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Delays in estate planning based on elections not recommended

It is often human nature to delay tasks that are viewed as unpleasant or complex. However, with the upcoming elections on the horizon, now may be the ideal time for estate planning. Arizona residents who wait may find that their desired plans will not be valid in the future.

Since election outcomes are impossible to predict, financial professionals advise clients to begin drafting their plans. If there is a change in the controlling party after the 2020 election, then existing tax and estate planning laws may face drastic overhauls. There are indications that future legislators may pass widespread reforms in the existing tax-exempt gift and inheritance amounts. While there are often grandfather clauses in these types of legislation, there is no guarantees that one's plans will be valid in the future.

Estate planning can be undone by beneficiary mistakes

One of the least enjoyable chores for many Arizona residents is contemplating how their affairs and property should be disbursed after their demise. However, once one has settled down to the task of estate planning, it is important that errors do not undo all of the hard work. Those who are unsure about certain details relating to trusts may benefit from learning more about selecting beneficiaries.

One of the most important points is whether cash assets would be a desired form for inheritance. If so, then provisions must be made for ensuring that these types of assets are available for executors to disperse. A trust is often set up to minimize taxes to both the estate and to future heirs. If these trusts are not fully utilized due to individuals chosen as beneficiaries over the trust, it may create an unintended estate tax burden.

A spendthrift trust could resolve estate planning dilemmas

Spendthrift trusts have gotten a bit of a bad rap due to their name, which implies that heirs are profligate spenders unable to keep two dimes to rub against one another.

While it is certainly true that a spendthrift trust can be used to put the brakes on heirs' reckless financial habits, that is certainly not the only use for these types of trusts.

Planning and professional advice can ease divorce costs, process

When a couple chooses to marry, they are not usually focused on the what-ifs. Unfortunately, many marriages do not stand the test of time and a couple finds themselves facing the prospect of a divorce. In order to avoid some of the harsh financial ramifications of divorce, there are measures Arizona residents can take into consideration.

In spite of any verbal agreements that a couple may arrive at, not having written documentation to support these agreements may come with a significant cost. If one spouse has purchased a home before a marriage, marital contracts can ensure that one's investments is protected in a divorce. Likewise, retirement savings can be subjected to court-ordered division in the absence of a prior written agreement. 

Retirement and estate planning often go hand in hand

According to an American Association of Retired Persons report, an estimated 60% of adults do not have any formal documents in place regarding their final wishes. While the numbers are improved for those nearing retirement, there are still many people who have not engaged in any formal estate planning. Arizona residents who are approaching retirement may find this is a good time to review their estate plans

Many working adults dream of retiring, but this change can also provoke feelings of insecurity and uncertainty. For many, this is an ideal time to make sure they have plans in place in the event an incapacitating illness or injury leaves them incapable of making sound decisions or an accident results in their untimely death. There are several documents that can provide instructions for loved ones to follow to fulfill one's final wishes, beginning with a will. This tool dictates how an estate should be handled including the provision for heirs, especially minor children.

Bypass trusts may be a useful tool for estate plans

There are many purposes that well-drafted estate plans can serve, including protecting assets from certain taxes. For married couples with considerable assets, bypass trusts may play a beneficial role when incorporated in their plans. Arizona residents may find that these trusts can ensure that taxes are controlled and surviving spouses and their heirs are provided for in the manner they desired.

Bypass trusts are actually two separate trusts in one. The first one, referred to as the A trust or marital trust, is set-up for the benefit of a surviving spouse. This trust can provide a surviving spouse with income and access to assets to use as he or she sees fit. The assets in this trust are tax exempt. This portion of the trust is also revocable with the terms subject to change as the surviving spouse chooses.

Estate planning is about a lot more than limiting tax liabilities

The Tax Cut and Jobs Act of 2017 made some major changes to the Internal Revenue Code. Since it significantly increased the exemption amounts for the estate and gift taxes, it made the need to engage in estate planning for tax purposes a less pressing issue for the majority of people. However, there are still many reasons why Arizona residents may consider drafting these important plans. 

Based on the number of filings regarding the exemption for estate and gift taxes in 2013 and the fact that the exemption amounts have doubled, it is estimated that less than 0.1% of adult deaths in 2018 will include taxable estate filings. As such, estate planning for the average person will not have to focus on shielding heirs from these type of taxes. It is estimated that the average person revisits an existing plan about every 20 years, which means that many documents are likely outdated and may need to be revised.

Who keeps the house in Arizona divorce?

Divorce is rarely an easy process, but it can prove quite difficult for couples who must divide up significant assets, especially real estate. Owning a home is a strong step you may take as you build your assets, but when divorce comes knocking, determining which spouse keeps a marital home is often a major stumbling block along the way to a fair property division agreement.

To make matters potentially more complicated, Arizona uses community property laws to govern how spouses divide their marital property. The laws require spouses to split their property equally, allowing less room for negotiation. If you own a home and see divorce in Arizona on the horizon, it is wise to build a strong divorce strategy that protects your rights and interests, keeping these issues in mind.

Irrevocable trusts may be part of planning for future care needs

There are many concerns that need to be addressed in life, including paying for future health care. Though trusts may often be associated with wealthy individuals, these tools can also be used for those who wish to preserve an estate while still qualifying for assistance from Medicaid. Arizona residents who are worried about providing for their heirs and still receiving elder care may benefit from irrevocable trusts.

Paying for nursing or assisted living care is costly -- especially when there are limited resources. In an effort to protect some assets, people may choose to transfer assets to their heirs through gifts. The Medicaid program requires that a five-year period elapse from the time of asset transfer to the time an individual will qualify for benefits. Unfortunately, transferring assets in this manner will not protect them from a beneficiary's creditors or divorce actions.

Cancer diagnosis can heighten importance of estate planning

In the United States, approximately 13% of women will receive a diagnosis of breast cancer at some point in their lives. Men also suffer from this disease with an estimated 3,000 diagnosed annually. Though such a serious illness is a frightening prospect, it may only magnify the importance of estate planning. Arizona residents who are facing a serious health crisis are encouraged to attend to this important issue sooner rather than later.

Understandably, a cancer diagnosis is a deeply unsettling experience. While the focus is obviously directed to the appropriate medical treatment, there are other matters that may require attention in the time right after the diagnosis. Waiting until treatment has progressed may make it nearly impossible to fully concentrate on drafting plans that will best reflect one's wishes. In addition, the financial and physical strain of obtaining needed medical care may require that previous plans be revised.

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