Arizona Estate Planning Terms


Arizona Estate Planning Terms and Definitions

Make an Informed Decision by Fully Understanding the Options Available to You

Agent –  Someone given the authority to act on your behalf through a power of attorney.

Attorney in Fact – Another term for someone acting as your power of attorney.

Beneficiary – Anyone who will receive assets or property from your will or trust.

Codicil – An official addition to a will that amends the terms without the need to rewrite a new will.

Decedent – Someone who has died, and usually the person who has written the will, trust, etc., in an estate planning context.

Durable Power of Attorney – A power of attorney that will last when the person becomes incapacitated, because they created the power of attorney while of sound mind.

Estate Planning – The general term for the process of creating wills, trusts, and other legal documents meant to distribute your estate upon your death. Estate planning laws vary by state.power of attorney that will last when the person becomes incapacitated, because they created the power of attorney while of sound mind.

Executor – The person responsible for distributing your assets, who you can designate in your will. A female executor is sometimes referred to as an executrix.

Grantor – A person who creates or contributes to a trust. If multiple people have contributed to a trust, each person will only be a grantor to the portion that they contributed. A grantor can also be called a donor, settlor, or trustor.

Health Care Power of Attorney – Also called a health care proxy, this document is used to give an individual the authority to make decisions regarding your medical treatments if you are incapacitated.

Irrevocable Trust – This is a trust that can’t be canceled, amended, or modified by the grantor. However, decanting, or transferring assets from one trust to another, is becoming increasingly permissible.

Life Estate – This is a type of transfer where the recipient will maintain use and control of the property for their lifetime.

Pour Over Will – This is a will used to add property to a trust that was not added during the grantor’s lifetime.

Principal – A piece of property, including real estate, stocks, and money, transferred to a trust. It can also be called a trust corpus. The principal will be used to generate income for the benefit of the trust.

Revocable Trust – A trust that the grantor can cancel, revoke, modify, or amend as they see fit.

Trust – When you create a trust, a trustee will own and operate the property you contribute for the benefit of someone else.

Will – A legal document used to distribute your estate after your passing. You can also assign someone as a guardian to your minor children in your will.

Disclaimer – This is a beneficiary’s official refusal to accept a gift, insurance proceeds, etc., to allow the asset to pass to the alternative recipients. The disclaimer must be made within 9 days of receiving the property, and the disclaimant can’t have accepted interest in the property. This is typically done when the disclaimant wants to avoid the tax liability associated with the property. nyone who will receive assets or property from your will or trust.

Estate Tax – Tax imposed on property transferred after the decedent’s passing. State estate taxation rates vary, and your estate could be subject to federal estate taxation. In Arizona, an estate is only subject to estate taxation if the estate is valued at $11,700,000 or higher.

Gift Tax – This is the tax on property transfers while the grantor is still alive. Arizona has no gift tax, but federal gift taxation may apply. There is a $15,000 annual exemption for federal gift taxes. The exemption raises to $30,000 for a married couple, and gifts between spouses are generally exempt. The grantor, not the recipient, is usually responsible for reporting a non-exempt gift to the IRS.

Guardian – Someone who is assigned responsibility for a minor child or incapacitated individual. You can designate who you would like to be your children’s guardian if you pass away while they are minors in your will.

Income – In a trust context, this refers to interest, rent, and cash dividends from a principal asset.

Intestate – The term for someone who dies without a will. Each state has its own intestacy laws that determine who will benefit from that person’s estate. Most states first distribute assets to spouses and children, then parents and siblings, but can vary if the state needs to search further back in the family tree.

Living Trust –  A trust that is created during the grantor’s lifetime, and is usually a revocable trust.

Power of Attorney –  You can use a power of attorney to give someone the authority to complete business and financial transactions on your behalf. That authority can be limited in scope and duration, such as for a one time transaction, or can be indefinite. It can come into effect immediately, or only once a certain condition is met.

Probate –  This is the official process of validating a will and distributing assets per its terms after a decedent’s passing. Arizona doesn’t have probate taxes, but several other states do. Regardless, probate can be an expensive process, especially if your family members are challenging the validity of your will and the distribution of your assets. This can cost your intended beneficiaries thousands of dollars in attorney’s fees, and tie up your estate for months or even years. When your will and other estate planning documents are carefully crafted, it reduces the risk of your estate being held up in probate court.

Testator – A person who signs a will. A female testator is sometimes referred to as a testatrix.

Trustee – This is an individual or organization designated to maintain and administer the property in a trust. A grantor can choose a person or a bank or trust company to be the trustee.

Contact Our Arizona Estate Planning Attorneys for additional assistance,  our experienced AZ Wills and Trust Lawyers are ready to help.

Understanding the terms used in estate planning is just the first step in making sure your estate is accurately distributed per your wishes after your death. Your next step is deciding which documents would be the best to use in your situation. For experienced estate planning services at affordable rates, call or use our online form to schedule your case evaluation with one of our dedicated Arizona estate planning attorneys today.