Regardless of your level of wealth, the failure to establish an estate plan in Arizona (or anywhere, really) can be detrimental to your family.
A properly structured estate plan helps ensure that your family and financial goals are addressed during your life, if incapacitated, and after your death.
What follows below and in this website provides an introductory discussion regarding essential planning that individuals should consider, as well as an overview of lifetime gifting strategies and long-term trust planning.
The following information should be considered essential regardless of whether an individual is married or single.
Basic Estate Planning includes:
Last Will and Testament
A will directs how you want your assets distributed upon your death.
Without a will, your property would pass as required under your state’s intestacy statutes. State law may not provide the inheritance scheme you would choose for your family, and could also increase your exposure to federal estate taxes.
In addition to directing the disposition of your property, a will can enable you to:
- Name an executor, avoiding the trouble and cost of a court-appointed administrator.
- Avoid bonding costs.
- Avoid annual reporting/accounting to the probate court.
- Name a guardian for minor children, substantially eliminating the likelihood of a court-appointed guardianship.
- Protect the children’s inheritances in the event your surviving spouse should remarry.
- Retain assets in trust if distributions to your heirs at your death would be inadvisable.
For high net worth married couples, a will, if structured properly, also can help assure federal estate tax benefits are preserved for the couple’s estates.
Estate tax-efficient wills allow a married couple to take full advantage of the unlimited marital deduction and the federal estate tax exemption ($5.34 million per individual in 2014, as indexed for inflation) of both spouses.
Allocation of the first-to-die spouse’s exemption amount to a trust may reduce estate tax for the couple’s combined estate, provide asset protection and allow control and management by a trustee, while still benefiting the surviving spouse and children.
For couples with more modest estates, estate tax-efficient wills may not be as advantageous from a total federal tax perspective as an “all-to-spouse” will, taking into consideration the unlimited marital deduction, the potential portability of a deceased spouse’s unused “applicable exclusion amount” (as discussed below), and the opportunity to have appreciated assets receive a step-up in tax basis at both spouses’ deaths (which could help reduce the heirs’ capital gains tax exposure).