Introduction: What is Estate Planning?
Estate planning is often misunderstood as something only wealthy people need. In reality, every adult with assets, family members they care about, or strong opinions about their medical care needs an estate plan. It's not about how much you have—it's about protecting what you've built and the people you love.
"Estate planning is not about death. It's about protecting your family and ensuring your wishes are honored, whether you're facing incapacity, death, or simply want peace of mind today."
At its core, estate planning encompasses all the legal arrangements that govern what happens to you and your assets during your lifetime and after death. This includes:
Asset Distribution
Who receives your property and when
Guardian Designation
Who cares for minor children
Healthcare Decisions
Your medical care wishes if incapacitated
Financial Management
Who handles your finances if you cannot
Asset Protection
Shielding assets from creditors and lawsuits
Tax Minimization
Reducing taxes on wealth transfer
Common Misconceptions
"I'm not rich enough for estate planning"
Reality: Everyone with a home, car, bank account, or family needs a plan. Without one, the state decides what happens.
"I'm too young to worry about this"
Reality: Accidents and unexpected illness don't discriminate by age. Young parents especially need guardianship provisions.
"My spouse will automatically get everything"
Reality: In Arizona, your spouse may only receive half of community property, with the rest going to children or other heirs.
"A will is all I need"
Reality: Wills go through probate, don't help during incapacity, and become public record. Most families benefit from additional documents.
The Cost of NOT Having a Plan
When someone dies without an estate plan (called dying "intestate"), the consequences can be severe:
- The court decides who gets your assets—not you
- Probate costs can consume 3-8% of your estate
- The process takes 6-18+ months, during which assets may be frozen
- Your family's financial information becomes public record
- A judge chooses your children's guardian if you haven't named one
- Family conflicts often arise when there's no clear guidance
- If incapacitated, the court may appoint a stranger to manage your affairs
Arizona-Specific
Arizona's intestacy laws follow a specific hierarchy: your spouse, then children, then parents, then siblings, and so on. If you're unmarried with no children, your entire estate may go to relatives you barely know—or to the state if no relatives can be found.
1Understanding Your Options
The foundation of any estate plan involves choosing between wills, trusts, or a combination of both. Understanding the differences is crucial to making the right choice for your family.
Wills Explained
A Last Will and Testament is a legal document that specifies how you want your assets distributed after death and who should manage that process (your "executor" or, in Arizona, "personal representative").
Advantages
- • Relatively simple and less expensive to create
- • Allows you to name guardians for minor children
- • Can be easily updated with codicils
- • Appropriate for smaller, simpler estates
- • No need to retitle assets
Limitations
- • Must go through probate (public, time-consuming)
- • Only takes effect after death
- • No protection during incapacity
- • No asset protection benefits
- • More easily contested in court
Trusts Explained
A trust is a legal arrangement where you transfer assets to be held by a trustee for the benefit of beneficiaries. The most common type—a revocable living trust—allows you to maintain complete control during your lifetime.
Types of Trusts
Revocable Living Trust
You maintain control and can change or revoke it anytime. Avoids probate, provides privacy, and allows seamless management if you become incapacitated. This is the most common choice for Arizona families.
Irrevocable Trust
Cannot be easily changed once created. Used for asset protection, estate tax reduction, and Medicaid planning. Requires giving up control of the assets.
Special Needs Trust
Provides for a disabled beneficiary without disqualifying them from government benefits like SSI or Medicaid.
Testamentary Trust
Created by your will and only takes effect after death. Often used to manage inheritances for minor children or young adults.
When You Need a Trust vs. Just a Will
While everyone needs at least a will, you likely need a trust if you:
Arizona-Specific
Arizona has streamlined probate procedures, but even "informal" probate takes 4-6 months minimum and requires court involvement. For estates with real estate, a trust is almost always the better choice for avoiding delays and maintaining privacy.
Common Questions
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A complete estate plan is more than just a will. These additional documents are equally important—some would argue even more so, since they protect you during your lifetime, not just after death.
Healthcare Power of Attorney
This document designates someone (your "agent" or "healthcare proxy") to make medical decisions on your behalf when you cannot communicate. This includes decisions about treatments, surgeries, medications, and end-of-life care.
