Arizona Estate Planning for Snowbirds
“Snowbirds” is the affectionate term that refers to retirees in northern states who spend cold winter months in warmer places. Arizona is a great place in the United States for snowbirds to visit, with hundreds of golf courses and luxury RV parks around the state drawing in crowds from across the country.
Although estate planning is always an important topic to consider, there are some unique considerations that should be taken into account when you spend several months out of the year in another jurisdiction.
Understand How Different States Treat Your Real Estate Holdings
For most people, real estate is the most valuable and potentially complicated property they own. In addition to the importance of knowing what type of deed you have for each piece of land, you should consider how the property will be distributed to your heirs after you pass. Property laws can differ from state to state, so you cannot assume that what is true in New York will be the same in California.
In Arizona, real estate that is held by a trust can be distributed to your beneficiaries after you pass away. Because the property is held by the trust, it is not considered part of the deceased estate, meaning that it will not go through the probate process. However, other states may have different rules regarding whether your real estate needs to go through probate or is subject to estate taxes.
Additionally, in Arizona, property in a trust may be subject to income taxes if it earns income. Often, snowbirds hold vacation homes in another state that they rent out to others. It’s important that income is carefully recorded and that income tax is paid.
Prepare Your Advance Directives
A significant part of estate planning involves ensuring that your loved ones can care for you when you are no longer able to do so. This involves preparing financial and medical durable power of attorney documents, which give your financial and health care proxy the ability to make decisions on your behalf. You should also prepare a medical living will, which gives your family permission to take you off life support if the time comes.
In addition to preparing these documents in your home state, I strongly suggest that you prepare these documents for each state you spend a significant portion of the year in. Although your out of state medical power of attorney will likely be sufficient, if you need it in Arizona, it’s better to be safe than sorry in an emergency.
However, it’s not enough to prepare the documents – you should have a discussion with your family about your wishes as you get the paperwork in order. Although your wishes may be laid out, it is often reassuring to let your loved ones know about your decisions, and why you made them.
Keep Your Documents in Order
Finally, after you have taken the time to organize your estate and prepare the relevant legal documents, you should keep your estate planning documents in a safe and orderly fashion. It won’t do much good to put together these documents if your loved ones can’t find your power of attorney documents in an emergency.
You can keep multiple hard copies in an at home safe, do cloud storage of the documents, save them to your phone or put them on a flash drive. The key is to make sure that your loved ones know where these papers are and how to access them in the event of an emergency.
I recommend traveling with your health care power of attorney documents. You never know when a medical emergency may arise. Copies of estate planning documents are almost always as good as the actual originals. Once again, better to be safe than sorry.
This article does not provide legal advice. To discuss your estate plan, concerns you may have regarding your plan or if you spend the winter months in Arizona, contact me to set up a consultation today.