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Estate Planning/ Probate/Trust Administration

We can help you with the following areas related to Estate Planning:

  • Power of Attorney
  • Wills
  • Living Wills
  • Revocable Trust
  • Probate
  • Guardianship/ Conservatorship

What is a power of attorney?

A Power of Attorney (POA) is a legal document containing a written authorization to delegate power and authority to act on behalf of another person. The person who signs the POA is called the Principal. The Principal gives legal authority to another person (the Agent or Attorney-in-Fact) to make decisions on behalf of the Principal. There are two main categories: financial and medical. All of the POA documents discussed below require the Principal to execute (sign) the document while they are of sound mind and can fulfill the mental capacity requirements under Arizona law.

What happens if I don’t have a power of attorney and something happens to me?

If a POA was not put in place or is not valid for some reason and an individual is unable to manage his or her personal, financial and/or health decisions then a court proceeding would be started to ensure the individual is protected and taken care of. This process is called Guardianship and Conservatorship. This process typically takes 6 months and costs approximately $4,000.00. All funds would be frozen until the Court Order giving control to the Conservatorship, which could likely cause a great deal of stress and frustration for your loved ones.

What is a will?

A will, sometimes called a “last will and testament” or “pour over will” is a document that states your final wishes and specifically states what happens with your property after you pass away. This document will name the person responsible to handle your affairs after you pass away, the guardians for your children, provide for pets, designate beneficiaries to personal property like jewelry and vehicles. If you have a trust created (see below) then your will states anything not contained in the trust will “pour over”; into the trust.

What is a living will?

A living will, sometimes called an advance health care directive, is a legal document that provides specific instructions regarding the medical care a person wishes to receive (or not receive) if he or she becomes incapacitated or seriously ill and cannot communicate their wishes themselves. It is their final expression or statement to the family and medical care providers regarding their refusal of medical or surgical treatment; and their acceptance of the consequences. The person usually wishes to die naturally, with only the administration of medication or the performance of any medical procedures considered necessary to provide them with comfort and care or to alleviate pain, even though the medication or procedure may shorten their remaining life. A Living Will is the document that helps the patient weigh the quality of his life against what it will take to continue their life

Is this a different document than the Last Will and Testament?

Yes. This is a completely different.

When does the Living Will activate?
For the Living Will declaration to take effect, the attending physician (sometimes two physicians) must determine that there can be no recovery from the irreversible coma, terminal or vegetative condition, and that either death is imminent, or the person can no longer experience a meaningful life.

What are life-prolonging procedures?
Life-prolonging procedures include any procedure that would serve only to artificially prolong the dying process such as nutrition and hydration administered by invasive procedures; antibiotics; ventilators, pacemakers, renal dialysis, or any other mechanical devices designed to assist the functioning of organs; transfusion of blood and blood products; and cardiac or cardiopulmonary resuscitative procedures.

Can the Living Will “release” the Agent from the decisions made?
Yes. Release in this context is a legal word essentially meaning the person “gives up” or releases their legal right (including the Estate of the deceased) to file a lawsuit against the person for their alleged wrongdoing. The person making the Living Will should release and hold harmless any person who, in good faith, terminates life- sustaining procedures in accordance with the guidelines of the Living Will declaration.

Should the Living Will contain a statement of intent?
A statement of intent is another declaration of the persons mental ability and their desires to be medically treated in a specific way if they cannot express their desires. Everyone has the legal right to refuse medical or surgical treatment. Usually, the statement of intent will request that this document be accepted and honored by the family and physician in accordance with their personal beliefs.

Is a Living Will the same as a DNR (Do Not Resuscitate)?
No. A DNR is a completely separate document, which specifically states the conditions related to your preference not to be resuscitated by cardio pulmonary resuscitation (CPR), so that if your heart stops, you will not be revived.