Choosing Your Healthcare Agent
- • Someone who knows your values - They'll make decisions you would make
- • Someone who can handle pressure - Medical crises are stressful
- • Someone geographically accessible - They may need to be present quickly
- • Someone willing to serve - Always discuss this role in advance
Living Will (Advance Directive)
While your healthcare agent makes decisions based on circumstances, your living will provides specific instructions about end-of-life care preferences:
- • Whether to use life-sustaining treatments if terminally ill
- • Preferences about artificial nutrition and hydration
- • Pain management wishes
- • Organ donation decisions
Having a living will doesn't mean "pulling the plug." It means YOUR wishes—whatever they are—will be followed, not someone else's interpretation of what you might have wanted.
Durable Financial Power of Attorney
This document authorizes someone to handle your financial affairs if you become incapacitated. "Durable" means it remains effective even during incapacity. Without this document, your family would need expensive, time-consuming court proceedings to gain access to your accounts.
Critical Warning
A power of attorney grants significant control over your finances. Only name someone you trust completely. Consider naming a backup agent in case your first choice is unavailable. Some attorneys recommend requiring two agents to act together for added protection.
HIPAA Authorization
Federal privacy laws (HIPAA) prevent healthcare providers from sharing your medical information without authorization. A HIPAA Authorization form allows designated individuals—your healthcare agent, family members, and others you specify—to access your medical records and speak with your doctors.
Arizona-Specific
Arizona combines the healthcare power of attorney and living will into a single comprehensive document. However, a separate HIPAA Authorization is still recommended to ensure all relevant parties can access your medical information.
Common Questions
3Protecting Your Children
For parents, estate planning isn't optional—it's essential. The most important aspect isn't about money; it's about who will raise your children if you cannot.
Naming Guardians
If both parents die or become incapacitated, a guardian steps in to raise your minor children. Without a named guardian in your will, a court will decide—and their choice may not align with your wishes.
Factors to Consider When Choosing a Guardian
Shared Values
Similar parenting style and beliefs
Age & Health
Physically able to raise children
Location
Proximity to extended family, schools
Financial Stability
Can they manage household expenses?
Relationship
Do your children know and trust them?
Willingness
Have they agreed to serve?
Pro Tip: Name Backup Guardians
Life changes. Your first choice may become unavailable due to health issues, relocation, or changed circumstances. Always name at least one alternate guardian.
Setting Up Trusts for Minors
Leaving money directly to minor children creates problems. Until age 18, they cannot legally manage assets, and at 18, they receive everything outright—rarely a good idea for a large inheritance.
A children's trust solves both problems by:
- • Appointing a trustee to manage funds until children reach ages you specify
- • Setting distribution ages (e.g., 25, 30, or staggered distributions)
- • Defining appropriate uses (education, health, support, etc.)
- • Providing incentives tied to education or achievements (optional)
Example Trust Distribution Schedule
Education Funding
Your trust can prioritize education expenses, ensuring funds are available for college, trade school, or other educational pursuits. Consider:
- • 529 education savings accounts (tax advantages)
- • Trust provisions specifically for education expenses
- • Life insurance designated for education funding
Common Questions
Protecting Minor Children?
Our Document Checklist Generator will create a customized list of documents needed for your family situation.
Generate Your Checklist4Managing Your Assets
One of the most common estate planning mistakes is not understanding how different assets pass to heirs. Your will doesn't control everything—in fact, many of your most valuable assets bypass your will entirely.
How Different Assets Pass
| Asset Type | How It Passes | Goes Through Probate? |
|---|---|---|
| Life Insurance | Beneficiary Designation | No |
| 401(k), IRA, Pension | Beneficiary Designation | No |
| Joint Bank Accounts | Right of Survivorship | No |
| POD/TOD Accounts | Payable/Transfer on Death | No |
| Property in Trust | Trust Terms | No |
| Arizona Beneficiary Deed | Deed Designation | No |
| Real Estate (titled in your name) | Will/Intestacy | Yes |
| Vehicles, Personal Property | Will/Intestacy | Yes |
Beneficiary Designations
This is critical: Beneficiary designations on retirement accounts, life insurance, and POD accounts override your will. If your will says "everything to my spouse" but your 401(k) still lists your ex-spouse as beneficiary, your ex-spouse gets the 401(k).
