Come meet with us in our Scottsdale or Phoenix office!
Frequently Asked Questions
Why Do I need To Estate Plan?
Here are five reasons for using a revocable trust as the primary method for disposing your estate:
Pass on assets privately, quickly and efficiently: Using a revocable trust to distribute your estate provides a degree of privacy because the trust won't be filed with the probate court and therefore won't become a public document (unlike a will). Further, property transferred into a revocable trust during your lifetime won't be subject to the expense and delays of probate. And if you become incapacitated, the trustee of your revocable trust can manage the assets without the need for a court-appointed guardian.
Preserve assets for heirs and charities: You can make changes to your revocable trust at any time. But when you die, it becomes irrevocable, and the provisions that pertain to the disposition of assets to your heirs and charities will be administered by your trustee under the terms of the trust.
Your trust can include language to allow the trustee to make special elections to minimize or eliminate any applicable estate tax (federal or state). The trust can also include language that allows the trustee to protect assets from creditors of, or a legal judgement against, a trust beneficiary. A will cannot do this.
Assets that remain in your trust after your death (when the trust becomes irrevocable) are generally not considered marital property. That means those assets aren't subject to division in a divorce settlement if the beneficiary gets divorced. However, in many states, a divorce court may take the beneficiary's income interest into consideration when making decisions about the division of marital property or marital support obligations.
Retain control over distributions: Your trust can include language that stipulates when distributions of income and principal will be available to beneficiaries, such as children, grandchildren or others. Your trust can include distributions for specific purposes such as for education or health care expenses. You can also include language for distributions based on attaining specific ages, such as one-third of the principal is distributed at age 30, half at 35 and the remainder at 40.
Distribute retirement accounts efficiently: When your trust is the beneficiary of your retirement accounts (IRAs, retirement plans, etc.) and it includes the proper language, the trustee can limit withdrawals to the retirement account's minimum required distributions based on the life expectancy of the oldest beneficiary. This prevents a beneficiary from making the mistake of liquidating a retirement account and triggering a large income tax obligation.
Keep assets in the family: When a surviving spouse remarries, or in the case of second marriages, the concern arises that a new spouse's children could inherit assets and reduce what children of the first marriage might get. In this case, a special trust provision (called a Qualified Terminable Interest Property trust, or QTIP) can be used to provide income to the second spouse while he/she is alive. After his/her death, the assets are distributed to the children of the first marriag
Planning with Retirement Benefits?
More and more people are holding the bulk of their wealth in qualified plans and individual retirement accounts (IRAs). Although most plan participants know that these vehicles provide income tax-free growth for assets held in them, few participants understand the rules for plan distributions. With proper planning, participants can make the most of this income tax benefit and even pass some of that benefit on to their beneficiaries.
I HAve outstanding Taxes, what are my options?
An Offer in Compromise:
A compromise is an agreement between the taxpayer and the IRS that is a result of the taxpayer making an Offer in Compromise (OIC) under Internal Revenue Code (IRC) section 7122 (Preamble to TD 9007, July 18, 2002). For the IRS to enter into a compromise agreement with the taxpayer, the following conditions must be met:
· Doubt as to liability [Treasury Regulations section 301.7122-1(b)(1)];
· Doubt as to collectability [Treasury Regulations section 301.7122-1(b)(2)]; or
· A need to promote effective tax administration because either 1) collection of the full amount would cause economic hardship for the taxpayer [Treasury Regulations section 301.7122-1(b)(3)(i)] or 2) compelling public policy or equity considerations provide a sufficient basis for compromising the liability [Treasury Regulations section 301.7122-1(b)(3)(ii)].
What is an operating agreement?
Like corporate bylaws or a partnership agreement, an operating agreement spells out an LLC’s operating rules and the rights and duties of its managers. It can address everything from how the LLC is managed to how key business decisions are made and the procedure for transferring ownership interests.
How can I express MY medical Wishes?
Health Care Proxy
A "health care proxy," sometimes called a "health care surrogate" or "durable medical power of attorney," is a durable power of attorney specifically designed to cover medical treatment. You appoint a person and grant to him or her the authority to make medical decisions for you in the event you are unable to express your preferences about medical treatment. Most commonly, this situation occurs either because you are unconscious or because your mental state is such that you do not have the legal capacity to make your own decisions. Normally, one person (not multiple persons to act at one time) is appointed as your health care proxy. It is quite common, however, for you to appoint one or more alternate persons (successors) in the event your first choice proxy is unavailable. You should confirm prior to appointing someone as your proxy that he or she will in fact be willing and able to carry out your wishes. If your preferred proxy has, for example, a religious view that prevents him or her from carrying out your wishes, you should name someone else. As in the case of a living will, medical professionals will make the initial determination as to whether you have the capacity to make your own medical treatment decisions.
What is Probate?
Probate is the formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate and distribute assets to the intended beneficiaries. The laws of each state vary, so it is a good idea to consult an attorney to determine whether a probate proceeding is necessary, whether the fiduciary must be bonded (a requirement that is often waived in the will) and what reports must be prepared. Most probate proceedings are neither expensive nor prolonged, which is contrary to the claims of many vendors selling living trust and other products.