Should the Living Will be witnessed and notarized?
Yes. It is always good practice to have the Living Will witnessed by two (2) individuals and a notary that declare the person signed the document in their presence. They should also further state that the witnesses are not related to person by blood, marriage, or adoption, are not heirs to the estate, and are not responsible for paying the health care costs.

Do I put my request for funeral arrangements such as burial or cremation in the Living Will?
No. Usually this request is contained in a document titled Memorial Instructions or Memorial Letter. This document could include specific information on religious beliefs to be followed, private vs. public attendees, clergy, pallbearers, scripture selections, flowers vs donations, music selections, and specific pictures to be shown. Most funeral directors/businesses allow for you to make pre-arrangements.

Do I include organ and tissue donation in the Living Will?
No. This request is included in several different documents, such as a Medical Power of Attorney. You can also make note on the back of your driver’s license through the Motor Vehicle Department and/or you can get an organ donor card.

 

What is a revocable living trust?
A trust is almost like your own personal company that owns substantially all of your assets. As trustee of your trust, you have 100% control over the assets. You manage the trust estate assets for your benefit. When you die, your trust provides who takes your place as trustee. This successor trustee immediately has control of the assets

in the trust estate without going to court to get that authority. Most clients with children should have a trust to avoid any delay in caring for the children and a trust avoids the expense of a conservatorship mentioned above.

What is probate?
Probate refers to a method by which your property is administered and processed through the court system after you die. The probate court appoints a personal representative (also known as an executor) who then has authority to access bank and investment accounts, sell real estate, pay creditors, and to distribute the estate assets in accordance with the will or intestate succession law (your family members). The average probate case in Arizona takes about a year and costs about $5,000.00.

If I have a will, does that prevent probate? No.

If I have a revocable living trust, does that prevent probate?
Yes. But it is imperative that all assets are held in the trust name. Any mistake will likely result in a probate.

Are there other ways to avoid probate?
Yes. If you own real property “jointly” with another person then your interest automatically transfers without going to court. Or, you could execute a beneficiary deed, which transfers the interest in the real property one a death certificate is recorded with recorder’s office. If you have a money account, make sure there is a beneficiary or payable on death beneficiary and you will avoid probate. Not everyone needs a trust, but everyone does need a “plan.”

Do you need to hire an attorney for estate planning?
The idea of taking care of your affairs when you have the power to do so is based on making sure your wishes are carried out and making it as easy as possible for your loved ones after you have passed away. It is very important to “get it” right because it will take 10x times longer and more expensive to fix if it isn’t and the results could be completely different than your wishes. There are paralegal services offering estate planning and there are even more online websites offering these services. The price difference really isn’t that much between paralegals, lawyers and the websites creating these documents. Each person determines the value of legal services; similar to other services across all industries. Would you build your own home? Would you hire a person knowing they are not a licensed contractor to build your home? Knowing how much time and money it took for you to save your money to build your home, wouldn’t you want to make sure your investment is protected, and your wishes are fulfilled? Some people see the value in engaging a professional and some do not.

What is the average cost?
The average cost of a trust and all of the ancillary documents that go with it such as powers of attorney, will, deed, etc. is approximately $1,500.00 for married couples. Each estate plan is different, and the cost depends on many factors, but the numbers above should serve as a guide. In some situations, there are additional terms or business considerations the client would like included, which takes more time, and more money.

PROBATE

DUTIES OF THE PERSONAL REPRESENTATIVE

      The duties of the Personal Representative are found in Chapter 3, Title 14 of the Arizona Revised Statutes (from now on called “A.R.S.”). You are responsible for knowing and doing your duties according to these statutes. Some of the duties are:

  1. GATHER, CONTROL AND MANAGE ESTATE ASSETS

As Personal Representative, you have the duty to gather and control all assets that belonged to the decedent (the person who has died) at the time of his or her death. After the valid debts and expenses are paid, you have the duty to distribute any remaining assets according to the decedent’s Will or, if there is no Will, to the intestate heirs of the decedent. As Personal Representative, you have the authority to manage the estate assets, but you must manage the estate assets for the benefit of those interested in the estate.

