Arizona Estate Planning Lawyer & Attorney : Stephen Follett Law Firm : Probate Law and Trusts : Gilbert, Phoenix, Arizona

The family dynamics after the death of a parent can change dramatically.  Parents often do not truly understand their own children and family.  If you are a parent, you may be saying to yourself:

He is right some families are really messed up.  I am glad my kids get along.

The problem is, this is what many other parents have said before World War III breaks out after their death.  Karen S. Gerstner, a member of the Houston, Texas, firm of Karen S. Gerstner & Associates, P.C. wrote the following in her article in the Property and Probate Magazine of the ABA.

When I was a young lawyer, I attended a meeting with several attorneys to discuss certain “contested matters” that had arisen after the death of a widower who died survived by four children. I was shocked to hear one of the seasoned attorneys say, “If all decedents had only one child, my workload would decrease to nothing.” Whether you go back to Cain and Abel, or only as far back as the Smothers Brothers (“Mom always liked you best”), sibling rivalry is the chief factor in many disputes arising after a parent dies. Many laypeople attribute all litigation to greed, but in the case of family situations, often much more is involved than simply greed. Sometimes children hold deep-seated resentments, which may be based on perceived unfair treatment by a parent or sibling, often going back many years. Sometimes the last living parent is the only “glue” holding the children in the family “together” (if they ever truly were, in fact, “together”). Sometimes parents have unrealistic expectations about family.  

I have seen children try to impose their view of "fairness" to their parent's estate plan.  In some situations it comes to theft and in others subtle manipulations.  As Ms. Gerstner stated, sometimes the last parent is the only reason for children to hold back deep-seated resentments and emotions.

Proper advanced planning is the best way to mitigate the potential for court challenges in the family.  Hopefully, enough can be done during life to address some of the underlying issues that give rise to court challenges.

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I watch how people find this blog.  It gives me an idea of the topics in which people are interested.  One search was "estate planning in arizona and children from a previous marriage".

As a general rule, in Arizona, children from a previous marriage have a special status under the law.  If you do not have a will or a trust, then the government will give half of your community property and half of your separate property to children of a previous marriage.  The surviving spouse gets the rest.

I have seen this outcome and it is often very tragic.  Once, because of the way a couple had structured their investment properties, the husband owned the rental house in his name.  It was the couple's retirement.  When he died, his wife lost half of the retirement to the children of the husband.

Usually, when there are children of a previous marriage a trust is a good idea.  The trust is structured so that the surviving spouse gets to use the money during his/her life, but then at the surviving spouse's death the money can go to right children.  Otherwise, if a will is used the surviving spouse gets the money and the surviving spouse could give it to anyone, and the children could get nothing.

If you are married and you or your spouse have children from a previous marriage you need to speak with a qualified Arizona estate planning attorney.  This general information is insufficient for any planning.

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When you inherit stock in a company, you may have no idea what to do with it.  If it is a significant sum you should definitely get help and competent advice.

This article can help get you started with the process.  However, you should always consider getting the help of a professional financial advisor, broker or other experienced individual.

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The death of famous actor Heath Ledger was unfortunate and unforseen.  News regarding the aftermath shows how important it is to review and update your estate plan.  Professor/Blogger Gerry Beyer posts about it here.

Apparently, Heath prepared a will in Australia before he became successful that left everything to his parents and siblings. However, since then he had a child who may face a possibility of being left out of his estate. 

There is a possibility that New York or Australian law may provide for children that were born after the will was created.  Such a provision is for "pretermitted children" and was created because it regularly occurs that parents do not update their wills after having children.

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Yuma, Arizona attorney Larry Deason identifies seven important elements of an Estate Plan in this article.   The article is brief and easily understandable.

The seven points he makes are:

1. Health care power of attorney with a living will so your appointed agents can care for you to avoid costly guardianship.
2. HIPPA authority so that your loved ones can have access to your confidential medical information.
3. Durable financial power of attorney so your appointed agents can care for your money and assets to avoid costly conservatorship.
4. Revocable living trust to avoid costly living probate (conservatorship) and death probate.
5. Pour over will so anything not in the living trust is added upon death.
6. Funeral trust to protect money from creditors and Medicaid to ensure your family does not bear the burden of your funeral.
7. Completed legacy estate plan distributing the personal items (like grandmother's ring or grandfather's watch) that most frequently cause family fights.

I agree with each of these points.  However, a revocable living trust is not necessary for many situations.  In a modest estate, a will and proper advance planning is sufficient.

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Look here for a simple article on choosing a guardian for your minor children.  The three simple steps it lists are:

1. Make a list of possible guardians.
2. Decide what matters most.
3. Match people with priorities.

Perhaps the most important thing to remember is that you do not have to consider your possible guardian's ability to manage finances.  You can appoint a conservator/trustee to manage the money. 