Action Required
Review ALL beneficiary designations now. Log into each account and verify:
- • Primary beneficiaries are current
- • Contingent (backup) beneficiaries are named
- • Designations align with your overall estate plan
Joint Ownership Considerations
Joint ownership with right of survivorship passes assets automatically to the survivor—but has significant drawbacks:
- • Loss of control: The joint owner can sell, spend, or give away their share
- • Creditor exposure: The joint owner's creditors can reach the asset
- • Gift tax issues: Adding someone to title may trigger gift taxes
- • Medicaid problems: Joint ownership can affect benefit eligibility
Real Estate and Out-of-State Property
If you own real estate only in your name (not in a trust or with a beneficiary deed), it must go through probate. If you own property in multiple states, your family may face probate in each state—a process called "ancillary probate."
Arizona-Specific
Arizona offers the Beneficiary Deed (A.R.S. § 33-405), which allows your home to pass directly to a named beneficiary without probate. It's revocable during your lifetime and can be a simple alternative to a trust for the primary residence. However, for multiple properties or more complex situations, a trust is usually preferable.
Common Questions
5Planning for Incapacity
Estate planning isn't just about what happens after death—it's equally about what happens if you become incapacitated during your lifetime. Without proper planning, your family may face expensive, time-consuming court proceedings just to help you.
What Happens Without Planning?
If you become incapacitated (through accident, stroke, dementia, etc.) without proper documents in place:
- Financial Accounts Frozen: Banks won't let anyone access your money, even to pay your bills
- Court Guardianship Required: Family must petition the court to appoint a guardian/conservator
- Expensive Process: Legal fees typically $5,000-$15,000+ for guardianship proceedings
- Ongoing Court Oversight: Annual accountings and reports required to the court
- Loss of Privacy: Court records are public—everyone can see your finances
- Family Conflicts: Family members may fight over who should be appointed
Healthcare Decisions During Incapacity
Your Healthcare Power of Attorney allows your designated agent to:
- • Consent to or refuse medical treatments
- • Choose doctors and healthcare facilities
- • Access your medical records
- • Make end-of-life care decisions
- • Authorize organ donation
Financial Management During Incapacity
Your Financial Power of Attorney allows your designated agent to:
- • Pay your bills and manage daily finances
- • Access bank and investment accounts
- • File taxes on your behalf
- • Manage real estate and business interests
- • Apply for government benefits
Trust Advantage for Incapacity
A revocable living trust provides additional protection: if you become incapacitated, your successor trustee can immediately step in to manage trust assets without any court involvement. This is often smoother than relying solely on a power of attorney, which some financial institutions may refuse to honor.
Avoiding Court-Appointed Guardianship
The cost of creating a complete set of incapacity documents is a fraction of the cost of guardianship proceedings—and you maintain control over who manages your affairs.
With proper planning, court-appointed guardianship should never be necessary. Your documents work together:
- Healthcare Power of Attorney: Handles medical decisions
- Living Will: Documents end-of-life wishes
- Financial Power of Attorney: Manages finances and daily affairs
- Revocable Trust: Manages trust assets through successor trustee
- HIPAA Authorization: Allows family access to medical information
Common Questions
6Minimizing Taxes and Costs
While estate taxes affect fewer families than you might think, proper planning can still save your heirs thousands of dollars in taxes, probate costs, and administrative expenses.
Federal Estate Tax Basics
2024 Federal Estate Tax Exemption
$13.61 Million
Per individual. Married couples can effectively shield $27.22 million from federal estate tax.
The federal estate tax rate for amounts over the exemption is 40%. However, because of the high exemption, fewer than 0.2% of estates owe any federal estate tax. Still, the exemption amount is set to drop significantly after 2025.
2026 Exemption Warning
Without Congressional action, the federal exemption will drop to approximately $7 million per person in 2026. Larger estates should plan now while the higher exemption is available.
Arizona Tax Considerations
Arizona-Specific
Arizona has NO state estate tax and NO inheritance tax. This makes Arizona one of the most favorable states for wealth transfer. Your heirs will not owe any Arizona tax on inheritances, regardless of amount.
