One of the most commonly used and most important documents in estate planning is a last will and testament that itemizes all of the assets and property that are owned and determines how they will be distributed upon the death of the owner. While a will is beneficial, it’s one downfall is that it does not go into effect until the person passes away. If you have not kept your will up to date and have forgotten to add in new assets and properties, your beneficiaries are going to have to go through probate to retrieve them.
Luckily, this can all be avoided through the use of a living trust. A living trust is a proactive approach to estate planning that sets aside property and assets for safekeeping.
What Is An Arizona Living Trust?
Living trusts are established to provide legal protection for property and assets, to make sure those assets are distributed correctly, to avoid probate, and to avoid or reduce taxes legally. Living trusts, also referred to as revocable trusts, work by appointing a trustee or trustees to look after assets that a trustor has placed into a trust.
For instance, if the father of a family decides to place assets such as the family home and the vacation homes in a trust, he is the settlor, and he can appoint whomever he would like as the trustees. The trustee’s role is to look after all assets that are included in the trust. This includes managing the finances associated with the assets and distributing them according to the settlor’s wishes when they pass away.
Why Is a Living Trust Valuable?
Many people rely on a will to transfer their assets to beneficiaries, but the one drawback of a will is that it is meant to pass assets on once someone has passed away. This means that the assets that the testator plans on passing down to their beneficiaries cannot be passed down until they die. This is somewhat troublesome if there are assets that weren’t added to the will in time or if beneficiaries need to access any of the assets in the trust.
Here are some of the top reasons you should utilize a living trust in Arizona:
- Trustees manage assets on behalf of the settlor
- The trustees must follow the wishes of the settlor
- The settlor receives income from the assets in the trust
- Beneficiaries avoid probate, which saves them money
- The estate is eligible for substantial tax savings
What is a Living Trust Checking Account?
A trust checking account is a bank account held by a trust, and the trustees use it to pay for ordinary expenses and to disperse the assets to the trust’s beneficiaries after the settlor’s death. It is relatively common for assets in trust such as a home to have expenses such as utility bills and taxes that need to be paid, and a living trust checking account provides a way for these expenses to be paid for.
Besides having funds set aside to cover these expenses, having a living trust checking account protects the assets from being taken in divorce proceedings or liability lawsuits. If a trustee is paying for the expenses out of their own pocket, this action makes it seem as if they are the owner of the asset. This means if the trustee ends up going through a divorce, the personal payments can be used as evidence that the asset is shared marital property and must be split in the divorce.
How to Set Up a Living Trust Checking Account
Not all banks provide checking accounts for trusts, so you will need to shop around to find a bank that is willing to work with you. Once you have found a bank, you will need to supply them with documentation such as the original trust agreement, several forms of a valid ID, and IRS form SS4. All of these documents and forms of ID are vital, as the checking account will be named after the trust, and the account will also have the same tax ID number.
Using a Living Trust Checking Account in Arizona
Once your checking account has been created, the next step is to begin adding money into it so it can be used to pay for expenses. Your checking account can be funded in numerous ways, including regular deposits as well as through payouts that come from life insurance policies or any other sources.
While multiple trustees may use the funds in the account, banks require one trustee to be designated as the controller of the account. The designated trustee is in charge of replenishing the account, and they must endorse all checks that are being deposited. Checks that the designated trustee does not endorse will be denied.
Secure Your Assets With an Experienced Estate Planning Attorney
If you are looking to protect your hard-earned property and assets legally, now is the best time to have an experienced estate planning attorney assist you. Don’t put off securing your property and assets until it is too late, get in touch with our team below and get the help you need.
Call our Arizona Estate Planning team at (480)467-4325 to discuss your case today.