Accordingly, in conjunction with your decision for guardian, you can choose a conservator or trustee to hold the money and spend it for your children--according to the instructions you leave them.  The three simple steps for choosing a conservator/trustee would be the same except you would subtitute your financial principles and priorities with those of raising your child.

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Just yesterday, I blogged about the need for farmers to plan carefully to avoid family fights.  Today, I see this article from Reuters: 

Grain rally complicates US farmer estate planning

The article focuses on the impact of rising grain prices and the rising value of farm land.  The good news is families are making more money and have more wealth.  The bad news is nearly half of that wealth could be lost at death.  Worse, without a plan the family will have to agree on the disposition of the family farm.

The article recognizes that even a plan completed a few years ago could be dangerously out of date today.  Moreover, the death tax and inheritance laws are very likely to change.  The only way to avoid the death tax and loss of the family farm is to plan well and plan ahead.

This is another reason to have a positive relationship with your estate planning attorney.

What struck me most was a daughter in law's comment that she feels uncomfortable bringing the subject up.  She and her husband farm her mother in law's land.  That is a recipe for disaster because if there is no plan, they could lose the farm and their income.  Her family depends on the land and there is no plan for the future.

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Wills are the traditional method for giving away property after death.  Practically everyone has heard of wills and has also heard that everyone needs one.

But, why do you need a will?

If you do not have a will, your stuff may go to the wrong people.  Consider the following.  A couple work for many years and develop quite a nest egg for their retirement.  However, neither got around to preparing a will.

The husband unexpectedly died without a will.  Now, she is obligated to divide the nest egg in half and give it to her husband's children from a previous marriage.  This includes the house that they shared!! 

This widow is now frightened and unsure about her future.  This is truly unfortunate because it could have been prevented with a properly drawn and executed will.

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Having a Special Needs Child brings many financial demands.  Many parents pay out of their pocket for special schools, food, medicine, therapies, etc.  In an article from the Leimberg Newsletter for estate planning professionals comes this:

As the number of children diagnosed with autism, asperger's syndrome, and other neurological disorders skyrockets, parents and their advisers need to carefully understand and plan for their children (and grandchildren's) medical care and capitalize on tax and other available benefits.

If you are the parent of a special needs child, you should consider the tax breaks available for the money you are spending.  And, you should especially consider the estate planning benefits and pitfalls.

If you would like more information about special needs planning, feel free to contact me.  As the parent of a special needs child, I understand the unique challenges.  I want to help others because I know how overwhelming it can be.  I also know how parents of special needs children are hungry for more information.  I would like to satisfy some of that hunger.

The above quote came from Steve Leimberg's Estate Planning Newsletter # 1183 (October 4, 2007) at http://www.leimbergservices.com.  It is part of an important series for special needs planning.

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I mentioned my desire to offer free education to the public in a previous post.  I am pleased to have an upcoming seminar offered free to the public.  I hope to see you there.

The first session of my new seminar:  "19 Smart Ways to Plan Your Estate" will be held Tuesday March 18, 2008 from 1:30 to 3:30 at the community room at Northern Trust Bank in Sun Lakes, Arizona.  A flyer with a detailed description of the program can be downloaded here.  It requires Adobe Acrobat Reader which is free.

The seminar was designed with special emphasis on 12 Planning Mistakes That Could Cost Your Family a Fortune -- and Their Solutions”   Come learn about the good and bad about wills and living trusts, especially 20 misconceptions about wills and trusts.  Read the flyer above for even more exciting topics.

This will be a unique - fact filled seminar that you will not want to miss.  It will be filled with examples that will engage your mind as I lead you through the legal process of creating an estate plan.  Mark your calendar now!  Invite a friend.  If you cannot make it, please feel free to call me for more information.

Topics include, living trusts, wills, powers of attorney, health care powers of attorney, living wills, ethical wills, beneficiary deeds, payable on death accounts, IRAs, retirement plans, and more.

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Legal Forms fit in well with our "Do It Yourself" (DIY) nation.  We watch home improvement shows, cooking shows, and decorating shows.  Home Depot earns fortunes as we tackle home improvement projects. 

This DIY spirit carries over to our own legal issues.  However, there is great danger in using the "do it yourself" legal forms for divorce, estate planning, business formation, etc.  Some of the most frequent stories I hear when speaking about issues, are the consequences of these DIY forms.

Yesterday, I attended a continuing legal education class about rules regarding pension and retirement benefits like pensions, 401(k)s, and IRAs.  He is like a brain surgeon in the legal world, the expert to which other attorneys and judges go for help.  His fee is $300.00 per hour.

He used a great line when he called DIY legal forms  "The Do It To Yourself Forms" because when you foul it up using the forms, you can only say that you did it to yourself.  Unfortunately, there is no easy estate plan when retirement benefits, 401K, or IRAs are involved.  The tax rules are too complex.  Because of your DIY planning, your family could face a tax rate between 35% to 80% of the money that you leave them in your retirement savings.    

