Posts Tagged ‘new laws’

Arizona Legislative Changes Effective September 12

AUGUST 26, 2013 VOLUME 20 NUMBER 32

The Arizona legislature meets every spring, and in most years adopts changes that affect elder law attorneys, estate planners, guardians, conservators and trustees. The changes become effective nine months after the end of the legislative session, which means that late summer is the time for annual review of new laws about to become effective.

For 2013 the effective date for most new legislation will be September 12. There are a handful of changes affecting our practice area, including:

Fingerprints. The legislature decided to make it a little bit harder for most people to get appointed as guardian or conservator for a family member or other person needing assistance. It has long been the law that unrelated guardians of minors had to submit to fingerprinting; now anyone seeking a guardianship or conservatorship over an adult (related or not) can be required to undergo fingerprinting. Not every person will be required to provide official fingerprints, and it is not yet clear how the courts will implement the new law.

If the courts require fingerprinting, the change will primarily affect family members, since professional fiduciaries already have to go through a fingerprint review to get licensed in the first place. The cost is modest; probably most important for petitioners will be the half-day it usually takes to get to the fingerprinting office, wait in line and get the card. Then it will be submitted for a criminal record check.

This change continues the trend of the past several years to make court proceedings more difficult, and to discourage concerned family members from initiating protective proceedings. While the effect will probably be small, there is a cumulative shift making it more expensive and difficult to seek legal help for a failing family member. It also increases the importance of advance planning to avoid having to turn to the courts for that help.

Simplified probate proceedings for small estates. It has long been possible to avoid probate in Arizona for smaller estates. If personal property in the decedent’s name does not total more than $50,000 (and that does not include joint tenancy property, property held in a trust or property with a valid beneficiary designation) then the person entitled to the property can collect it with a simple affidavit. Even real property can be subject to a simplified probate proceeding, up to $75,000 in value.

Now both of those figures are set to increase. The personal property limit will go from $50,000 to $75,000, and the real estate limit from $75,000 to $100,000. This one will affect a small number of estates, but can save significant costs for those who fit under the increased limits. More good news: the valuation figures are for estates as of the date of collection, not the date of death. In other words, for a decedent’s estate worth more than $50,000 but less than $75,000 the best strategy will likely to be to wait another month before taking action.

Trusts created by married couples. This change is a little bit arcane, but could have broader impact than was probably intended. Many married couples establish trusts that become irrevocable (or partly irrevocable) after the death of the first spouse. Typically, those trusts permit the surviving spouse to manage the assets and, in some circumstances, to even withdraw the principal for their own use. The new law will make it a little harder for surviving spouses to legitimately withdraw money from those trusts — though another family member acting as trustee will not face the same limitations.

With the significant increase in federal estate tax exemption levels (there is currently no tax until the estate is more than $5 million in most cases), many of our clients want to eliminate irrevocable trusts set up by a now-deceased spouse when the estate tax figures were very different. This new law will make that a little more challenging, but not impossible in most cases.

Section 529 plans. Most lawyers have long assumed that money set aside for education of children and grandchildren probably was protected in bankruptcy proceedings — but the law was not explicit. It is now, at least for Arizona. If the education account is a “Section 529 plan” account, then it is not an asset of the person who set it up if they later file for bankruptcy — provided that the bankruptcy filing is at least two years after the account was set up. Incidentally, the beneficiary of a 529 Plan account is also protected in the event of bankruptcy.

It was a slow year at the legislature for those of us involved in estate planning, trust administration and elder law. That’s OK with us.

Interstate Guardianship Law Adopted in Arizona

JULY 12, 2010 VOLUME 17, NUMBER 22
Among the less-controversial steps taken by the Arizona Legislature in 2010 was the adoption of the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act, which is usually referred to by its unpronounceable acronym UAGPPJA. The new law, which becomes effective on July 29, should make it easier for families to handle interstate guardianship and conservatorship issues. At the same time it should make it harder for warring families to move an ailing or demented family member across state lines for personal advantage.

Problems with interstate application of guardianship and conservatorship laws have been all too common. Imagine a typical scenario: father and stepmother, married for 25 years, live in Pennsylvania. Three children from father’s first marriage live in Florida, Arizona and Illinois. After stepmother checks father into a Pennsylvania adult care home, the children meet in Pennsylvania and decide they are better equipped to make decisions about their father’s care. Without telling their stepmother of their intentions they check father out of his adult care home, put him on an airplane, fly to Tucson and check him in to a nursing home here. Then they file a guardianship and conservatorship action in Arizona, giving notice to his wife in Pennsylvania.

Under existing law such a proceeding would be permissible, and could result in the Arizona courts making decisions about not only the Pennsylvania man’s living arrangements and medical care, but also over his (and his wife’s) Pennsylvania property. The cost and trouble of traveling to Arizona, hiring a local attorney and objecting to the Arizona court proceedings might well deter his wife from protecting herself or asserting her views on the proper care for her husband.

After the UAGPPJA goes into effect, however, such interstate moves to secure legal advantage should become ineffective. The Arizona courts will be instructed to defer to the courts of the home state of any proposed ward.

There are other frequent — and much more benign — interstate problems in guardianship and conservatorship proceedings that are addressed by the UAGPPJA, too. One arises when the subject of an Arizona guardianship legitimately moves out of state. Imagine, for example, that a working couple have become guardian for their 22-year-old son who is developmentally disabled. Now they want to move to another state, and they will take their son with them. Will their Arizona guardianship be valid in the new state? Will they have to initiate an entirely new proceeding in the new state? If they do not, will they have to report to the Arizona courts for the rest of their son’s life — even though Arizona no longer has any direct involvement in his life?

If the new state has also adopted the UAGPPJA (and so far 19 other states and the District of Columbia have) the process of transferring a guardianship or conservatorship is vastly simplified. A filing needs to be made with the Arizona court, then with the courts of the new state. Once both courts have agreed that the guardianship can be transferred, the Arizona proceeding is terminated and the new state takes over. The process is much simpler than a second proceeding in the new state, and it ensures approval from the Arizona courts before any action is taken. The same process can work in reverse for people moving into Arizona.

One other interstate problem arises when, for example, an Arizona conservatorship involves property in another state. Under the existing patchwork of laws, each state is different — and many of them require an entirely new conservatorship (a “protective proceeding” in the language of the interstate jurisdiction law) with court-appointed attorneys, bond premiums and separate accountings filed in the state with the property. The new law makes the process much simpler: once the Arizona conservator has filed appropriate documents with the courts of the other state, he or she can proceed as if appointed in that state. No separate court proceedings required, no additional legal fees incurred, and no potential conflicts between two courts overseeing the same conservatorship.

The UAGPPJA is available online through the National Conference of Commissioners on Uniform State Laws. Arizona’s version, the new Arizona Revised Statutes sections 14-12101 and following sections, differ very little from the proposed uniform law. The list of states adopting the UAGPPJA (which list is steadily growing) is also online at the NCCUSL website.

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