Strategies for Reducing Taxes
Even if estate taxes don't apply to you, these strategies can reduce income and capital gains taxes for your heirs:
Stepped-Up Basis
When heirs inherit assets, the cost basis "steps up" to the date-of-death value. This can eliminate decades of capital gains taxes. Plan asset ownership accordingly.
Charitable Giving
Leaving assets to charity reduces your taxable estate and can provide income tax deductions. IRAs are particularly tax-efficient to leave to charity.
Annual Gift Exclusion
You can gift up to $18,000 per person per year (2024) without using your lifetime exemption. This can transfer significant wealth over time.
Irrevocable Life Insurance Trust (ILIT)
Removes life insurance proceeds from your taxable estate. Important for large policies and estates near the exemption threshold.
Avoiding Unnecessary Probate Costs
Probate costs in Arizona typically include:
- • Attorney fees: 2-4% of estate value (negotiable)
- • Personal representative fees: up to 5% of estate value
- • Court filing fees: $300-$500
- • Appraisal and accounting costs
- • Publication and mailing costs
For a $500,000 estate, probate costs could easily exceed $20,000. A properly funded trust avoids probate entirely, saving your family significant time and money.
Common Questions
Estimate Your Estate Value
Use our free calculator to estimate your estate size and potential tax exposure.
Calculate Now7Business Owner Considerations
If you own a business—whether a solo practice, family business, or company with partners—estate planning takes on additional complexity. Without proper planning, your business could be forced to close, leaving your family without income and your employees without jobs.
Business Succession Planning
Every business owner needs to answer these fundamental questions:
- Who will take over? Family member, key employee, partner, or outside buyer?
- When will transition occur? At retirement, disability, death, or gradually over time?
- How will the successor get the resources? Buy the business, receive as gift, or inherit?
- What if no successor is identified? Sell to competitors, liquidate, or close?
- How will non-involved family members be treated fairly? Business goes to one child, other assets to others?
Buy-Sell Agreements
If you have business partners, a buy-sell agreement is essential. This legally binding contract specifies what happens to a partner's share upon death, disability, retirement, or departure.
Types of Buy-Sell Agreements
- Cross-Purchase: Partners buy each other's shares
- Entity Purchase: Business buys departing owner's shares
- Hybrid: Combination approach with flexibility
Key Agreement Elements
- • Triggering events (death, disability, etc.)
- • Valuation method and timing
- • Payment terms and funding
- • Non-compete provisions
Protecting Business Assets
Business owners face unique liability risks. Proper structure and planning can protect both business and personal assets:
- • Entity selection: LLC or corporation provides liability protection
- • Operating agreements: Clear governance and succession provisions
- • Insurance: Key person, business continuation, buy-sell funding
- • Asset separation: Keep personal and business assets distinct
Family Business Transitions
Passing a business to family members requires careful planning to address:
- • Fairness among children: Not all children may be involved in the business
- • Competence: Interested family members may not be capable successors
- • Control issues: Who makes decisions after you're gone?
- • Tax efficiency: Gifting and valuation strategies
- • Training: Preparing successors before transition
Common Questions
8Special Situations
Not every family fits the traditional mold. These special situations require additional planning considerations.
Blended Families
If you have children from a prior relationship and a current spouse, balancing everyone's interests requires careful planning:
Key Considerations
- • QTIP Trust: Provides income to surviving spouse, with remainder to your children
- • Prenuptial agreements: Can clarify separate vs. marital property
- • Life insurance: Can provide for spouse while preserving other assets for children
- • Clear communication: Discuss plans with all family members to avoid surprises
Special Needs Planning
Leaving assets directly to a person with disabilities can disqualify them from essential government benefits like SSI and Medicaid. A Special Needs Trust (SNT) solves this problem:
- • Trust funds supplement (not replace) government benefits
- • Can pay for education, recreation, personal care, and other quality-of-life expenses
- • Must be carefully drafted to comply with government benefit rules
- • Professional trustee often recommended due to complex rules
Arizona-Specific
Arizona has its own ABLE Act accounts that allow some disabled individuals to save up to $100,000 without affecting SSI eligibility. These can complement a Special Needs Trust but don't replace proper trust planning for larger amounts.
