Estate planning refers to legal arrangements for the orderly transfer of real and personal property to intended beneficiaries when a person becomes incapacitated or dies. An estate refers to real and personal property owned by an individual. These include real estate, businesses, vehicles, furniture, jewelry, other valuable or invaluable items, and bank accounts.
An estate plan, i.e., a will, trust, or power of attorney, is a legal document backing asset transfer by the owner’s prerogative. Regardless of size, every property owner in Arizona must have an estate plan before he/she dies. Otherwise, the distribution of assets follows probate, the court guidelines for transferring the property of deceased persons intestate.
Arizona estate planning law refers to legal principles that guide the preparation and execution of an estate plan as well as the resolution of conflicts or disputes that may arise in the state. Generally, these legal principles are codified in Title 14 of the Arizona Revised Statutes. Federal laws also influence the preparation and execution of estate plans in Arizona.
Estate Planning Legal Issues
Generally, the common legal issues in estate planning in Arizona involve taxation, intestate succession and probate administration, and estate plans, i.e., wills and trusts.
- Taxation
These include estate tax, gift tax, and inheritance tax. Most simple estates in Arizona are transferred from the owner to beneficiaries without tax. However, estates worth more than $11.7 million are subject to federal estate tax. Nevertheless, the estate is taxable only on the amount that exceeds the valuation threshold. There is a base tax and additional tax, with an incremental rate set per the excess valuation. Furthermore, estate gifts to beneficiaries while the owner is alive are subject to the federal gift tax. Arizona does not impose inheritance tax on heirs of estates in the state.
- Intestate Succession & Probate Administration
Probate is a statutory process for administering an estate when a person dies without an estate plan, i.e., intestate. Probate transfers the prerogative of estate division from the deceased to the probate court in his/her county of residence. The court shall establish and execute intestate succession.
Intestate succession is the distribution of an estate to persons entitled to receive property as determined by Arizona rules of descent and inheritance. This part of Arizona estate planning law also makes provisions for distributing an estate to illegitimate children, posthumous children, and adopted children.
- Wills & Trusts
Arizona estate planning law does not restrict the right of a person to make a will. However, the law specifies rules and regulations on will creation and resolving issues that arise under the execution, revocation, and disqualification of beneficiaries in a will.
A trust is a legal arrangement for a third party, called a trustee, to hold, safeguard, distribute and control assets on behalf of a beneficiary or beneficiaries. Arizona Trust Code includes the rules and regulations on the scope, creation, validity, and termination of trust within state jurisdiction.