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

Suppose you could deposit your money into two different accounts, which would you choose?

• Bank account (A) is safe from lawsuits, creditors, divorce, bankruptcy, etc.; or,
• Bank account (B) could be wiped clean by lawsuits, creditors, divorce, bankruptcy, etc.

I assume that you would choose account A for YOUR money.  Believe it or not, estate plans that I review much more commonly offer account B to their children and grandchildren.

Whether assets or money are passed by a will or by a trust, they can be placed into a protected account.  That "account" is actually a specialy designed trust for the benefit of each child or grandchild designed to give protection.

There is little downside, because the child or grandchild can become trustee of their own trust at an age that is appropriate under the circumstances.  Consequently, the child has control over their "account."  Truly, in this age where litigation and divorce are rampant, an inheritance protection trust is a very powerful tool to preserve YOUR money for the benefit of the people you love. 

It would also be an appropriate time to include your children in your planning process.  Consider asking your children which account they would rather have for their inheritance and legacy.

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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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Arizona is a community property state for married couples.  It is not available for unmarried couples.  Community property is an ownership status that is favored for estate tax and capital gains tax (step up in basis).

It also allows for much more flexibility in planning with trusts.  In other common law states, it is necessary to divide assets for estate tax planning purposes before death.  However, with community property, it is possible to divide assets for tax planning purposes after death. 

This means there is a tremendous amount of flexibility for the surviving spouse.  This can be important because the assets may be split differently depending on which spouse dies first.

If you have moved to Arizona, and have two trusts designed in other states, it may make sense for you to explore and consider the benefits of changing ownership to community property.  However, this is a highly individualized decision and it will be important to discuss this with a qualified Arizona estate planning attorney experienced and educated in tax planning.

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If you have real property (land, houses, etc.) in more than one state then you need a trust.  When you have property in more than one state, you are subjecting each parcel of property to probate in each state. 

When you place property in a trust, you enable your trustee to sell or manage the property without passing through probate.

In Sun Lakes, Apache Junction, Casa Grande, and other communities with large "snow bird" populations it is common to own a winter home here and a summer home in another state.  If you are in this situation, then you should consult with a qualified estate planning attorney in your principal state in order to address the potential of two probates.

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In light of Britney Spears' recent problems, the court has declared she is not capable of handling her own affairs.  As a result, her father was appointed to take care of Britney and some of her assets.

Britney also formed a trust according to this article.  Like most trusts, Britney was named as the sole trustee.  However, because she was judged incompetent to handle her own affairs, she can no longer manager her trust.  Apparently, the trust did not provide for a successor trustee, because her brother and attorney are now acting as trustee.  Or, court action was required to have them appointed.

Now that her brother has been appointed, he is trying to determine what the trust owns.  Britney was not clear on "funding" the trust.  She put some of her assets and companies in the trust but others were left out.  So, he has petitioned the court to make a ruling to try to determine what is in the trust for him to manage.

The lesson is that maintenance of your estate plan and trust is important.  While it is good that Britney formed the trust, it would have been better if she funded the trust.  It would have been best if she kept a list of the assets in the trust for the benefit of the succeeding trustees.

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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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Freedom is the great American Dream.  Freedom to succeed and be who we want to be.  We are normally free from direct control of the government, except when we have been convicted of a crime.

However, this story about a court appointed guardian demonstrates that the government can take away almost every significant right from ordinary citizens, including the right to manage and spend your assets and money.  One way to prevent the government from taking such absolute control over our assets is to place them in a properly drafted trust.

Consider Norman Baker's situation:

Until he was placed in a nursing home against his will by the court-appointed attorney he is trying to reject, Norman Baker owned and managed two dozen rental properties, many of which he designed and built himself. He also owned a 33-acre farm, with four horses, an array of tractors and other heavy farm implements, a carefully preserved century-old barn, a restored farmhouse from which he drew steady rental income, and a 3,000-square-foot brick home, which he also designed and built.