  1. FIDUCIARY DUTIES

As Personal Representative, you are a fiduciary. This means you have a legal duty of fairness and impartiality to the beneficiaries and the creditors of the estate.  You must be cautious and prudent in dealing with estate assets. As Personal Representative, the estate assets do not belong to you and must never be used for your benefit or mixed with your assets or anyone else’s assets. Arizona law prohibits a Personal Representative from participating in transactions that are a conflict of interest between you, as Personal Representative, and you as an individual. Other than receiving reasonable compensation for your services as Personal Representative, you may not profit from dealing with estate assets.

  1. PROVIDE NOTICE OF APPOINTMENT

Within thirty (30) days after your Letters of Personal Representative are issued, you must mail notice of your appointment to the Arizona Department of Revenue and to the heirs and devisees whose addresses are reasonably available to you.  If your appointment is made in a formal proceeding, you need not give notice to those persons previously noticed of a formal appointment proceeding.  See A.R.S. §14-3705.

  1. PROVIDE NOTICE OF ADMISSION OF WILL TO PROBATE

Within thirty (30) days of the admission of the Will to informal probate, you must give written notice to all heirs and devisees of the Admission of the Will to probate, together with a copy of the Will.  You must notify the heirs that they have four (4) months to contest the probate. See A.R.S. §14-3306.

  1. MAIL COPIES OF THIS ORDER TO PERSONAL REPRESENTATIVE

Within thirty (30) days after your Letters of Personal Representative are issued, you must mail a copy of this Order to Personal Representative and Acknowledgment and Information to Heirs and Devisees to all the heirs and devisees of the estate and to any other persons who have filed a demand for notice.

  1. FILE PROOF OF COMPLIANCE

Within forty-five (45) days of your Letters of Personal Representative are issued, you must file with the Court a notarized statement swearing that a copy of this Order was mailed to each devisee, to each heir in intestate (no will) estates, and to any other persons who have filed a demand for notice.

  1. PUBLISH NOTICE

Unless a predecessor personal representative already has fulfilled this duty or you were appointed more than two years after the decedent’s date of death, you must publish a notice once a week for three (3) consecutive weeks in Mohave County in a newspaper of general circulation that announces your appointment as Personal Representative and tells creditors of the estate that, unless they present their claims against the estate within the prescribed time limit, the claims will not be paid. In addition, you must mail a similar notice to all persons you know are creditors of the Estate.   See A.R.S. §14-3801.

  1. PROTECT ASSETS

You must immediately find, identify, and take possession of the estate assets and make proper arrangements to protect them. See A.R.S. §14-3709. All property must be retitled to show ownership in the name of the estate – such as “Estate of (decedent’s name), by (your name) as Personal Representative.” Do not put the estate assets into your name, anyone else’s name, joint accounts, trust accounts (“in trust for”), or payable on death (“POD”) accounts. Do not list yourself or any other person as joint owner or beneficiary on any bank accounts or other assets belonging to the estate. Do not mix any estate assets with your own assets or anyone else’s assets.

If your authority as Personal Representative has been limited by the Court, you must promptly protect the estate assets as ordered and file a Proof of Restricted Assets with the Court. You may not sell, encumber, distribute, withdraw or otherwise transfer restricted assets without first obtaining permission from the Court.

  1. DETERMINE STATUTORY ALLOWANCES

It is your responsibility to determine whether any individuals are entitled to statutory allowances under A.R.S. §§14-2402, -2403, and -2404. Statutory allowances include a homestead allowance, exempt property allowance, and a family allowance.

  1. INVENTORY ASSETS

Unless a predecessor personal representative already has fulfilled this duty, within 90 days after your Letter of Personal Representative are issued, you must prepare an inventory or list of the decedent’s probate assets and their values as of the date of death.  See A.R.S. §14-3706.  The inventory must be either (1) filed with the Court and mailed to all interested persons who request it, or (2) not filed with the Court, but mailed or delivered to: (a) each of the heirs if the decedent died intestate or to each of the devisees if the decedent’s Will was admitted to probate; and (b) to any other interested person who requests a copy of the inventory.

