by Lisa Paine | Feb 26, 2025 | Estate Planning, Trusts, Wills
Divorce is an emotional and complex process, but one important aspect that often gets overlooked is your estate plan. If you don’t update it, your estranged spouse could still inherit your assets or make crucial financial and healthcare decisions on your behalf. In Arizona, unless you specify otherwise, your spouse remains a beneficiary until your divorce is finalized.
To protect your interests, here are key steps to updating your estate plan during a divorce:
1. Update Your Will and Trust
One of the first things you should do during a divorce is review and update your will or trust. Many estate plans automatically designate a spouse as the primary beneficiary, executor, or trustee. If these documents aren’t revised, your assets could unintentionally pass to your estranged spouse.
While Arizona law revokes provisions for a former spouse once a divorce is finalized, these provisions remain in effect during the divorce. That means your spouse may still inherit from your estate unless you update your documents in advance.
2. Understand Arizona’s Community Property Laws
Arizona is a community property state, meaning most assets acquired during marriage are jointly owned and subject to equal division in a divorce. This can impact your ability to transfer assets or update beneficiary designations before your divorce is finalized.
Before making any changes, consult both your divorce attorney and an estate planning attorney to ensure you’re following Arizona law and protecting your financial future.
3. Review and Update Beneficiary Designations
Certain accounts—such as life insurance policies, retirement plans, and payable-on-death bank accounts—have designated beneficiaries. If you don’t update these designations, your estranged spouse may still inherit these funds.
However, some changes may require spousal consent while the divorce is ongoing. For example, in some cases, retirement account beneficiary changes need written consent from your spouse. Always check with your divorce attorney before making any updates.
4. Update Powers of Attorney and Healthcare Directives
Estate planning isn’t just about assets—it also covers financial and medical decisions if you become incapacitated.
If your estranged spouse is listed in your power of attorney or healthcare directive, they may still have the legal authority to make medical and financial decisions for you. If that’s not what you want, you should update these documents as soon as possible to appoint someone you trust.
5. Remove “Right of Survivorship” on Jointly Owned Property
If you and your spouse own property jointly with “right of survivorship,” the property automatically passes to the surviving spouse, regardless of your will or trust. You may be able to terminate this designation during your divorce, ensuring your share of the property is distributed according to your wishes.
6. Protect Your Children’s Future
If you have children, updating your estate plan is especially important.
- Review and update guardianship designations in your will to reflect your current wishes.
- Consider setting up or modifying a trust to protect your children’s inheritance and provide for their education, healthcare, and living expenses.
Stay Proactive with Your Estate Plan
Divorce brings a lot of legal and financial changes, and your estate plan should not be left behind. By updating your documents, you can ensure that your assets go to the right people, the right decisions are made on your behalf, and your children’s future is protected.
To navigate this process smoothly, work with a qualified estate planning attorney in Arizona. They can help you make the right changes while staying compliant with state laws and the terms of your divorce.
Disclaimer: Any changes to your estate plan, asset transfers, or beneficiary designations should be reviewed with both your divorce attorney and an estate attorney. This ensures compliance with Arizona’s community property laws and the terms of your divorce.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | Jan 8, 2025 | Estate Planning, Tax, Trusts, Wills
As we enter 2025, it’s important to stay informed about the current federal estate and gift tax laws, including annual exclusion limits and significant changes anticipated by the end of this year.
Annual Exclusion Amount
The annual exclusion amount for gifts in 2025 allows individuals to give up to $19,000 per recipient without incurring gift tax or needing to file a gift tax return. This exclusion is a valuable tool for wealth transfer and estate planning, as gifts within this limit do not count against your lifetime exemption amount.
Estate and Gift Tax Exemption
The federal estate and gift tax exemption for 2025 remains historically high at $13.99 million per individual. This exemption permits significant wealth transfers without triggering federal estate or gift taxes. Married couples can combine their exemptions, effectively shielding up to $27.98 million from taxation.
