Legal Matters – June 2014

Editor’s Note: “Legal Matters” is a new column in the Sun Lakes Splash dedicated to legal issues. The publisher shall not be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential or other damages. As each individual situation is unique, questions relevant to personal legal issues and specific to the individual should be addressed to an appropriate professional to ensure that the situation has been carefully and appropriately evaluated. Robson Publishing, a division of Robson Communities Inc., is not liable for information contained in these articles.

What could possibly be wrong with an outright inheritance?

I’d like to take a moment and share an experience I recently had while meeting with a mother and her son. The mother has always had a Last Will and never wanted to have a trust. Despite all the explanation of how beneficial a trust would be for her and her family, she chose not to have one. Thus, we assisted in the creation of her Last Will and helped her to complete additional paperwork that would transfer assets to her beneficiaries upon her passing without having to go through the strenuous probate process.

An inherent problem with a Last Will and other non-probate transfers, such as listing beneficiaries on bank accounts or life insurance policies, is that the funds will transfer outright to the beneficiary. You might ask, “What could possibly be wrong with that? That’s who I want to receive the money! Shouldn’t they receive it outright?” The answer is yes… and no. While you may want them to receive the funds, you may not like how and when the funds are received.

For example, my client wanted her three children to receive equal shares of her property, free of probate. She listed beneficiaries and structured her estate the best she could. Recently she decided that one of her sons is no longer capable of managing his inheritance. She wanted to know if she could control how, when and what he was to receive.

She was surprised to learn that exercising this type of control, with her Last Will, generally comes with a price – the estate would have to go through probate. Needless to say, she was not pleased that the cost would be steep, not only in money, but in time, grief and with publicity. The only way to exercise the control she wanted and avoid probate was to create a trust. Ultimately, after we carefully explained all the alternatives and ramifications, she decided to do just that.

Like many new clients, the mother told us that she thought she wasn’t “wealthy” enough to own a trust, so she only kept a Last Will. A trust does so much more than help the “wealthy.” In fact, wealth is only one of several factors we look at when determining if you should create a trust. Control is one of the main factors to consider and if you have beneficiaries that will need care, assistance, time and/or oversight, then a trust might be the right tool for you. Typically, a Last Will simply isn’t enough.

Mark D Simonson is an attorney with Morris, Hall & Kinghorn. MHK is located at 1129 S. Oakland, Ste. 102, Mesa, AZ 85206. He can be reached at 480-385-1700 or by e-mail at [email protected] For more information, visit our website at http://morristrust.com/attorneys/mark-d-simonson/.