Will an Estate Disaster be Your Legacy?
Boldface names like Aretha and Prince make the news, when they die without a will. However, for the average family, someone dying without a will is no headline. It’s an expensive and stressful mess, and sometimes, can tear families apart.
What happens when someone dies without a will is usually, for a few days, nothing. No one knows what to do. The family must find an estate planning attorney who knows nothing about the family, its assets, family relationships or what the deceased person may have wanted to happen and start the process of untangling a mess. According to the article “Don’t have a will? Lack of estate-planning could cost your successors dearly,” from The North Bay Business Journal, this is definitely not how you want to be remembered.
The most common way to avoid confusion, expense and stress is to have an estate plan, including a will, in place. Another tool used in estate planning is called a “pour-over” will. A pour-over will states that assets that have not been placed in the living trust, should go there when you die. By creating a trust that contains all of your assets, you are avoiding the cost and time it takes to go through the probate process.
A living trust is a legal document that places your assets inside a trust for your benefit, while you are still living. When you die, the assets are distributed by your chosen representative, which in this case is a successor trustee, to the beneficiaries you have named.
All states have their own laws about how trusts are treated. However, if you live in Arizona, the court can initiate a probate case when there is no will and there are assets requiring the opening of a probate, particularly concerning real estate owned in the decedent’s name. The probate process starts with the filing of a probate petition in the county in which the decedent lives. The court then appoints the personal representative, the individual with the fiduciary responsibility of administering the probate properly under the law. The court typically appoints a close relative—a spouse, adult child or grandchild, in that order—as an administrator.
That person is responsible for settling your debts, including final state and federal income taxes. Debts are deducted from the assets of the estate, then the administrator distributes the remaining assets to the deceased person’s heirs.
If you are survived by children but have no spouse, then the children inherit everything in equal shares. If you are survived by a spouse only, then assets are handled differently, depending upon whether the assets are community or separate property. Community property is property acquired during the marriage, including income earned during the marriage.
Separate property is property that a spouse owned before marriage or after a separation. It also includes property that a spouse inherits or receives as a gift before, during, and after marriage. Assets can change status, if they are commingled, if the spouses have a written agreement, or the spouses improve separate property with community income.
After a decedent passes, the spouse gets all of the community property. When the decedent is survived by a spouse and there are no children, grandchildren, parents, siblings, nieces or nephews, then the spouse also inherits all the separate property.
There personal representative is also responsible for filing the decedent's final tax return, collecting documentation of and valuing probate assets for tax purposes, and then distributing those assets to the proper heir or devisees. The probate process closes with the filing of a closing statement with the probate court where the personal representative assures that court that all assets have been distributed and the process has followed the requirements of Arizona statutes.
It sounds like a lot of trouble for a grieving family member, doesn’t it?
No one actually wants to leave this kind of a disaster for their loved ones. If you choose to work with an estate planning attorney, they will create legal documents for you to execute that will convey your wishes for your assets and your legacy for your family and loved ones. At the Soto Law Firm we can help you work through any family issues, no matter how simple or complex. Call us today for a free consultation.
Reference: The North Bay Business Journal (September 24, 2018) “Don’t have a will? Lack of estate-planning could cost your successors dearly”
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