A will is a set of instructions that tell a probate court how to distribute your assets between the time you die and the time probate is closed — anywhere from several months to several years later. A living trust, by contrast, is administered by your trustee and takes effect while you are still alive. You may authorize your trustee to distribute trust assets all at once or over a long period of time.
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To create an Arizona living trust, you must first draft and sign a Declaration of Trust. The Declaration of Trust names the trustee who will administer the trust, names the beneficiaries, states whether the trust is revocable or irrevocable and lists the powers and duties of the trustee. You may vest the trustee with wide discretionary powers with respect to his disposition of trust assets, or you may provide him with specific instructions. If the trust is revocable, you can amend or dissolve it at any time. If it is irrevocable, you cannot amend or dissolve it without a court order. You may fund the trust by listing trust property in an appendix to the Declaration of Trust and by transferring title to titled assets, such as real estate and bank accounts, to the trustee's name. The assets of a living trust are not subject to probate after you die, as long as you re-title all titled assets in the name of the trustee.
You can create a testamentary trust by including the terms of a Declaration of Trust as part of your will. In this case, the trust will not be created until you die. Since you will be dead by the time the trust takes effect, the trust will be irrevocable as soon as it is created and cannot be revoked without a court order. The assets of a testamentary trust are subject to the jurisdiction of the probate court, just like any other assets that pass under your will.
In Arizona, a will must be in writing, signed by you, or someone else at your direction, and two people who watched you sign it. Your will may only distribute assets that remain in your estate after all estate creditors have been paid. One exception to this rule is that your spouse is entitled to receive the first $37,000 from your probate estate ahead of your creditors, even if your will attempts to disinherit your spouse.
Probate vs. Non-Probate Assets
Certain property is not subject to probate even if it is not part of a living trust. Such property includes property that belongs to your beneficiaries under qualified retirement plans, life insurance policies and annuities. It also includes assets held in joint tenancy with the right of survivorship, such as joint bank accounts or jointly-held real estate. Check the title documents to jointly-held property to confirm the "right of survivorship" applies. If it does, the property is not subject to probate and can pass immediately to the surviving owner.