Sunset of the Current Exemption
The current exemption levels are set to sunset at the end of 2025. If no legislative action occurs, the exemption amount will revert to pre-2018 levels, estimated at approximately $7 million per individual (adjusted for inflation). This reduction could significantly impact estate planning strategies, potentially exposing more estates to federal estate tax liability starting in 2026.
Planning Considerations
Given the scheduled sunset, 2025 presents a strategic window to utilize the historically high exemption amounts. Potential strategies include:
- Lifetime Gifting: Maximize the use of your lifetime exemption through substantial gifts before the reduction.
- Irrevocable Trusts: Consider establishing irrevocable trusts to transfer wealth outside of your taxable estate.
- Spousal Planning: Use spousal lifetime access trusts (SLATs) to preserve wealth while maintaining indirect access to gifted assets.
- Charitable Planning: Consider charitable donations and charitable remainder trusts to support causes you care about while reducing your taxable estate.
Review your current estate plan with our office to see how these changes may impact your financial goals. Proactive planning can help minimize tax liability and protect your legacy for future generations.
For questions or to schedule a consultation, contact Lisa Paine today.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | Jun 21, 2021 | Estate Planning, Trusts, Wills
Many people think that estate planning is just about what happens when someone dies. However, an equally-important part of estate planning is ensuring that you are cared for while you are still alive. If you become incapacitated, even for a short period of time, who will pay your bills or decide where you should live? Who will determine what doctors will care for you, or what treatments and medicines you will receive?
A comprehensive estate plan will include powers of attorney for both your finances and health care to ensure that the persons making decisions on your behalf are the ones that you want. You can select different people – and backups – for your financial and health care powers of attorney. Without these powers of attorney, if you become incapacitated, your family may have to go through the court process of having a guardian and conservator appointed for you and that can be expensive and onerous.
Besides the routine responsibilities that your agent under a financial or health care power of attorney may have, you can also give specify directions regarding different situations. For example, if you are incapacitated, do you want to continue making charitable donations or paying for a grandchild’s piano lessons? Can your health care agent make mental health care decisions on your behalf?
The clearer you are with your wishes, the better your loved ones will be able to care for you during any periods of incapacity. So, when you are thinking about your estate planning, be sure to consider how you will be cared for during your lifetime as well.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | May 3, 2021 | Estate Planning, Trusts, Wills
One of the best things about working with someone or a couple on their estate plan is that a primary goal is usually to take care of their children, grandchildren, and other loved ones. I enjoy getting to know the families, hearing their stories, and helping them make sure future generations will be protected and cared for.
Because their focus is on others, many clients do not think about making sure they are cared for during their lifetimes and during any periods of incapacity. This is equally important, if not more important, than taking care of others. Too many times since COVID-19 pandemic started, I have received heart-wrenching phone calls from children whose parents have become ill. They want to know how they can help take care of their parents’ finances, who is the proper person to make medical decisions, or how do they make end of life care decisions.
Nobody wants to contemplate these types of issues. I don’t like to think about them for myself or my family either. What we learned during COVID-19 pandemic is that things can change in an instant. It is so important to put documents in place to give authority to those who will be decision-makers if someone becomes incapacitated. Once those documents are together, it is time for another uncomfortable yet critical step. It is vitally important to talk to the decision-makers about your wishes so, if they are needed, they can be as prepared as possible.
Providing for your family means more than figuring out how to distribute your assets. It also means giving them the tools to make sure you are cared for during your lifetime.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
by Lisa Paine | May 7, 2020 | Estate Planning, Wills
If you’re like most people, there is a laundry list of things you’d rather do than think about your estate plan. While it can be a challenging area to discuss, your estate plan is essential to ensure you and your family are protected and cared for, and that your assets are distributed as you wish at your death. While estate planning is not one-size-fits-all, it will be helpful to familiarize yourself with the documents that are often included in estate plans. Your attorney will work with you to customize these documents to meet your specific estate planning goals.
An effective estate plan includes documents to:
- Care for your financial and health care needs while you are living,
- Care for your family and loved ones per your instructions, and
- Distribute your assets after your death.
