{"id":918,"date":"2017-11-30T14:43:04","date_gmt":"2017-11-30T14:43:04","guid":{"rendered":"https:\/\/www.jacksonwhitelaw.com\/arizona-estate-planning\/?page_id=918"},"modified":"2022-08-03T22:56:23","modified_gmt":"2022-08-03T22:56:23","slug":"why-is-estate-planning-important","status":"publish","type":"post","link":"https:\/\/www.jacksonwhitelaw.com\/arizona-estate-planning\/blog\/why-is-estate-planning-important\/","title":{"rendered":"Why Is Estate Planning Important?"},"content":{"rendered":"
Estate<\/a> planning isn\u2019t just for the wealthy. The complexity of an estate plan will certainly vary from case to case, but there are a handful of contingencies that everyone needs to prepare for. Following are 10 reasons why estate planning is important.<\/p>\n It\u2019s a common mistake to focus estate planning solely on what will happen after you die. Transferring assets to your heirs (also known as beneficiaries<\/a>) is important, but so is the time preceding your death when illness, injury, or senility can render you incapacitated. If a serious car accident leaves you in a coma, how will the doctors know your preferences regarding life-sustaining treatments such as artificial life support and tube feeding? If you have lived a long, healthy life and you\u2019re prepared for a natural death, how will the physicians or emergency responders know that you don\u2019t wish to be resuscitated? The answers to these important questions should be articulated in a living will, also known as an advance healthcare directive<\/a>, that your doctors and family members can consult if you are ever unable to communicate important healthcare decisions. Without this, your doctors and your family will be left to wonder what you would do, making already difficult decisions even harder.<\/p>\n In addition to your living will, you\u2019ll need to designate trusted individuals to handle your affairs on your behalf. If you become incapacitated, you\u2019ll need someone to continue paying your bills, manage your investments, and provide for your dependents. You can empower someone to handle your financial and legal affairs with a durable power of attorney<\/a>, and you can authorize someone to make important medical decisions for you with a healthcare power of attorney.<\/p>\n A power of attorney will dissolve when you die, so you\u2019ll also need to nominate someone to handle your estate once you\u2019ve passed away. This person will be known as your executor or personal representative<\/a>, and you can nominate them for the position in your will. If you fail to do this, the court will appoint a third-party administer who should provide unbiased administration, but who may not act in the best interests of your intended beneficiaries.<\/p>\n Your death will be an emotionally difficult time for your family and friends; don\u2019t make it even harder by leaving them to handle your funeral and burial arrangements alone. If you have specific requests, or if you have the means to pay for the services, make it known in a Letter of Intent attached to your will.<\/p>\n If you are the primary breadwinner in the home, your surviving spouse may have a hard time maintaining the standard of living your family has enjoyed. If you and your spouse die together, your minor children and other dependents will be unable to provide for themselves altogether. A proper estate plan should ensure that your family\u2019s needs are provided for in your absence. If the value of your estate isn\u2019t sufficient to cover their needs, consult with a qualified financial advisor about using a life insurance policy to bridge the gap. If you have minor children, talk to an estate planning attorney about using a trust<\/a> to provide income for them during childhood, and transfer the assets to them when they reach adulthood.<\/p>\n In addition to providing financial support for your children, you\u2019ll want to choose a guardian<\/a> to care for them if both you and your spouse pass away. If you fail to do this, the court will assign a guardian. If there is no next-of-kin willing to take the children, your children will be placed in foster care. To avoid this, choose a trusted family member or friend to serve as the primary guardian, and indicate a secondary or alternate guardian who will care for your children if the primary guardian is unable to do so. Speak with these potential guardians ahead of time so they have the opportunity to accept the responsibility, as they have the right to decline even if you nominate them in your will.<\/p>\n While many haven\u2019t personally experienced probate court, most people understand that it can be a long, costly process that should be avoided as much as possible. An uncontested will usually takes about 4 \u2013 6 months to transfer property through informal probate<\/a>, but a contested will could take several years depending on the complexity of the situation.<\/p>\n In Arizona, small estates can completely bypass probate court if the estate has less than $75,000 in personal property, and less than $100,000 in real property. If you qualify, simply fill out a non-probate affidavit<\/a> and submit the document to the Superior Court of Arizona.<\/p>\n If your estate is too large for the state\u2019s small-estate exception, you can still position your assets to avoid probate. Retirement accounts (e.g. IRA, 401k), accounts held in joint tenancy, accounts with transfer-on-death (TOD) or payable-on-death (POD), real property held in joint tenancy, and life insurance death benefits, will all automatically pass to the beneficiary listed on the account when you die. Probate is not required to transfer these assets. For assets that are subject to probate\u2014individual accounts, personal property, and real property held in the decedent\u2019s name or as tenants in common\u2014you can transfer these assets to a trust during your lifetime. When you die, the assets held in trust will skip probate and transfer directly to your beneficiaries.<\/p>\n1.\u00a0To Prepare for End-of-Life Healthcare and Incapacitation<\/h2>\n
2.\u00a0To Nominate Trusted Individuals to Handle Your Affairs<\/h2>\n
3.\u00a0To Alleviate the Strain on Your Friends and Family<\/h2>\n
4.\u00a0To Financially Provide for Your Spouse, Children, and Dependents<\/h2>\n
5.\u00a0To Provide Care for Your Minor Children<\/h2>\n
6. To Avoid Probate<\/h2>\n
7.\u00a0To Minimize Estate Taxes<\/h2>\n