All Norman Baker's properties were free of any liens or mortgages. ?Before he was confined against his will to a nursing home, Norman Baker also had some $250,000 in cash and liquid investments above and beyond his real estate holdings. He rented his properties and lived a quiet, private life.

Today, without writing a check or using a credit card or making a single bad investment, Norman Baker has less than $20,000 in cash. Most of his rental properties are vacant. Some have been flooded. In one, a broken pipe has resulted in a water bill in excess of $19,000. Nearly all his properties, which were once entirely rented, are now vacant. Some have been seriously vandalized. A rental property business, which yielded a steady cash flow, is now bleeding cash every month.

Read the whole story.  Unfortunately, Norman Baker had his assets controlled by someone appointed by the court.  Obviously, spending his cash and leaving the property distressed was contrary to what Norman would have done. 

Norman could have protected himself from this situation.  If Norman had put his assets in a trust, the court would not have controlled them.  Instead of the court controlling the assets, the successor trustee would have controlled the assets.

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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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IRAs and other retirement investments are subject to special rules because of their preferred status in the IRS's rules on qualified investments.  Estate planning with IRAs requires specialized knowledge to be able to leverage the IRS's rules for maximum benefit for your family.

Here is an excellent article with illustrations for how to create more wealth for your family by strategic IRA planning with IRA inheritance trusts.  His article starts with the following:

[I]f a child or grandchild inherits an IRA, they will be tempted to close it out and withdraw all the money. In addition to having to pay income tax on all the withdrawal, there will be no continued opportunity for further tax deferred growth. If, on the other hand, a 25-year-old child inherits a modest, say $100,000 IRA, and if the IRA is left in place to pay only the required minimum distributions over the child's lifetime, it will pay the child far in excess of $1 million.

Consequently, the benefits of planning ahead with your IRA assets are plentiful.  Appropriate planning can protect the benefits of the IRA and protect the assets of the IRA for your heirs.  Read the article above and you will see illustrations of the power of an IRA inheritance trust.

Unfortunately, I have had occasion where IRAs were just left to children and grandchildren without consideration for the tax consequences of the planning.  This most often happens when estate plans are created by do-it-yourselfers, document preparers, and attorneys that do not focus on estate planning.

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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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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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Planning for children with special needs is a challenge for parents.  I know first hand that just surviving is almost too much.  On the other hand, I know how strong these parents are.  They do more than humanly possible at times.  

However, an article states that parents do not do enough legal planning.  The article in the Mikwuakee Business Journal states:

Most parents want to save money for education or leave something for their children in their wills. But local financial planners and lawyers say failing to plan properly can jeopardize the special needs dependent's eligibility for government benefits, like Medicaid and Social Security Disability Income.

Planners and lawyers recommend setting up a special needs or supplemental trust for the child.

As a parent I know how hard it is.  But as an estate planning lawyer I know how very important it is.

When my daughter was about eight months old, my wife felt something was wrong.  By that time, my daughter was already being treated for bilateral club feet.  I said she was just being overly worried, but I agreed go with her to the appointment.  (Denial?) 

I remember that first appointment when the pediatrician said that she wanted a second opinion.  We were in for a ride.  The doctor rattled off a list of specialists for us to see.  Plastic surgeon, neurologist, geneticist.....

Whew, it is now nine years later.  Thank goodness for skilled physicians, therapists, special schools, excellent teachers, etc.  My daughter is doing great and her future looks good.

And, I know what she needs from my estate planning.

 

 

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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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As an estate planning attorney, I get to talk with people about their hopes and fears for their family after their death.  It is an inspiring opportunity which I cherish.

Living trusts are often a good planning tool to accomplish those hopes and to protect against fears.

I hear a fear frequently from some clients.  Their fear is that one of their children or beneficiaries will be unable to manage the money left to them.  This fear stems from poor money management skills, gambling, or drug addiction.  

A gambler or poor money manager may lose all the money, ignoring the family values that created the wealth.  Worst of all is the fear that the parent's money could kill their child who is addicted to drugs.