Revocable Living Trust
A trust is often the cornerstone of your estate plan. Your trust will be used to manage most of your assets during your lifetime, during any periods of incapacity, and after your death.
One benefit of a trust is that it is very flexible and customizable. Upon your death, your trust will include instructions regarding how you would like your assets distributed. For example, your trust can provide for education and health care for your children or grandchildren, but delay principal distributions until they reach particular ages or achieve certain accomplishments. In addition, protection can be added to prevent your children or grandchildren from accessing trust assets if they are having creditor issues, substance abuse issues, going through a divorce, or other similar circumstances.
Another benefit of a trust is that assets owned by your trust avoid probate. Probate is the court supervised process for determining the validity of a Last Will and Testament (if one exists), and managing and distributing probate assets. Probate is often costly and time-consuming, and should be avoided if possible. One of the best ways to avoid probate is to title your appropriate assets to your trust.
Common terms you may find in your Trust:
- Revocable Living Trust – The trust is Revocable, which means you will be able to revoke or amend the trust during your lifetime. Since you are creating your trust during your lifetime, it is a Living trust. Another type of trust can be created through your Last Will and Testament at your death (called a testamentary trust).
- Settlor – The Settlor, also called a Trustor, is the person(s) who created the trust and who transferred assets to the trust. You, and your spouse if a joint trust, will be the Settlors of your trust.
- Trustee – The Trustee is the person(s) or institution who manages your trust assets, including making necessary decisions regarding the trust. You, and your spouse if a joint trust, will likely be the initial Trustees of your trust. You will name successors to serve in your place if you are unable to continue serving as Trustee.
Last Will and Testament
Your Will is only effective at your death, which means it cannot be used to manage your assets if you become incapacitated. If your estate plan includes a Revocable Living Trust, your Will is a “Pour-Over Will,” which takes assets outside of your trust at your death and transfers them to your trust. If your estate plan does not include a Revocable Living Trust, your Will will be used to manage your probate estate and distribute your assets at your death. Assets in either a Pour-Over Will or a traditional Will need to go through probate before they are distributed.
Your Will also names a Guardian or Conservator for your minor or incapacitated children.
Common terms you may find in your Will:
- Testator/Testatrix – The person who makes the Will. Testator can be used for either a male or a female; Testatrix is used only for a female.
- Personal Representative – In Arizona, the Personal Representative, also called an Executor, is the person you nominate in your Will, and who is appointed by the court, to carry out the responsibilities and terms of your Will.
- Guardian – The Guardian is the person you nominate, and who is appointed by the court, to care for your minor or incapacitated children.
- Conservator – The Conservator is the person you nominate, and who is appointed by the court, to oversee the finances for your minor or incapacitated children.
Power of Attorney
Your Power of Attorney, also called a Durable Power of Attorney or Financial Power of Attorney, is the document used to name an Agent to manage your finances and assets outside of your Trust during any periods when you are incapacitated. Besides managing assets, a properly drafted Power of Attorney will allow your Agent to manage areas not commonly considered, such as dealing with your utilities or mail. Your Agent has a duty to manage your assets for your benefit and must follow the guidelines and powers you grant in the Power of Attorney. You may choose to give your Agent an immediate power, or have it come into effect only upon your incapacity.
Common terms you may find in your Power of Attorney:
- Durable – Your Power of Attorney is Durable if it remains valid and is not impacted by the passage of time.
- Agent – Your Agent is the person you name in your Power of Attorney to manage your finances during your incapacity.
Health Care Power of Attorney/Mental Health Care Power of Attorney
Your Health Care Power of Attorney gives your Agent, sometimes called Health Care Agent, the power to make medical decisions on your behalf if you are unable to do so yourself. Your Agent will be given the power to consent or refuse treatment, medications, and procedures on your behalf. Your Agent will also be able to hire health care personnel, procure health care equipment, and review your medical records. Your Agent has the responsibility of making the decisions consistent with any wishes you have made known.
