COMMUNITY PROPERTY IN ARIZONA

Most people in Arizona, and practically all married people here, have heard the term “community property.” Most people have a general idea of what it is, but most of us aren’t sure what makes property community property; whether we want something to be community property; or how to convert property into or out of being community property. These are important issues because they impact property ownership, particularly regarding division pursuant to a divorce, and may impact taxes and inheritance where divorce is not involved.

Property, including earnings, acquired during marriage, is legally presumed to be marital community property in Arizona. This presumption can be overcome by clear and convincing evidence to the contrary. Problems occur when such evidence is lacking.

For example, a property might be viewed as separately owned by one spouse, to the exclusion of the other spouse but, because of community property rights, the other spouse, has rights to that property. A piece of real estate may be mistitled in a way that causes capital gains tax advantages from community property status to be missed, causing an increase in tax liability. A piece of property is often labeled as separate in order to assure it stays in one spouse’s family where there is a second marriage and stepchildren. Again, this assumption is sometimes incorrect and the desired inheritance is missed.

At Arizona Mobile Attorneys we can advise you as to the status of property, the advantages and disadvantages of that status, and help you take actions to further your best interests regarding ownership, taxes, and inheritance regarding your property.

© 2024, ARIZONA MOBILE ATTORNEYS

Do I Really Need a Will?

Our clients have often asked us “Do I really need a will?  This question often comes up because the client feels that “the law will take care of it when I die”, or the client doesn’t think they have a lot of property or money to worry about, or because the client thinks that they have already disposed of their property by other means such as a deed, a beneficiary designation for an account, a trust, or some other transfer besides a will that, unlike a will, allows the client to avoid a probate procedure in Superior Court.

The law will only take care of distributing your property if the law follows the way you want the property distributed. People who want their property distributed in a specific fashion should not depend on state law to do that job for them.

The other reasons stated above may be reasons for believing that a will is not needed for the purpose of distributing their property on death, when looked at very narrowly; however, a will has other purposes as well.

First, a will is used to identify a person’s heirs under the law. It is important to do so because will contests are often based on a failure of the testator to adequately state who his or her natural heirs are. This indicates that the testator may lack capacity to make a will. Stating who would legally receive your property if you had no will and died immediately is an important way to lessen the likelihood of any contest, even if some or all of these heirs will not be receiving anything from the will. Stating who your heirs are together with a statement in the will that specifically disinherits any or all of them can be very effective in disinheriting heirs if that is desirable.

Persons with minor children can nominate a guardian for them in their will. Such a nomination will be prioritized by the court over others who might be asked to be so appointed.

Even in the case of a small estate (in Arizona this would mean personal property of $75,000 or less and Real Estate of $100,000 or less) being named in a will entitles a person to utilize a much abbreviated probate procedure for small estates.

Finally, a will is a fail-safe document for property that is never placed in a trust or otherwise transferred outside of the jurisdiction of a probate court. A great example of using a will in this manner in conjunction with a trust is through a pour-over will. This type of will transfers any property subject to a probate proceeding into an existing trust to ensure that the trust provisions for distribution of the property will be applied.

TIME FOR A TUNE-UP?

            The older we get the more conscious we become of the need to put something in place to protect our heirs from the hardship of a death without estate planning. The present time is always the best time to take care of that.

            Sometimes we find ourselves in a situation where there is a need to change arrangements we have already made, for instance:

  • We have an older trust that was made for reasons that are unnecessary now. For example the threshold for being liable for any estate taxes has increased from about $600,000 to about $12 million dollars in the last 20 years, yet people still have overly complex trust documents to deal with estate tax liability.
  • Things have changed over time and you want to change your beneficiaries.
  • You have a trustee that you no longer want to have serve, or who has died, and you want to make a change.
  • You have a beneficiary who does not manage their money effectively and you want an alternative to leaving them a huge sum of money all at once.

Again, there is no time like the present to address these types of issues. Arizona Mobile Attorneys has extensive experience in this area and we stand ready to assist you in this endeavor.

© Arizona Mobile Attorneys

LLCs and Estate Planning

Often, a business, typically a limited liability company (“LLC”) is created as part of an estate plan. This is done because LLCs are somewhat informal business entities and are easy to administer compared to a Corporation. In addition, unlike a Trust, an LLC can continue in existence indefinitely. These types of arrangements are often used to deal with a specific asset, such as a home, vacation cottage, or other real estate. A new federal law called “The Corporate Transparency Act” is going into effect January 1, 2024 with new requirements for companies and very severe penalties for noncompliance, with civil penalties up to $500 per day, with a maximum cap of $10,000. Willfully providing false information in such reporting carries a prison sentence of up to two years.

These penalties are applied to beneficial owners and senior company officers.

This law requires the disclosure by companies of the beneficial ownership in the company (any individual who owns at least 25% of the company is considered a beneficial owner). A new system called BOSS will be made available for companies to report this online. Companies that already exist as of January 1, 2024 will have until the end of the year to comply. Newly formed companies will have 30 days to do so from formation or registration.

At Arizona Mobile Attorneys we assist clients in the formation of businesses and related estate and succession planning. Please call us to arrange an appointment.

© 2023, Arizona Mobile Attorneys

UNDUE DELAY IN ESTATE PLANNING

Many people put off estate planning. They cite many reasons for doing so: “I don’t have time, too many family issues; I’m not sure of exactly what I have to leave for loved ones;  I’m not sure how to make everyone happy” etc.

