Estate planning

Not just for the super-rich


Melinda Nelson, CPA

Do you have an estate plan? Maybe you think you don’t need one or don’t have enough assets to make creating a plan necessary. Not true. Estate planning isn’t just for the super-rich. Even though it’s called “estate” planning and people think you need a lot of money in order to do it, estate planning is really a process to make sure your personal and financial affairs are taken care of and your wishes are considered.

When we assist clients and their attorneys with estate planning, we’re typically doing several things:

  • Laying out the process of transferring your property and assets upon your death
  • Identifying who/what is important to you and making sure that those things are taken care of – for example, your children, who are a VERY important part of your planning
  • Helping you plan your affairs in the event you are not able to manage them while you’re still living
  • Explaining the tax ramifications of the plan (both for estate tax and income tax)

It’s hard to think about our ultimate end, but no one is going to live forever. Because we don’t know when our demise will happen and because we love our families, we want to do what’s best for them. That doesn’t mean, for example, just paying or planning for their college education. Part of taking care of them is doing your estate planning because you care about them. Here are some items to consider as you get started or update your existing plan.

Wills + other documents

If you die without a will, state law dictates how your property is distributed and who receives it. Will the court make the correct decisions? Another very important consideration is the custody and/or guardianship of your children. Who should have custody if both parents are deceased? What happens if you are in a coma and unable to communicate? Who will pay your bills? Take care of your property? The estate planning process typically deals with all these questions.

The estate planning process may involve preparing a will, trust, guardianship documents and powers of attorney for financial and medical decision making. These documents allow others to take care of your children and your financial affairs. Without prepared documents, upon your death, a legal process will decide who will have custody of your children if there is no living parent and who will have control of your assets. Without instructions from you to guide the court, disputes among potential heirs is a likely outcome. That’s why it’s super important, especially if you have minor children, to have legal documents such as a will prepared in the event of your death.

A very important part of your estate planning team will be your attorney. A good attorney will help guide you and make sure your legal documents comply with the laws of your resident state. If you already had a will or other legal documents prepared many years ago and things have changed – maybe now you have adult children or a different spouse – you need to re-visit your estate plan to make sure everything is updated correctly to fit the current circumstances.

Probate process

Not having an estate plan in place can end up costing you money. For example, does your property automatically transfer to a beneficiary or a loved-one on your death? If not, your estate may need to go through probate. In Arizona, probate isn’t such an onerous thing. However, if you have property in other states, especially real property, you’ll want to make sure it will be transferred properly. Otherwise, your property could be subject to probate in other states and the process could cost your beneficiaries additional tax, fees or legal costs. Because state law determines how property is transferred, be sure you work with an attorney to ensure that the appropriate state laws are considered.

One method to avoid probate is the use of a trust. Trusts can be created while you are living and used as a will substitute. Trusts can also hold your property while you are alive, and at your death, the trustee can handle the administration of your wishes. The property transferred into your trust before your death will avoid probate.


Part of going through the estate planning process is making sure you have your beneficiary designations done correctly. For example, 15 years ago when you took out a life insurance policy as a young person, you made your parents the beneficiaries and have never looked at it again. Now, at the age of 37, maybe your spouse or significant other should be the beneficiary. Or maybe you’re divorced and you don’t want your ex-spouse to get your money. In many cases, beneficiary designations are completed when you opened the account and signed the contract, and never reviewed it again. Obviously your circumstances can change over the years. So be sure to go check and make sure your beneficiaries are updated for accounts such as:

  • Life insurance policies
  • IRAs
  • 401(k)s
  • Other retirement accounts
  • Commercial annuities

Estate planning + your business

If you own a business, it’s critical that you do some sort of estate planning so that if you die or become incapacitated unexpectedly, someone would have both the knowledge and authority to continue with the business while decisions are being made about its future.

Special circumstances

Are there special circumstances that you need to address in your estate planning documents? Examples: a child who is a drug addict, a child with special needs, a child who might be divorcing, etc. By having appropriate estate documents, you can protect your children and/or protect them from hurting themselves, if necessary. So, if one of your children has an addiction and you don’t have an estate plan in place, upon your death, state law may award this child your assets because according to state law, your child is your heir. Obviously, this might not be the best solution for a child with addiction problems. However, if the distribution of your assets is driven by state law, the rules are the rules.

Other benefits

Estate planning can help with other financial and personal situations including:

  • Tax efficiency
  • Privacy
  • Giving specific instructions to your personal representative or trustee regarding your personal and financial affairs

Under the new tax law, very few individuals will now be subject to the estate or “death” tax since it only applies to individuals with assets exceeding $11,200,000 and $22,400,000 for a couple. However, estate planning is more than just planning to avoid the death tax. Ultimately, when it comes to having your assets distributed on your terms, if you don’t make the decision, someone else will make it for you. So, get started on an estate plan today to help secure your future and your family’s.

Melinda Nelson, CPA, Partner, specializes in tax planning and compliance for closely held business and their owners, business benefit tax issues and estate, gift + trust taxation. You can reach her at or (480) 839-4900.