Your Health Care Power of Attorney may contain a Mental Health Care Power of Attorney, or the Mental Health Care Power of Attorney may be a separate document. The Mental Health Care Power of Attorney gives your Agent the power to make mental health care decisions on your behalf, similar to those allowed in the Health Care Power of Attorney. In Arizona, you are required to specifically initial in your Mental Health Care Power of Attorney if you wish to allow your Agent to admit you to an inpatient psychiatric facility.
Common terms you may find in your Health Care Power of Attorney:
- Agent – Your Agent is the person you name in your Health Care Power of Attorney/Mental Health Care Power of Attorney to make health care/mental health care decisions on your behalf if you are unable to do so yourself.
Living Will
Your Living Will, also called an Advance Directive, is the document in which you specify what, if any, life-sustaining interventions you may want if your death is imminent or if you are in a permanent vegetative state. This important document will give your Health Care Agent guidance about what decisions you would want made under different circumstances.
Having a basic understanding of common estate planning documents can help you begin thinking about your estate plan. However, your estate planning attorney will guide you through the process and help you determine the best plan to ensure you are protected and your needs are met.
Lisa Paine is an estate planning and business law attorney at the Phoenix law firm of Jaburg Wilk. She assists clients with estate planning, probate, trust administration and corporate business needs.
by Lisa Paine | Sep 1, 2017 | Wills
As a new parent, you naturally want to ensure your new baby’s future in every way. For many new parents, infancy is a time for celebrating new life, and making a will is the last thing on their minds. For others, the process of bringing new life into the world sparks intense feelings of wanting control and needing organization. Regardless of where you fall on that spectrum, you might be struggling to figure out what steps you need to take to protect your family’s future should the unthinkable happen. Here are five key things every new parent should know about wills.
1. Naming a guardian could be the most important part of your will.
If you pass away while your child is a minor, the first issue to be addressed is who will assume responsibility for your child’s care. If you don’t name a guardian for your child in the will, the courts may decide this question for you, and the guardian might not be the person you would choose. Selecting a trusted guardian is in many ways more important at this stage than deciding about how to pass any assets you own.
2. Name an executor you trust.
To ensure your child does receive all that you have allocated when she comes of age, choose a trustworthy executor. Many people choose a family member, but it’s just as acceptable to appoint a trusted attorney to handle your estate. Typically, an attorney has no emotional attachment to the family, which might seem bad, but usually results in less potential conflict.
3. Named beneficiaries on your financial accounts may override the will.
Many accounts allow you to name a beneficiary. When you pass away, the funds go to the beneficiary named on the account, even if your will states otherwise. If you’re creating a will with your child in mind (or adding the child to an existing will), you should review your investment and bank accounts with your financial advisor to make sure there are no inconsistencies when naming beneficiaries. It’s also a good time to check retirement account and life insurance beneficiary designations with your financial advisor and your attorney.
4. A will is not always the right document for your goals.
When naming your child as a beneficiary, a will only goes into effect after you die. If your will leaves property outright to a minor child, the court will step in and hold the assets until your child turns 18. Most 18 year olds lack the maturity to handle even a modest estate, so we don’t recommend outright inheritance for minor children.
A trust, on the other hand, goes into effect when you create it and can provide structure to manage the assets you leave behind for the benefit of your child. An experienced estate planning attorney can advise you on the best option for your family and your circumstances.
5. In the absence of clearly stated intentions, the state steps in.
Think of a will, trust and other estate planning documents as an instruction manual for your executor and the courts to follow. You must be clear and consistent in your stated intentions regarding your child, as well as for others. If you’re not clear or if you don’t leave any instructions at all, the probate courts will step in and follow the government’s plan, which can lead to long delays and is probably not the plan you would have selected for your child and family.
Providing for your baby’s long-term welfare may start with just a simple will, but to be fully protected, you probably need more. That’s why it’s important to talk with a competent estate planning attorney to make sure you have the right plans in place to fulfill your goals. I’m here to help! Contact me today to talk about your options to protect your family.
Lisa is well versed in challenges faced by small businesses and their owners. Her unique prospective benefits her business clients with agreements, employment advice, copyright violations and succession planning. She also assists families with estate planning not only guiding them through the estate planning process but also understanding why this is so vital to their families.