A living trust is a way to offer protection for those children.  The parents' living trust leaves the child's money with a trustee.  The trustee then follows instructions in the living trust.  Accordingly, the parent can ensure that a child is not given the money to feed an addiction or to be spent frivolously.

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The Arizona Attorney General has warned against Living Trust scams here. 

Why should you choose a qualified Arizona living trust lawyer or attorney and not a trust salesman or document preparer?

A living trust is a lot like your car.  You drive, you put in gas, you air up tires, some of you even change the oil or simple parts.

Cars used to be simple, however, cars have changed.  They now use sophisticated computers and electrical parts like fuel injectors, oxygen sensors, etc.  It takes a computer just to diagnose the problem.  

Few of you are qualified to diagnose and repair your car.  You may be able to perform some of the maintenance and make some of the repairs, but do you really know enough to work on the car yourself AND have the confidence that you didn't leave anything out.

A living trust is just like a car.  They were simple in earlier days.  However, there are so many technical rules governing the assets we own that qualified legal education is necessary.  The law changes so often that a lawyer who knew how to "fix" a living trust a few years ago has missed important changes.

One specific decision is whether to make the trust the beneficiary of your IRA.  Your wrong decision or wrong type of trust could be the mistake I saw that cost a family more than 20% of the inheritance in income taxes to the IRS.  The result should have been different.

 

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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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I wrote a post about my experience with trust seminar scams here.

Basically, an unscrupulous financial planner sells an estate plan, usually based upon a living trust for free.  This strategy is a trojan horse meant to get the crook past the defenses of the target, usually a senior couple.  Once the salesmen find out what investments the couple have by "creating an estate plan," they sell them highly profitable investments that are often very bad for the investors.

I am glad to see others getting the word out on this illegal practice.  Professer Beyer of the Wills Trusts & Estates Prof Blog did a post here.  Here is a list of seminar scams by David Goldman of the Florida Estate Planning Lawyers Blog.  This list was prompted by a post from Michael Bonasera of the Ohio Trust and Estate Blog.  And, the posts were also picked up by Connecticut Elder Law Blog.

 

 

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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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Many people I meet with do not know a "secret" benefit of creating a living trust in Arizona.  Every estate plan including a trust should be drafted with this secret taken into consideration.  After learning the secret, clients are even more excited about the benefits of their trust. 

This secret is how a trust avoids "living probate" in addition to "death probate."  Neither "living probate" nor "death probate" are legal terms, but they aptly describe two times the court and government normally step in to "protect" our interests.

Most everyone has heard of "death probate" when a person dies.  Avoiding this probate is good because the Arizona Superior Court process is slow, public, and can be very expensive.  There have been many books and articles written on the subject, and this is a primary reason why Arizonans create a trust. 

The "secret" of avoiding "living probate" excites my clients when I design their estate plan! 

Avoiding "living probate"  is another very compelling reason to have a trust in Arizona.  Consider what happens if you are severely injured in an accident and suffer serious brain damage, or more commonly you gradually loses the ability to make financial decisions due as you grow old.  You are"incapacitated" and the court and government step in to "protect you."  

When you are incapacitated, a loved one or any interested party can go to probate court and petition to be appointed "conservator" of your money and assets.  Nursing homes have sought to be appointed conservator.  Even if your family agrees, they will have to spend thousands of your money and take unnecessary time, increasing the burden on those caring for you.  When there is disharmony in a family or there are significant assets, the decision of who gets to control your money is often contentious and will cost thousands to tens of thousands more.

Significantly, you will not be able to tell the court your wishes.  Someone that you would never choose yourself may be appointed as your conservator by the court .  This living probate is as undesireable as probate after we die.

A properly drafted trust is the answer to the concern about "living" probate court.  Your trust will designate the person to control the assets.  When you, the owner of the trust become incapacitated, your trusted representative seamlessly step in as successor trustee without court approval or challenge by other "interested" parties.

I was surprised when one client already knew this secret.  His cousin was already taking care of a relative that was incapacitated.  He saw the benefits of a trust and wanted to avoid "living probate."  Having seen that situation, avoidance of "living probate" was very important because he would be living if it happened.

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