Eventually, the DIY catches up with us when we get in over our head.  I once started fixing my computer but could not finish it without the help of an expert.  It cost me more after I Did It To Myself than to pay a professional in the first place.  Imagine the cost of $300.00 per hour to fix a legal mess, in addition to the irreparable tax consequences.

Do you really want your family to say:  Mom and Dad were "do it yourselfers" and they did this to themselves.  Please get competent legal counsel for your estate planning.  Otherwise, you are taking a chance that you will do it to yourself and your family.

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My approach to estate planning is different than most estate planning attorneys.  I started my firm for the freedom to create a fulfilling experience for clients planning for their families.  My focus is on people not plans, families not forms, and values not valuables.  People do not create plans because they love their money or assets.  People create plans because they love their families.

I was pleased to recieve the following endorsement from a client:

I would enthusiastically recommend Stephen Follett to anyone who wants to get competent, professional estate planning assistance.   He has been patient, available and always helpful in helping me to make the important and complex decisions I needed to make while getting my estate in order. Stephen always took time to explain all the options and the pros and cons of each as we proceeded.

If you want someone who will give you their knowledge and time and always have your best interests at heart, Stephen Follett should be your estate planning attorney. If you   would like to ask me any questions about his service or character, or discuss his services please feel free to call me at 602-XXX-XXXX.

Sincerely

Vxxxxxx Dxxxxxxxxxx

If you would like to speak with my client, please call my office and I will give you her name and number.  Although she gave me permission to publish this, including her name and number, I am concious of protecting her privacy.  When you contact the firm, mention this post.

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Looking on the internet for information for another post I was writing, I came across this post by the North Carolina Estate Planning Blog. 

I agree with his position on living trusts and his comments on North Carolina are applicable for Arizona.  He stated:

Some North Carolina attorneys are also guilty of overstating the value of living trusts, implying that probate is much more costly than it actually is, and that estate taxes savings can be achieved only by the use of living trusts (as opposed to wills).  Of course, some attorneys go to the other extreme and don't believe i[n] using living trusts in any  situation. 

I view myself as "neutral," only recommending living trusts when I think there will truly be a cost savings or other benefit.  I have had many new clients come into the office requesting living trusts based on advice of friends or articles they had read, when a will is a simpler, cheaper method of transferring thier property.

Not everyone will benefit from a trust.  Sometimes a will and powers of attorney are enough.  Probate is not always an expense to be avoided in Arizona, unlike our west coast neighbors in California where probate is definitely more expensive.

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I wrote previously about my experience with Annuity Scams and Living Trust Scams.  Every time I think about that experience I get a pit in my stomach.  So called "advisors" took advantage of their client's trust and wrecked the lives of ordinary families.  Many were in their golden years with less than $50,000.00 in their nest egg.

To work against the trust mills and unscrupulous "advisors", I want to educate the public about living trusts so they can avoid the financial scams.  I am proud to be an estate planning attorney and lawyer and I want to share my knowledge with others.  There should be no "secrets" in estate planning that only the wealthy know.

I am so excited about a partnership I am developing in the Sun Lakes and Chandler area where there is a greater need for education.  This partnership will be of tremendous benefit to those who live in and around Sun Lakes and Chandler who want to learn more about Living Trusts or other estate planning tools. 

This is the purpose of my effort: 

Anyone, regardless of income and status in Sun Lakes or Chandler can learn what they need to know about wills, financial power or attorney, healthcare power of attorney, living will.  And, they can clear away the misinformation about living trusts so they learn who could benefit from a living trust, because not everyone should have a living trust. 

If you support that mission or would like to participate, then check back for more information or call me with questions.  If you or your organization would like to sponsor a class on living trusts or another aspect of estate planning, I will do what I can to make myself available.

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You are more than your money.  Why should your estate plan only focus on the money? 

I believe that every person has a natural and powerful desire to leave a lasting legacy.  For many parents, this is the powerful reason that drives them to leave something for their kids.  Whenever I ask parents and grandparents about leaving money, ultimately, the conversation isn't just about the money.

Parents and grandparents easily talk about what the money means to them and their loved ones.  They explain what they want the recipients to do with the money.  Sometimes, they say why they do not want someone to get any money.  Estate planning necessarily focuses on the money, but it isn't all about the money.

Ultimately, what parents and grandparents focus on is the values they are teaching and leaving for their loved ones.  They have greater wishes and aspirations for their family and friend.  This is why I include the opportunity for clients to leave an ethical will.

An ethical will is not a legal will leaving money and things.  Rather, it is a "will" that leave values.  It has been explained that a legal will leaves valuables, but an ethical will leaves values.  Consequently, every one can leave an ethical will because it doesn't require anything other than personal family wealth of the intangible kind. 

