- December 27, 2018
Trusts can seem complicated, especially for the who’ve been trained to think “I’m not rich, why do I need a trust?” However, trusts are useful tools for those attempting to circumvent probate court, in mixed families, where minors will receive large sums of money, where there are large assets to transfer, and for those worried about the effects of incapacity, among other reasons.
First, Probate. Arizona currently allows you to collect personal property valued at less than $75,000 or real property with equity valued at less than $100,000 through the small estate administration process. Assets without beneficiary designations will be subject to probate whether or not you have a last will and testament. In its most basic form, probate is the court set up to establish the validity of a will or determine the personal representative and heirs where there is no will.
A revocable trust in Arizona, also known as a revocable living trust or family trust depending on who you talk to, helps to move assets around probate. In general, revocable trusts are previously (to death) created contracts, whereby a Trustor transfers ownership of individual assets to a Trustee to hold and distribute those assets in accordance with the terms of a Trust during incapacity or after death.
Revocable trusts are normally revocable by the Trustor (or Grantor, or Settlor) during the lifetime of that Trustor, or prior to incapacitation. Most times, once the Trustor becomes incapacitated or passes away, a successor Trustee will take over to manage the assets, either for the benefit of the Trustor or to pass them to named beneficiaries. Each trust is different and can include different terms for different things, so these general statements may not be applicable in your situation.
Many trusts include provisions that allow the successor trustee to pass assets to minors or to the guardians of minors who are named beneficiaries. Assets can be held until a beneficiary reaches a certain age or educational level, and there can even be restrictions for minors or beneficiaries with substance abuse issues. Where there are children in mixed families, assets can be set aside at the death of a first spouse to protect them for those children born to the first spouse.
A revocable trust is an option for many families and is not just for those passing or protecting a lot of money. Each family’s situation will impact the vehicle with which assets should be protected and transferred. A revocable trust doesn’t always fit, but each family should evaluate the options for themselves. If you have any questions as to whether a revocable trust or other options might be able to help your family, call us for a complementary consultation at (480) 994-5000 in the Valley or (928) 458-7402 in Northern Arizona.