A common question heard by many lawyers on a routine basis is “Do I really need a will? Requirements of a will are set forth in Arizona Revised Statutes § 14-2502. In general, a will is a document that provides directions for what happens to a person’s property after they pass away. A handwritten will is called a holographic will. This is a will that is written in the persons own handwriting and signed by that person as well. A more formal will must be typed, and will usually have two witnesses as well as be notarized.
In Arizona, a person’s will nominates a personal representative, sometimes more than one, to manage and distribute the estate. The estate is all the belongings, personal property, real property, savings accounts, really anything left behind when a person dies. In other states this is also known as an executor. When a person dies, this estate is administered pursuant to the will. This process is called probate. More about probate was covered in our previous blog, “Do I Need a Lawyer to Handle a Probate?” Except for the very rare case where someone has no possessions or heirs, everyone over 18 should have a will.
Estate planning, for one reason or another, is often a subject people tend to avoid. However, having a good estate plan is crucial for just about anyone over the age of 18. Wills and Trusts are governed by Title 14 of the Arizona Revised Statutes. Our previous articles have discussed the requirements for a valid will or trust, whereas this article will discuss which one is better, and why.
People do estate planning for various reasons, most commonly it is to (1) Avoid Probate (2) Direct how their assets should be used after death (3) Minimize Tax Liability and (4) To simplify the administration of their estate. If these are the main reasons to make an estate plan, what method, a will or a living trust, works best? Overwhelmingly, a trust will handle all of these areas better than a will.
On January 1, 2015, Arizona’s amended anti-deficiency laws became effective. The previous law contained in Arizona Revised Statute §33-814 (G) held that “If trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling is sold pursuant to the trustee’s power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses”. Basically, this breaks down to be, as long as a loan is secured by property of 2.5 acres or less, and used for a one or two family residence, the owner is not responsible for the difference if the fair market value of the property is less than the outstanding balance of the loan when the house is foreclosed and sold at auction.
The changes to the law, which took place January 1, 2015, apply to all loans, secured by deed of trust, after December 31, 2014. So if a loan occurred before that, the amended law is not applicable. The amended law is now contained in Arizona Revised Statute §33-814 (H) which states that the amended law applies if any of the following are true; “(1) Trust property owned by a person who is engaged in the business of constructing and selling dwellings that was acquired by the person in the course of that business and that is subject to a deed of trust given to secure payment of a loan for construction of a dwelling on the property for sale to another person. (2) Trust property that contains a dwelling that was never substantially completed. (3) Trust property that contains a dwelling that is intended to be utilized as a dwelling but that is never actually utilized as a dwelling.”
It is natural to expect that named beneficiaries, or a designated attorney in fact will outlive you, but as everyone knows all too well, things rarely go according to plan. However, just because an unexpected death may occur, it doesn’t need to throw a wrench in your estate planning documents. One way to get around this problem is to name alternate beneficiaries or agents for powers of attorney.
In the case of a will, naming an alternate beneficiary is important so your wishes are clear in the event an heir predeceases you. It is important your wishes are clear so the person handling your estate (“the personal representative”) can properly administer your estate. For example, it is common for someone to leave all their property to their surviving spouse. However, in the event the other spouse does not outlive them, naming an alternate beneficiary, such as a brother, or children from another marriage, makes clear the intended distribution.
It is possible to take this a step further, and name additional beneficiaries assuming a brother or children from another marriage pass away first. For instance a will could name an aunt or an uncle to further clarify how the property should be distributed. Just as naming alternate beneficiaries is a good idea, it is also a good idea to name alternate personal representatives to administer your estate. Although Arizona Revised Statute § 14-3203 sets forth the priority of appointment of a personal representative, naming an alternate or two is a good idea to ensure your estate is not administered by someone you didn’t intend to administer it.
Imagine a home mortgage loan where the mortgage company pays you and your re-payment obligation is deferred until you sell or for the rest of your life. To those of us accustomed to monthly mortgage payments this sounds amazingly good. This is the Reverse Mortgage. It is a powerful and increasingly popular estate planning and financial planning tool. If you are over age 62 and have paid off or mostly paid off your home, you might qualify for a Reverse Mortgage. There are several advantages. In addition to the deferral of your payment obligation, the loan proceeds are not taxable income, there is no deficiency liability if the value of your house becomes less than the loan balance and your family can still (possibly) inherit your home.
Appeals from Arbitration are common. Litigants will sometimes appeal from an arbitration award in order to continue the negotiation process or where they are disappointed with an arbitration award. The tactic makes sense. An appeal from compulsory arbitration will result in a trial de novo before a superior court Judge or Jury. But it is not without risk.
Rule 77 (f) allows the party defending the appeal (appellee) to collect its reasonable attorney’s fees where the party bringing the appeal (appellant) does not receive an award on the appeal at least 23% more favorable than the sums awarded in arbitration. This rule can turn a win into a loss. An Appellant who does not do substantially better on Appeal can be required to pay the legal fees of the Appellee.
Collection of a judgment can sometimes be more difficult and expensive than obtaining it in the first place.
Once you have endured the lawsuit process and have obtained a judgment, the next step is collection. One powerful collection tool is to record the judgment. A.R.S. §33-961 (A) provides that the recording of a judgment creates a judgment lien against any real property either currently owned or subsequently acquired by the judgment debtor in the County where recorded. In practice, a judgment lien will usually be paid if the real property is sold or refinanced. But not always. Beware of A.R.S. §33-961 (C) which requires that a judgment information statement be attached to the judgment.
ARS §33-420 is Arizona’s Groundless lien statute. Generally, it prohibits someone from making a wrongful claim against a parcel of real property. It provides that a person who causes a document to be recorded “knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars,…
Arizona is one of the few states with a strong Anti-deficiency law. Our Arizona law was responsible for protecting thousands of Arizona homeowners from even greater hardship when they lost their homes to foreclosure during the recent real estate crash. The law limits the rights of a lender. It provides that a lender cannot sue a homeowner for a deficiency balance where a foreclosure sale does not produce enough money to pay off the loan or loans. The lender must…
In 2013 Arizona’s grandparent visitation statute was consolidated with our in loco parentis statute. The new terminology is “third party rights” and the statute is ARS 25-409. The idea is to allow a third party, including but not limited to a grandparent or great grandparent, to petition the court to determine custody, visitation and/or legal decision making rights for a minor child. The court recognizes that family life is all too often fractured and non-traditional. Children receive care and emotional and financial support from many persons other than their parents. Parents are sometimes unavailable or ineffective due to illness, absence or substance abuse.
A petition for grandparent or other third party rights should be filed in the existing family law case involving the children if one exists.
The Petition must be well thought out. The statute provides that a Petition shall be summarily denied unless the initial pleading establishes that all of the following circumstances are true:
- The petitioner stands “in loco parentis” to the children;
- It would be very detrimental to the children to be placed or remain in the care of the legal parent who wants to keep the children; and
- No court has entered orders concerning the care of the child in the past year unless a true emergency exists