Do You Need a Trust for Your Arizona Home?

Not every Arizona homeowner needs a living trust. A properly established and funded trust can be one way to help a home pass to beneficiaries without probate and can also provide a plan for managing the property if the owner becomes incapacitated. Arizona homeowners may have other options, including a beneficiary deed. The right choice depends on how your home is titled, your family circumstances and your estate-planning goals.

One thing is important: don't assume that having a will—or simply creating a trust—automatically takes care of what happens to your home.

This article provides general information for Arizona homeowners and is not legal or tax advice. An Arizona estate-planning attorney can advise you about your individual circumstances.

Does a Will Keep Your Arizona Home Out of Probate?

Not necessarily. A will provides instructions for how you want your property distributed after your death, but having a will does not, by itself, mean that your home will avoid probate.

This can come as a surprise to homeowners who assume that because their wishes are stated in a will, their family will automatically be able to take ownership of the home without going through the probate process.

Can a Living Trust Help Your Home Avoid Probate?

A properly established and funded revocable living trust can allow property held in the trust to pass according to the terms of the trust rather than through probate.

But there is an important detail: creating the trust isn't necessarily enough.

Your home needs to be properly transferred into the trust. That's why it can be helpful to have an Arizona estate-planning attorney review both your estate documents and the recorded deed to your property.

What Is a Beneficiary Deed in Arizona?

Arizona allows homeowners to use a beneficiary deed to designate who will receive an interest in real property when the owner dies.

The homeowner continues to own and control the property during their lifetime, and Arizona law provides a process for revoking a beneficiary deed before the owner's death.

For some homeowners, a beneficiary deed may offer a simpler way to transfer a home outside probate. However, it doesn't accomplish everything a trust or broader estate plan can accomplish, so whether it is appropriate depends on your circumstances.

What Happens If You Become Unable to Manage Your Home or Finances?

Estate planning isn't only about what happens after someone dies.

It's also important to consider who would be able to handle your financial and property matters if illness or incapacity prevents you from doing so yourself.

A beneficiary deed addresses who receives the real estate at death; it does not, by itself, designate someone to manage your financial affairs during your lifetime.

An Arizona estate-planning attorney can explain the documents and planning options available for those circumstances.

Does Putting Your Home in a Revocable Trust Protect It From Creditors?

A standard revocable living trust should not be viewed as an automatic asset-protection tool.

Under Arizona law, property in a revocable trust generally remains subject to claims of the settlor's creditors during the settlor's lifetime.

If asset or creditor protection is one of your goals, that is an issue to discuss specifically with an Arizona attorney.

What If Your Arizona Home Is in a 55+ Community?

If your home is located in an age-restricted community, there may be another consideration: owning the home and being eligible to live in the home aren't necessarily the same thing.

For example, someone may inherit ownership of a home in a 55+ community but still need to meet that community's age and occupancy requirements in order to live there.

If you're planning to leave a home in a 55+ community to your children or other beneficiaries, it's worth considering the community's requirements as part of your overall planning.

What If You Already Have a Trust and You're Buying an Arizona Home?

If you already have a trust and plan to purchase your new home in the name of that trust, let your REALTOR® know at the beginning of the transaction. You will need to provide the title company with your Certificate (or Certification) of Trust so the property can be titled correctly.

A Certificate of Trust is essentially an abbreviated version of the full trust. It provides key information, including the identity and authority of the trustee or trustees and how title to trust property is held, without providing all of the private provisions contained in the complete trust.

If you're unsure whether your new home should be purchased in the name of your trust, discuss that decision with your estate-planning attorney before deciding how to take title.

What Should Arizona Homeowners Do First?

You don't have to decide on your own whether a trust, beneficiary deed or another approach is right for you.

A good first step is to gather your current recorded deed along with any will, trust or beneficiary deed you already have. Then have an Arizona estate-planning attorney review your deed and estate-planning documents together.

The important question is whether the way your home is currently titled works with what you intend to happen to the property in the future.

Why Does This Matter When It Comes Time to Sell?

As a REALTOR®, I sometimes encounter questions involving trusts, estates and property ownership when a homeowner or family is preparing to sell.

Discovering at that point that the title or estate documents aren't what the family expected can add another issue during what may already be a difficult transition.

Taking the time now to understand how your Arizona home is titled and whether that works with your estate plancan make things much clearer for you and your family later.

Vonnie Bayard, REALTOR® | HomeSmart

This information is provided for general educational purposes only and is not legal, tax or estate-planning advice. Laws and individual circumstances vary. Please consult a qualified Arizona attorney and tax professional regarding your particular situation.