ARIZONA LAST WILLS
A Last Will handles your affairs when you die
What Does A Last Will Include?
A Last Will is also known as a Last Will and Testament. It includes:
- Who gets what when you die. This includes your personal stuff and your money. You can name anyone you want. You can name individuals and charities in different percentages. For example, you can say everything should go to “Kyle”, but if Kyle is not alive, then everything should go to Kathy.
- Who is in charge of distributing your assets. This is the executor. An executor in an Arizona Last Will is known as a Personal Representative. You can name Kyle as Personal Representative or you can name 2 people who will work together.
NOTE: Any time you name 2 people as Personal Representatives, you want to include whether the 2 people have to make all decisions jointly, or whether one or the other can make decisions independently.
- Most importantly, a Last Will includes who will raise minor children. I recommend that my clients have a Plan A and a Plan B. If your first choice of guardian is unable to serve, then you have a second choice included. Here are some things to consider when choosing a guardian:
- Will your children have to move out of state?
- How old are your guardians and are they raising children?
- What is the quality of your children’s current relationships with the guardians?
- How will other family members feel about your choice of guardians?
Does Everyone Need A Last Will?
The short answer is “Yes”. If you want your wishes followed, then you must put those wishes in writing. If you have minor children, the only document in which you can name guardians for your kids is a Last Will. Even if you have a Revocable Living Trust, you still have a Last Will that goes along with it to name guardians for your kids.
Having said all of that, most of my clients choose to have a Revocable Living Trust, and a Last Will that names guardians for their children.
What Are The Downsides To A Last Will?
In the “old” days, everyone had a Last Will. It was the only game in town for laying out how you wanted your money distributed when you died. Here are some of the problems with a Last Will.
- If you only have a Last Will, your estate will probably need probate. Most people want to avoid probate if possible.
You can avoid probate by naming a beneficiary on all of your assets, including your bank accounts, house, life insurance and retirement accounts.
However, naming a beneficiary can be a big problem.
- If a beneficiary is married to a spouse who you cannot stand, and your beneficiary dies, then that spouse will get the beneficiary’s share.
- If your beneficiary should not receive all of those millions outright and you name him/her as a beneficiary, then he/she will get all of those millions outright.
- If you only have a Last Will that leaves money to your minor children, your loved ones may need to go to court to get authority to babysit your money for the minor children until the children turn 18. This is not fun. You can avoid this situation by putting language in the Last Will that says that a trust account will be set up for the minor children and the kids can get the money when they are 30, for example. This takes care of the court authority issue, but probate then is needed before the trust account can be established.
- If you only have a Last Will and own real estate in Arizona and in another state, then a probate may be needed both in Arizona and in that other state. Also, not fun. You can beneficiary designate your real estate in Arizona. This is done using a Beneficiary Deed. It says when you die, a named person gets the house. The Arizona house will avoid probate. This does nothing, though, to avoid probate in another state.
You can avoid all 3 of these scenarios by choosing to do a Revocable Living Trust instead of a Last Will. It used to be that only very wealthy folks used Revocable Living Trusts, (meaning they can be amended as often as you want). These Trusts were used to avoid payment of estate tax. Now, the vast majority of people have Revocable Living Trusts for the following reasons:
- Assets that are controlled by a Revocable Living Trust do not get probated.
- If you want money to bypass your in-law, you can say in a Revocable Living Trust that if your son dies, his share goes to his kids, and not to his icky spouse.
- A Revocable Living Trust allows you to say that young recipients will get their inheritances outright at an age other than 18. There is no need for any court involvement.
If you have real estate in different states, deeds can be done in each state, tying the property to the Trust. This then avoids probate in every state.