By Phoebe L. Harris
Over the past two weeks, we have had over a dozen phone calls from clients who received something in the mail from an outfit in the Phoenix area who is to be hosting a “free” lunch seminar in Green Valley in the very near future.
The clients who called were scared, panicked and upset to read that their “Will cannot effectively transfer title of their property upon their deaths without being probated” [paraphrasing the actual wording in the mailing]. And, of course, the mailing went onto say that “the only way to transfer title of your property after your death and to avoid probate is to have a living trust” [again, paraphrasing].
Over the course of my practice in Green Valley, we have received numerous mailings, pamphlets and fliers containing similar misrepresentations of fact and scare tactics but for some weird reason this particular mailing has struck a nerve with many in our community. The funny thing about this one is that they have printed on the mailing with regard to a will not effectively transferring your property to others after you death without being probated is “technically” correct. However, the way in which they present this and the “only” alternatives you have available to you to avoid probate are, in my opinion, not only misleading but downright incorrect, disingenuous and predatory.
They’re not attorneys
After visiting their website, I found that NO ONE in this outfit is a licensed attorney and underneath it all – everyone in their outfit is a licensed life insurance agent, a licensed health insurance agent and/or a licensed annuity agent. In other words, everyone in their outfit is a licensed salesman.
They also have the standard disclaimers in small lettering at the bottom of each page on their website: “we are not lawyers,” “we cannot provide legal advice,” “we cannot prepare legal documents,” etc.
After reading those disclaimers, one has to wonder, then why are you mailing me something which essentially says that my current estate planning documents are no good? Now that is the million-dollar question.
I wanted to take this opportunity to provide a public service announcement and WARNING to our community – please DO NOT believe everything you read and please know that these outfits are wanting to SELL YOU something, whether it be a Living Trust (that you don’t need) or a financial product (that you also do not need). Although the below explanation is simplistic and not intended to cover every situation, family, person or quirk, I would like to provide some truths about probate, wills and trusts.
Here are the basics
So let’s dispel the mystery about Wills, Trusts and Probate and simply tell everyone the truth. When a Will is probated, that Will is “proved” by the court. The Probate Court is the only entity that may legally declare a decedent’s last will and testament to be valid and enforceable. So what assets are distributed by and through a decedent’s Will? Only those assets which are titled and held in the decedent’s name alone without any other non-probate transfer designation. What are non-probate transfer designations? Any designation, title or indication on the asset itself that tells the world where the asset goes after the owner is deceased. For example, assets titled in joint name with rights of survivorship; any other asset that has named beneficiaries, a payable on death or transfer on death designation; and any asset titled and held in the name of a Trust.
Let’s say that you have a Will wherein you name your spouse to inherit everything and if your spouse does not survive you then everything goes to your two children. All of your assets are held in joint name with your spouse and you have the two kids named as beneficiaries on everything. Will any of those assets be subject to probate? NO. Will your Will be probated for those assets? NO. Will your spouse and/or your children effectively receive legal title to all of these assets without your Will being subject to probate? YES! Could your Will ever be subject to probate? YES – but only for those “unknown” assets that are titled and held in your name alone at death. Some examples of “unknown” assets – well, you have taken care of everything you KNOW about (i.e., everything you own/have now) but what about a wrongful death lawsuit, a medical malpractice lawsuit initiated after your death, what if you win the lottery and then drop dead two days later? Those are examples of “unknown” assets that would be subject to your Will and probate. But trust me, no one in your family will be upset for having to open a probate for “found money” (i.e., assets that you did not know of, assets that you did not “own” prior to your passing and assets that you could not control). This is exactly why we advise our clients to always have a Will even if everything they know of and can control have non-probate designations – always play the “what if” to the “what if.”
Please also keep in mind that Arizona provides for small estate collection without the need for probate for those personal property items with a total value of $75,000 or less and real property valued at $100,000 or less. So, in the example above, even “unknown” or “found” money might not be subject to probate if valued at or below these small estate amounts.
So must I have a Trust to avoid probate? NO. Does having a Trust guarantee I will avoid probate? NO.
Let’s go back to the “technically” correct wording in the mailing. The only way to effectively transfer legal title to those assets titled and held in your name alone at date of death without any non-probate transfer designations is by and through your Will and the only way we know your Will is valid and effective is to have it probated by and through the Court. But if you take the proper steps and ensure that all of your assets have non-probate transfer designations (and assume you have no “unknown” assets), your Will should never be subject to probate, all of your assets will pass outside of probate and no one even needs to look to your Will because all of your assets themselves tell the world who gets what after you are gone.
Any discussion with regard to Wills, Trusts, Probates, Contests, family dynamics and the “what ifs” after a loved one has passed away could go on and on, but I just wanted to take this opportunity to try and ease the minds of those in our community who have also received these frightening, scare tactic, misleading, incorrect and bogus mailings. Also, if anyone does actually attend this “free” lunch/dinner seminar, please do not be duped into buying a large, unnecessary Trust binder and please do not buy a 20-year annuity policy just days after your 95th birthday. My father, Walter L. Henderson, and I have always offered free initial office consultations and would be more than happy to answer any and all questions any one might have with regard to their own personal estate plan and the scary mailings we all seem to receive living here in Green Valley.