This often leads to situations where a person dies without any estate plan or creates one very near to death. Both of these situations can cause significant problems.

Dying without an estate plan means that the property that is left behind is subject to probate. Probate is a process in which gathering and distribution of a deceased person’s property is administered by court process. This process is often several times more expensive than creating an estate plan that effectively distributes property privately, quickly and efficiently, outside of the court system.

If a person waits until they are on their death bed to create an estate plan a couple of major problems may arise. First, depending on the nature of their last illness, the person may lack capacity to create and sign off on an estate plan. Even if the person has sufficient capacity, the fact that they waited to do so to the end will often induce others to contest the estate plan based on alleged incapacity or undue influence by other persons which the mere fact of waiting until the end is used as support for those allegations. Secondly, the effect of waiting until the end, though better than doing nothing at all, causes hasty decision-making which in the end may not support that person’s final wishes.

At Arizona Mobile Attorneys we specialize in helping our clients devise effective estate plans that help clients leave the legacy they desire in an effective, efficient manner that takes care of their loved ones.

©2023, Arizona Mobile Attorneys

When Should A Married Couple Consider Estate Planning?

Often times married couples assume that their spouse will inherit their property when they die. They also often assume their children will inherit their property when they die. The truth is that inheritance always depends on the family situation and the nature of the property in a person’s estate.  In a community property state like Arizona a person can die with separate property which is in their own name. A person can die owning community property (property shared equally in their marriage) or they can own property jointly with a spouse or other persons as jointly held (non-community) property.

Certain legal rules must be applied that can sometimes have less than desirable results for both the deceased person and their surviving family members. These rules are very much dependent on what type of property the deceased person held while living.  For example a person can inherit a home from their deceased parent. This property being held solely in the inheriting person’s name is considered their separate property. If that person dies leaving a surviving spouse and a minor child they may very well believe that the husband will inherit the house and carry on. The truth is the husband would inherit half of the home and the minor child would inherit the other half of the home.

The above result seems harmless at first glance; however, the inheritance would only occur as the result of a time consuming and costly probate proceeding in the Superior Court. In addition the fact that the minor child has acquired a substantial asset means that their father will need to establish a conservatorship on their behalf which will be subject to substantial time consuming court supervision and substantial legal fees and costs until the child reaches 18 years of age.  This would render the child’s financial estate a public matter during their minority.

A much more time and money efficient approach for the inheriting parent would  to establish an estate plan upon their own inheritance that is designed to pass the property directly to the person(s) they wish to give the property to in a manner that bypasses probate proceedings as well as any subsequent conservatorship of an heir, keeping the matter private. At Arizona Mobile Attorneys we have prepared many such estate plans and can assist you with your plan.

© 2023, Arizona Mobile Attorneys

What is Elder law?

Elder law is an area of law that focuses on legal advice which takes into consideration the key issues facing older and disabled adults: housing, financial well-being and autonomy/quality of life. An Elder Law attorney assists with planning for costs of long-term care, reviewing and applying for government programs, choosing retirement plans and many other issues such as planning and settling your estate. Disability planning is a very important piece of Elder Law. It gives peace of mind to individuals that their personal and financial affairs are in order in case they are not able to manage their own affairs.

Tech Support Scam

A recent article has appeared in the Arizona Republic discussing a substantial increase in Tech Support Fraud across the U.S. according to the FBI. The article stated that losses from this fraud in Arizona in just ½ of 2018 are 263% of losses in all of 2017. While this type of fraud can victimize anyone, it has been increasingly targeted at citizens over the age of 60.

The scams start with an unsolicited phone call, email or computer-screen pop-up notification from someone purporting to be a tech-support specialist who has identified a virus infecting the victim’s computer. They offer to fix the problem – which very likely doesn’t exist – FOR A FEE.

When a victim responds to a call, email or clicks on a pop-up, criminals will offer to help fix the victim’s technical issues, leading them to request remote access to the victim’s device. At that point the victim will have already paid them money.

NOTE: It is this writer’s experience that these scams are presented suddenly, while a person is working on their computer, and prevents the work from continuing until you call a number in a pop-up to get the problem “fixed.”  One way to combat this problem is to press the ctrl key, then press the alt key while still holding the ctrl key down, and pressing the Delete key, while still holding the ctrl and alt keys down. This will interrupt the program and you can activate a program called  “Task Manager”  by clicking it on a window that comes up.  You can then select the web browser you are using (Chrome, explorer, etc.)  to eliminate the problem. At that point you should run any anti-spyware and anti-virus program you have and scan for problems to see if there is really anything going on and to clean up your computer.

The FBI states, anyone who is online is vulnerable to this scam, perpetrated by well-organized criminal organizations around the world looking to victimize people. Fraudulent tech support companies often will advertise their services online alongside legitimate companies, seeking to trick a victim.

With this access, scam artists can download malware to the victim’s computer, launch phishing attacks against the victim’s contacts and access the victim’s personal information such as tax returns or health records.

Criminals initiate contact with the victim and convince them to allow remote access. The FBI warns that access should never be granted to an unverified company.

According to the FBI a specific form of the fraud known as the “Fake Refund” is also becoming increasingly common. This scheme involves an offer to the victim for a refund for previous support services. The scam artist will then pretend to refund too much money to the victim’s account and ask the victim to return the difference. This kind of “refund and return” process can happen multiple times, causing the victim to potentially lose thousands of dollars.