now may be an ideal time to do so. With low interest rate and low stock market and other valuations transferring assets into a GRAT may be a valuable estate planning step.

  1. Intra- Family Loans

With historically low interest rates mentioned above, a very common and simple estate planning technique is for a client to make a low interest loan to a trust, family member, or family business entity, which could then invest to seek a greater return. It also follows that the lower interest rates provide an opportunity to see if notes can be renegotiated with a lower interest rate. This could be useful for cash flow planning and perhaps in certain transactions to reduce the negative income tax impact of interest payments. It’s possible that a mere change in interest rate could be viewed as a gift in a family context, but if the lender receives other benefits it may be feasible to re-negotiate the note without triggering a gift tax issue

  1. Valuation Considerations – Alternate Valuation Date

When someone passes away, Internal Revenue Code (“IRC”) Section 2031 states that the estate is valued as of the date of death for estate tax purposes. However, IRC Section 2032 permits the use of an alternate valuation date that is six months after the date of death for the estate’s assets where (1) the overall value the estate is less and (2) there’s a reduction in the estate tax. This technique hasn’t received much attention (or use) due to the market growth of the last decade, but it merits review with the recent market pullback from its highs. Depending on the length of the current market pullback and a possible contraction in the real estate market due to COVID’s effect, utilizing an alternate valuation date can provide significant benefits.

  1. Income Tax Considerations

Roth IRA Conversions.  Converting a regular or traditional IRA to a Roth IRA has been a common part of tax planning for some time. The SECURE Act, passed at the end of 2019, has eliminated the stretch IRA by requiring IRAs be liquidated in 10 years for all but a few situations and has brought even greater consideration to Roth conversions. A Roth conversion, or a series of incremental Roth conversions, are a possible means of reducing the negative tax impact of the 10-year rule under the SECURE Act. Put another way, rather than wait until the 10th year end following the plan holder’s passing to distribute and tax all plan assets at perhaps the highest tax bracket, consider converting the IRA in small yearly increments while the account holder is alive to a Roth IRA which may reduce the overall tax cost. With the stock market pullback reducing the IRA values, it’s a good time to consider converting traditional IRAs to Roth IRAs because the lower IRA values will result in lower tax cost, particularly at today’s lower rates.

Loss Harvesting. This is an extremely common tax planning technique. Typically, clients’ investment advisors endeavor to offset capital gains with capital losses to reduce taxable capital gains. With the nearly 10-year bull market this area hasn’t received much attention, so with the recent pullback, it is important to keep an eye out for these opportunities to reduce income tax exposure.

You can see that with the increased need for tax revenues, the halving of the exemption, interest rate environment and market environment, this presents a unique window of time to reduce estate and income tax exposure.

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 trust lawyers

Do I Still Need a Will If I'm Using a Trust to Distribute My Estate?

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Phoenix trust lawyersMany people use a Last Will and Testament to distribute their entire estate when they initially create an estate plan. As both their estate and their family grow, many choose to incorporate more comprehensive estate planning tools and strategies into their plan. For instance, they might decide to use a Trust to distribute their estate instead of a Will. If so, does that mean they no longer need a Will? The short answer is a special Will is needed even if you are counting on a Trust to distribute your estate.

Last Will and Testament Basics

A Last Will and Testament is a legally binding testament, usually in writing, that allows you to make both general and specific gifts of assets from your estate to designated beneficiaries. Those gifts are legally required to be honored after your death. Your Will also allow you to make two additional important decisions. First, you will appoint someone to be the Personal Representative, also known as the Executor, of your estate in your Will. The Personal Representative of your estate is responsible for overseeing the probate of your estate following your death. Second, you have the ability to nominate a Guardian for your minor children in your Will. Your Will, in fact, is the only opportunity you have to tell a judge who you would want to take over the care of your children if a Guardian is needed. A Will works fine to distribute a very simple and modest estate; however, if you have minor children, assets worth more then $75,000, or distinctive estate planning goals, you should consider incorporating a Trust into your estate plan as the primary vehicle by which your assets will be distributed after your death.

Trust Basics

A Trust is a legal relationship wherein property is held by one party for the benefit of another party. The person who creates a Trust is referred to as the "Trustor", "Settlor" or "Grantor." The Trustor transfers property to a Trustee, appointed by the Trustor. Almost always, the Trustor is the initial Trustee, and thus has complete control of the assets of the Trust.  The Trustee holds that property for the Trust's beneficiaries as well as invests Trust assets and administers the Trust terms according to the terms created by the Trustor.

There are several reasons why people frequently decide to use a Trust as their primary estate distribution vehicle. Under a Trust, your beneficiaries will not receive assets upon your death until they are of an appropriate age and are ready to control the assets.  Only through a Trust, and not a Will, will your beneficiaries have protection from creditors, ex-spouses, irresponsibility, and other factors that could deplete what you leave them. Another huge benefit to using a Trust to distribute an estate is that assets held in a Trust are not required to go through probate, which takes months, is very expensive, and allows the public access to all matters involved. Using a Trust to distribute your estate, however, does not mean that you no longer need a Will.

Pour-Over Will Basics

A properly drafted Trust can take the place of a Last Will and Testament regarding the distribution of estate assets; however, your estate may have some loose ends after your death for which a Will is required. Specifically, you need to include a “Pour-Over Will” in your estate plan if you decide to use a Trust as your primary distribution tool. Despite your best efforts, you might leave behind some assets that fail to make it into the Trust. Personal items, vehicles, less valuable assets, bank accounts used for day to day banking, and even valuable assets purchased just prior to your death are all examples of assets that might be inadvertently left out of your Trust at the time of your death. If they remain unaccounted for, they will create an intestate estate that requires probate. A Pour-Over Will simplifies the process and provides protection by directing all assets not already transferred into the Trust to be “poured over” into the Trust after your death. A Pour-Over Will serves as a “catch-all” tool that backs up your Trust.

Contact Morris Hall, PLLC

For more information, or if you have additional questions or concerns regarding the need for a Pour-Over Will to go along with your Trust, contact Morris Hall PLLC by calling 888-222-1328 to schedule your free consultation today.


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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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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

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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.