An Arizona living trust is a legal document that allows you to transfer legal ownership of assets during your lifetime into a trust, as part of your estate planning. You can continue to use and control the assets during life. After your death, the assets in the living trust are transferred to those people you have chosen as beneficiaries. These types of trusts offer many benefits.
Living Trusts in Arizona
If you create a living trust in Arizona, you are the trust grantor. Your assets become owned by the trust which will be managed by the person you choose as trustee. You can name yourself as trustee, but you need to name a successor trustee who will manage the trust after your death. The whole point of a trust is to ensure that your assets go to the people you choose, your beneficiaries, so you will want to choose them carefully. A revocable living trust allows you to change or cancel the trust at any point during your life, while an irrevocable living trust becomes permanent.
Creating a living trust in Arizona allow you to pass on your assets without having to go through the probate process. Although Arizona uses the Uniform Probate Code, a trust allows a speedy transfer of assets. If your assets pass via your will or through the state intestacy statues, there is a delay as the court approves the process. Arizona has a streamlined process for small estates (valued at under $50,000) and this method may be less expensive if you have a small estate, but does not offer all the protections of a trust.
Do I Need a Living Trust in Arizona?
There is no requirement that anyone create a living trust, however many people choose to do so because of the many benefits it offers. Your living trust allows you to control when and how your assets pass to the people you personally select. A living trust allows you to preempt probate, so there is never a court proceeding or any public record of what property you leave at your death and to whom you leave it. The privacy this provides is important to many people.
If you do not have a living trust, your assets will be passed according to your will, if you have one. The probate process can take months or more depending on the size of your estate. A living trust allows your assets to pass immediately upon your death.
If you do not have a will or a trust, the distribution of your assets is done in accordance with Arizona’s state intestacy law, leaving specified percentages to specific types of relatives, completely outside your control.
A living trust also provides you with protection should be you become incapacitated during your lifetime. Your assets are already in trust, being managed by a trustee you have hand selected, so your affairs will be completely managed.
Living Trusts and Estate Taxes in Arizona
There is no state estate tax in Arizona, however federal estate tax laws do apply and property placed in a trust in Arizona may be exempt from federal estate taxes if placed in an AB trust, sometimes called a marital trust or QTIP trust, which transfers the property in the trust to a surviving spouse. Because the federal tax exemption is more than $5 million per person, these types of trusts are rarely needed. Living trusts do not shelter your assets from Medicaid eligibility spend down laws.
How to Create a Living Trust in Arizona
To create a living trust in Arizona you need to create a trust document that lays out all the details of your trust and names the trustee and beneficiaries. You will sign the document in front of a notary. To complete the process, you fund the trust by transferring the ownership of assets to the trust entity.
Living trusts are a simple way to maintain control of your assets while planning for the future. Creating one can be an important part of your estate plan.
If you're ready to create a living trust in Arizona, LegalZoom can help. Create a living trust online by completing a simple questionnaire. LegalZoom will review your answers and prepare your living trust, and you will receive your complete living trust package by mail.