Charitable Giving
If philanthropy is important to you, estate planning can maximize your charitable impact:
Direct Bequests
Leave specific amounts or percentages to charities in your will or trust
Charitable Remainder Trust
Income to you/family, remainder to charity; potential tax benefits
Donor-Advised Fund
Immediate tax deduction, recommend grants over time
IRA to Charity
Most tax-efficient way to give; avoids income tax on distributions
International Assets
If you own property in other countries or have foreign citizenship, estate planning becomes more complex:
- • Different countries have different inheritance laws (some have "forced heirship")
- • You may need separate wills for assets in different countries
- • Tax treaties may affect how assets are taxed
- • U.S. citizens/residents are taxed on worldwide assets
- • Working with attorneys in each relevant jurisdiction is essential
Common Questions
9The Estate Planning Process
Understanding what to expect when working with an estate planning attorney helps you prepare and ensures a smooth process.
What to Expect When Working With an Attorney
Initial Consultation
We discuss your family situation, assets, goals, and concerns. This meeting is typically free and helps determine if we're the right fit.
Information Gathering
You complete a questionnaire providing details about assets, family members, and wishes. We may request copies of deeds, beneficiary forms, and existing documents.
Plan Design
Based on your information, we design a comprehensive plan and explain our recommendations. You make decisions about trustees, guardians, and distribution provisions.
Document Drafting
We prepare your custom documents, typically including trust, will, powers of attorney, and healthcare directives.
Review Meeting
We review all documents together, answer questions, and make any necessary revisions.
Signing Ceremony
Documents are properly executed with witnesses and notarization as required. You receive your originals and copies.
Trust Funding
We help transfer assets to your trust—the critical step many people miss. This includes deeds, account registrations, and beneficiary changes.
Documents to Gather
Before your first meeting, gather information about:
Family Information
- • Full names and birthdates
- • Marriage dates and prior marriages
- • Children and grandchildren info
- • Potential trustees/guardians
Asset Information
- • Property deeds
- • Account statements
- • Life insurance policies
- • Business documents
Existing Documents
- • Current wills/trusts
- • Powers of attorney
- • Prenuptial agreements
- • Buy-sell agreements
Beneficiary Forms
- • Retirement account designations
- • Life insurance beneficiaries
- • POD/TOD designations
Timeline Expectations
A typical estate plan can be completed in 2-4 weeks:
- • Simple will-based plan: 1-2 weeks
- • Trust-based plan: 2-4 weeks
- • Complex plans (business, special needs): 4-8 weeks
Costs and Fee Structures
Estate planning attorneys typically charge one of these ways:
- Flat Fee: Most common for estate planning. You know the total cost upfront. Typical ranges:
- • Basic will package: $1,500-$2,500
- • Trust-based plan: $3,500-$7,500
- • Complex plans: $7,500-$15,000+
- Hourly: Usually $250-$500/hour. Less predictable but may be appropriate for unusual situations.
Common Questions
Ready to Start Your Estate Plan?
Schedule a free consultation to discuss your specific situation and learn how we can help.
Schedule Free Consultation10Maintaining Your Plan
Creating an estate plan isn't a "set it and forget it" task. Life changes, laws change, and your plan needs to evolve with you.
When to Review and Update
At minimum, review your estate plan every 3-5 years. But certain events should trigger an immediate review:
Annual Review Checklist
Even without major life changes, conduct this annual review:
- Verify beneficiary designations on all accounts are current
- Confirm your trustees and agents are still appropriate choices
- Review any new assets and ensure they're properly titled
- Update your digital asset inventory and password access
- Check that your personal property memorandum is current
- Ensure your fiduciaries know where documents are stored
- Consider whether any beneficiaries' circumstances have changed
- Review life insurance coverage amounts
Working With Your Attorney Ongoing
At Legacy Law Group, we believe in building lasting relationships with our clients:
- • We store copies of your documents securely
- • We're available for questions throughout the year
- • We proactively notify you of relevant law changes
- • We offer discounted updates for existing clients
Your estate plan is a living document. The relationship with your estate planning attorney should be ongoing, not a one-time transaction.
Common Questions
Ready to Protect Your Family?
You've taken the first step by educating yourself. Now let's create a customized plan for your family. Schedule your free consultation to discuss your specific situation with an experienced estate planning attorney.