Here is a story that was done on PBS about ethical wills.  There are resources linked at the bottom of the article.

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It is my experience that parents with Special Needs children, whether autism, downs syndrome, or other disabilities have extraordinary ability to care for their children.  They accomplish heroic feats to care for and raise their children.  This extraordinary care extends through adulthood as well.

With everything these parents deal with, the condition of their child also requires special estate planning.  You see, these children once into adulthood are often dependent on assistance from our state and federal governments because they cannot care for themselves.  This is true here in Arizona.

Because these children and adults are dependent on government assistance, they cannot have any significant property of their own.  If they did, they would need a conservator or trustee to manage it.  When they have property of their own, they are disqualified from assistance until their property is spent.

Consequently, parents of special needs children and adults should not leave any money directly to their children.  Rather, they should leave it to a special needs trust for the benefit of their child.  This special needs trust can then spend money on their children to improve the quality of their lives.

The special needs trust for a child or grandchild can be used for vacations, special medical equiptment, therapies, televisions, DVDs, computers, etc.  These are things that government assistance will not cover.

The lesson is this.  If you have a special needs child who will require assistance for their lives, or may require assistance, then you absolutely need a special needs trust in Arizona.  How do you form a special needs trust?  The answer is find a qualified attorney who has the skills and education necessary to draft it.  This attorney should focus on estate planning.

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Your legacy is a powerful force in your life.  Just today I heard a commercial for a bed.  The premise of the commercial was that their beds were so good that they are a prized possession to be passed from one generation to the next.

This just illustrates how powerful our desire is to leave a legacy.  This bed company spent what I am sure was tens of thousands of dollars to produce and air the commercial.  And they chose to portray their bed as precious as--say your grandmother's diamond ring--something to be handed down among generations.

Ultimately, a bed and a diamond are just valuables.  They are nothing compared to the values that can accompany them.  From one generation to the next, there are only so many diamonds to go around.  However, you and your family have or can create values that can be never ending.

I would say the thing that makes family heirlooms valuable is not the inherent value of that thing, but rather the emotional value which is bound up in the thing.  I have a letter from my grandfather that is more valuable to me than any other article he could have given me.  I get it out and read it regularly for the emotional/spiritual boost it gives me. 

The letter is worthless to the world, but it is priceless to me.  That is my grandfather's true legacy.  I strive to leave my wife and daughter financially well prepared should I depart this life prematurely.  However, the most important thing I can leave my daughter is the power of my love for her and the values that will propel her to true success in her life.

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If there is one problem with a trust, it is the funding problem. 

Here is one example of what happens when a trust is not funded.  The trust named a person to get real property.  Unfortunately, when the trust creator died, the real property was titled in the name of a corporation.  Consequently, the property did not go the the person named in the trust, and instead the person entitled to get the stock also got the property as an asset of the corporation.

Funding isn't difficult.  But here, the creator's failure to fund the trust failed his desire to pass the property.  If funding is not dificult, why does it fail.   There are two main reasons that trust funding fails. 

 I see the following reasons for a trust funding failure:

• Innocent ignorance by the trust creator; and
• Failure of the trust creator to maintain title of asset correctly.

Ultimately, I believe that the greatest cause is innocent ignorance on the part of the trust creator.  When you buy a "trust document" from a store, an online service, or a document preparer (who might be an attorney) you are not getting the advice and education that comes from a competent and trusted personal family advisor. 

Everyone has some unique family, financial, or personal differences.  Accordingly, one size does not fit all.  Being penny wise and pound foolish can be a very big mistake in estate planning.  

So, if you obtain a trust--educate yourself.   If you pay an attorney, make sure that attorney is committed to ensuring your trust is fully funded and the plan will work.  Ask how many times they will meet with you.   Ask if they prepare a funding toolkit.  Ask what they do to ensure your plan will work. 

Ask lots of questions about their estate planning process, what do they do for you, how does it work, why do they do what they do.  An attorney seeking to be a trusted personal family advisor will be able to explain what they do that makes them different than other attorneys. 

If you have a trust make sure it doesn't fail.  Educate yourself and stay on top of funding.

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I am excited about my brand new office in south Gilbert. Arizona.  It is located at the Offices at Seville in the Northeast corner of Chandler Heights Road and Higley.  It is conveniently located to serve Gilbert, Queen Creek, Johnson Ranch, and Anthem in Pinal County. 

For the convenience of my clients, I retained my location in Chandler Arizona by appointment only.  It is is located off Loop 202 at Cooper and Ray in the fabulous new Cooper Crossing offices.  This Chandler office is conveniently located to serve Chandler, Gilbert, Ahwatukee, Mesa, Tempe and Sun Lakes in Maricopa County. 

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