Phoenix, Arizona Trust Lawyers
Expert Phoenix Arizona Trust Attorneys for Comprehensive Estate Planning Solutions
An Arizona trust may be used for many purposes, including: to pass assets after your death, to provide for a loved one without giving them free access to the funds, to support a charity, to help a disabled loved one without compromising their access to Medicaid and other important benefits, to protect assets against lawsuits, and to ensure that assets stay in the family.
The best way to determine what type of trust best serves your needs is to talk with an experienced Arizona trust attorney. Your attorney will also draft trust documents to ensure that the trust is properly created under Arizona law and that it fulfills your goals. The information on this page provides a general overview of how trusts work, how they’re beneficial, and the differences among types of trusts.
What is a Trust?
A trust is a separate legal entity created to hold assets. Every trust has a grantor (the creator of the trust, who places property in it), a trustee (the person responsible for managing the trust assets for the benefit of someone else), and one or more beneficiaries (the people who receive the benefit of the trust). The property no longer belongs to the grantor, but to the trust.
Here’s a simple example:
- A grandmother creates a trust to pay for her grandchild’s college education. She is the grantor, and appoints her financial manager as trustee. The grandchild is the beneficiary. The terms of the trust specify that the funds are to be used only for educational purposes, and provide for what happens to the trust assets if the grandchild never attends college or receives a full scholarship and doesn’t need the funds for college.
- She transfers a sum of money into that trust, and the trustee manages that money over the years, ideally growing the funds. When the grandchild is ready to start college, the trustee pays out funds according to the terms of the trust. The terms may be general (“for college expenses”) or may be specific (“for college tuition and fees, to be paid directly to the institution”).
- Since the grandmother transferred funds into the trust and appointed a trustee to manage the funds for the benefit of the grandchild, she need not have any further direct involvement. In fact, the trust funds will be available to pay for the grandchild’s college expenses even if the grandmother has passed away.
A trust may be revocable or irrevocable. With a revocable trust, the grantor is free to change their mind and take the assets back or change the beneficiaries at any time. When the trust is irrevocable, the grantor permanently transfers assets into the trust and has no control over them or the trust beneficiaries after the transfer. In the example above, the trust could be either revocable or irrevocable. If it was revocable, the grandmother could terminate the trust and reclaim the funds at any time she chose.
Common Types of Arizona Trusts
A living or “estate planning” trust can be used to transfer property after the grantor’s death. Many people prefer to pass their property, whether real estate or other assets, through a trust. With a trust, the transfer is more efficient and less costly than passing property through probate. Living trusts are always revocable.
Here’s an example of how a living trust operates:
- A married couple creates a trust with the intention of passing property to their adult children when they pass away. The couple are the grantors of the trust, since they are transferring their own property into the trust. During their lifetimes, they also serve as both trustees and beneficiaries. In other words, they continue to use the trust property as they wish and for their own benefit.
- The trust documents also appoint a successor trustee, and successor beneficiaries (the adult children). The successor trustee manages the trust for the benefit of the couple’s children, according to the terms of the trust.
Often, the trust assets are transferred directly to the successor beneficiaries, or liquidated and the proceeds paid out to the children. The property is transferred more quickly than it would be in probate, and the process is typically more expensive. In addition, passing property through a trust offers the family more privacy, since probate proceedings are a matter of public record, while trusts are private.
Special Needs Trusts
Family members with the best of intentions can create a catastrophic situation for a relative with special needs when they leave them money or other property in a will. The inheritance can create a “worst of both worlds” situation, where the money isn’t enough to cover the disabled person’s ongoing medical care, but is enough to disqualify them from the public benefits that typically cover those expenses.
Arizona law provides a way for a family member or other benefactor to provide for a loved one who is dependent on Medicaid or other public benefits without disrupting eligibility. The funds in a special needs trust aren’t considered assets for purposes of determining eligibility for benefits. However, the trust must be constructed in a particular way, which includes limiting use of the funds to certain types of expenses, including clothing, personal care, education, and medical expenses that aren’t covered by another source.
These are just two of the most common types of trusts we create for clients. The best way to find the type of trust best suited to your needs is to speak with an experienced Phoenix trust lawyer and explain what you hope to accomplish with the trust.
Talk to a Trust Attorney Today
Creating a trust is complicated, and many types of trusts have very specific requirements. An experienced trust attorney can explain the differences between revocable and irrevocable trusts, help determine what type of trust would best serve your purposes, and create documents that fulfill the law and make your intentions for the funds clear and irrefutable.
To learn more about how Kadish Associates Law Group can help you provide for your family and protect your assets, call 480-967-2688 right now, or fill out the contact form on this site.