  1. STANDARD OF CARE

In administering estate assets, you must observe the standards of care applicable to a trustee, including the prudent investor rules.  See A.R.S. §14-10801 et seq. and 14-10901 et seq.

  1. KEEP DETAILED RECORDS

You must keep detailed records of all receipts and expenses of the estate. You are required to provide an accounting of your administration of the estate to all persons affected by the administration.  See A.R.S. §14-3933.

  1. PAY VALID DEBTS AND EXPENSES

You must determine which claims and expenses of the estate are valid and should be paid.  You must provide to any creditor whose claims are not allowed prompt written notification they will not be paid or will not be paid in full.  See A.R.S. §14-3806. To the extent there are enough assets in the estate, you are responsible for the payment of any estate debts and/or expenses that you know about or can find out about. If there are not enough estate assets to pay all debts and expenses, you must determine which debts and expenses should be paid according to the law. See A.R.S. §14-3805. You may be personally liable if you pay a debt or expense that should not be paid.

  1. PAY TAXES

It is your responsibility to determine that all taxes are paid and that all tax returns for the decedent and the estate are prepared and filed.

  1. DISTRIBUTE REMAINING ASSETS  

After payment of all debts or expenses of the estate, you must distribute estate assets as directed in the Will or, if there is not a Will, to the intestate heirs. If there are not enough assets in the estate to make the gifts as set forth in the Will, it is your responsibility to determine how the distributions should be made as required by law.  See A.R.S. §§ 14-3902 and -3907. You may be personally liable if you make an improper distribution of estate assets.

  1. CHANGE OF ADDRESS

Until the probate is closed and you are discharged as Personal Representative, you must notify the Court in writing if you change your home or mailing address.

  1. PAYMENT AS PERSONAL REPRESENTATIVE

As Personal Representative, you may be entitled to reasonable compensation.  See A.R.S. § 14-3719. Arizona statutes do not designate percentage fees for your work or say how much a Personal Representative should be paid. You must keep receipts to prove out-of-pocket expenses. In determining whether a fee is reasonable, the Court will consider the following factors:

  1. The time required (as supported by detailed time records), the novelty and difficulty of the issues involved, and the skill required to do the service properly;
  2. The likelihood that your acceptance as Personal Representative will preclude other employment;
  3. The fee normally charged in the area for similar services;
  4. The nature and value of estate assets, the income earned by the estate, and the responsibilities and potential liability assumed by you as Personal Representative;
  5. The results obtained for the estate;
  6. The time limitations imposed by the circumstances;
  7. The experience, reputation, diligence and ability of the person performing the services;
  8. The reasonableness of the time spent and service performed under the circumstances; and,
  9. Any other relevant factors.

18. COURT INVOLVEMENT

Usually, to reduce estate expenses, estates are administered and estate claims and expenses are paid, including the fees to the attorney and Personal Representative, with little Court involvement. The Court does not supervise informal probates or the conduct of a Personal Representative. However, if any interested party believes that the estate has not been properly handled or that the fees charged by the attorney or Personal Representative are not reasonable under the circumstances, that party may require that the Court review the accounting for the Personal Representative’s administration of the estate. Any additional Court involvement may result in additional delay and expenses. If appropriate, the Court may assess the additional expense against the estate or the non-prevailing party.

  1. CLOSE THE ESTATE

            After you have administered the estate and the assets of the estate have all been distributed, the estate must be closed, either formally or informally. In an informal closing, a copy of the Closing Statement is filed with the Court and sent to all persons receiving a distribution from the estate. See A.R.S. §14-3933. For a formal closing, see A.R.S.  §§14-3931 and -3932. Usually, the estate should be completely administered and closed within two (2) years after the initial appointment of the Personal Representative.

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