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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that the average person revisits an existing plan about every 20 years, which means that many documents are likely outdated and may need to be revised.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.

Divorce may help former spouses focus on being better parents

Parenting is an exhausting job. When you add in the struggles of a troubled marriage, spouses may be unable to fully focus on their parenting responsibilities. Arizona families who are going through a divorce and are worried about parenting may choose to share custody.

It is sometimes claimed that children of divorce struggle both academically and socially. However, the tide may be slowly changing since more and more fathers are becoming more involved in parenting. Divorced fathers are discovering that they can form strong bonds with their children and make sound decisions on their own. Men have expressed a sense of relief and freedom when they are left to make parenting decisions without the worry that the other parent will override or undermine those decisions.

Be sure to include digital life in estate planning documents

Before the advent of technology, most people could handle their final wishes through wills and trusts. However, since so much of life is handled through online accounts, estate planning may need to take this into consideration. Arizona residents who need to establish their own plans may wish to ensure these digital assets are included when drafting their plans.

It may have once been adequate to simply provide a trusted individual with passwords to log into email and other accounts, and either close them out or ensure that they are managed. However, without proper authorization, this person could be accused of hacking, which could block all access to the affected accounts. There is now a legal remedy to this problem through the use of a form referred to as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows the naming of an individual who can legally access accounts by way of a will, trust or power of attorney. Some sites have made provisions for a legacy access, provided the owner has made this provision.

When your estate plan includes a business partnership

Sole practitioners and those who share legal or medical practices with others have more complex estate planning concerns than many other Tucson residents. As you approach your retirement years, you may be faced with several options regarding your business practice.

Some of our clients decide to sell their interest in their medical or legal practice as they approach retirement. Others prefer to retain an ownership interest and perhaps maintain a limited practice even in retirement. But one thing is certain — decisions need to be made regarding the future of your practice once you have passed on.

Estate planning may be vital tool for single-parent families

Parents work hard to provide for the needs of their children. Part of that provision includes estate planning, which may be especially important for single-parent families. Arizona residents who are concerned about how their children would fare if they died unexpectedly may wish to establish a trust.

Families that are headed by two parents may have an advantage in that, if anything happens to one of them, their children will still have a parent to provide for them and guide them into adulthood. Single parents may not have another parent as back-up in the event of their untimely demise. It is in these scenarios when a trust becomes invaluable. Along with the establishment of this planning tool comes the vital decisions of selecting the most appropriate individual to oversee the trust and the welfare of children.

Don't avoid estate planning based on these common fallacies

Few people like to think about death, especially their own. But those that do may find some comfort in the knowledge that they have protected loved ones through estate planning. Unfortunately, many Arizona residents mistakenly believe that having a plan in place is not necessary.

There are several common misconceptions about estate planning. Some worry that drafting a will hastens death. Of course, everyone dies, though making a will does not necessarily mean one has reached the end of the line. However, not having a will means that the state will decide how to divide one's property after death, and that may or may not be in accordance with the individual's wishes. Another common reason for not having an estate plan is lacking significant assets, but a will can also specify a guardian for minor children and what one wishes as far as final arrangements.

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