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When I first started practicing law digital assets did not exist. Now many of us consider digital assets indispensable since they make up a large portion of the record of our lives. Digital Assets are, of course, all of the things we store on the web; social media pages such as facebook, photos, videos, personal and business documents, personal and business websites, e-mails and even text messages. So what happens to all of this when a person dies? Does it all pass to the decedent’s heirs? Until just recently, these questions were answered by the website’s Terms of Service Agreements. These are the long documents in legalese that a prospective user must accept as a condition of using the site. Most of us are guilty of simply clicking the “accept” button without reading any of it. But these agreements supersede a decedent’s will or trust and can create hardship.

In 2016 Arizona changed this and brought predictability to the disposition of digital assets by enacting the Fiduciary Access to Digital Assets Act (FADAA).   The new law became effective on August 8, 2016 and provides that you can now pass your digital assets to your heirs or beneficiaries by your will, trust, power of attorney, notarized written statement or by using a website’s online tool provided for this purpose, if one exists. Not only can you now pass your digital assets via your estate planning documents, you can also specify that access to certain digital assets is to be withheld and the content deleted.   The complete text of the new law can be found at A.R.S. §14-13101 through A.R.S. §14-13118.

To take advantage of the new law we recommend that you consider amending estate planning documents to give instructions for the disposition of your digital assets. If you use an online tool to give such instructions, you need to know that your online instructions will supersede any instructions given in your will or trust. It works like a Payable on Death account which passes the account balance to the listed beneficiary despite the existence of a will or trust.   We also recommend that you provide your attorney or other trusted individual with a current listing of the online accounts and websites used by you with the log in and password information for each.

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Homeowners associations, or HOA’s as they are commonly referred to, are governed by Arizona Revised Statutes Title 33 Chapter 16 under planned communities. These statutes deal with various components such as Penalties, open meetings, exceptions, financial and other records to name a few. Although these statutes exist, oversight is often minimal. Most homeowners find themselves dealing with their HOA in regards to the codes, covenants and restrictions, or more commonly known as the “CC&R’s.” The CC&R’s are restrictive covenants that “run with the land” and thus, if one member sells a home he is no longer part of the association and the new owner takes his place, and is subject to the restrictions that attach as well.

All homeowners in a given development have to follow the restrictions set forth in the CC&R’s. The general purpose for HOA’s is to protect the property value of the owners. However, this often comes at the expense of abdicating rights a homeowner would otherwise have control over. Things like home color, landscaping, additional structures and even parking. HOA’s have control over most aspects of ownership and the have many methods to enforce these restrictions including the threat, or actual levying of fines, liens and legal action against an individual homeowner. Given the broad powers of an HOA to enforce its goals, an individual homeowner can be faced with a daunting task of defending themselves if the association deems them to have run afoul of the CC&Rs.

If an HOA is trying to enforce restrictive covenants on you as a homeowner, it is important to know what they can do, and perhaps more importantly, what they can’t. Most HOA’s have general review or architectural design committees charged with the task of making sure homeowners requests are in line with the CC&R’s. When an HOA seeks to enforce a restriction, it must do so in good faith and not act in a manner that is arbitrary or capricious. Moreover, the enforcement procedures must be fair and applied uniformly to all homeowners.

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The baby boomer generation is aging. Over the next decade or two there will be an enormous transfer of wealth to the next generation. This should be a good thing. The intention is good—to provide for the next generation—but actual results are often disappointing. Everyone is familiar with the statistics on lottery winners. Many lottery winners will have lost most or all of their winnings within just a few years. It is the same with inheritances. A large percentage of inheritances is quickly squandered and lost. This is tragic. Not only is the work, thrift and discipline of the previous generation discarded, but the education, retirement and dreams of their children are lost or impaired.

So what can be done to prevent the next generation from acting rashly and spending inherited funds unwisely? Unfortunately, there is nothing that can guarantee that the next generation will act responsibly. But there are some things that will certainly help. Here are a few that we have found to be helpful:

  1. All family members need to develop the discipline of saving and know the basics of investing. This is a process that ideally starts when children are small but can commence at any time.
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A reverse mortgage is a financial device where borrowers can receive money based off the amount of equity they have in their home. Reverse mortgages offer a tool for senior citizens to supplement their retirement income. To be eligible for a reverse mortgage, a borrower must be at least 62 years of age. There are also restrictions regarding the residence. To name a few: it must be the borrowers’ primary residence, it must be in good condition, it must be paid off or almost paid off and it must be a single family home.

Unlike a traditional mortgage, a borrower in a reverse mortgage receives payments instead of making monthly payments back to the lender. This is true as long as the borrower lives in the home. Payments from a reverse mortgage can be in the form of one-time upfront payments or in monthly payments to the borrower. The borrower is however, still responsible for HOA fees, property taxes and insurance on the home. The balance of the loan becomes due once the home is sold or the borrower passes away.

Reverse mortgages are an alternative means to tapping the equity a borrower has in their home. More conventional options include selling the home, refinancing or taking out a home equity line of credit. However, these options may not be available or suitable if the borrower does not wish to move or is otherwise not qualified to obtain additional financing.

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A Living Will is different from a normal Will.   A Will is a common estate planning document that controls the distribution of a person’s property after he or she dies. It is not effective until death. A living will, however, is effective during a person’s lifetime and serves a wholly different purpose.   Also known as an “advance directive” a living will allows a person, in advance, to give written instructions for medical treatment should he or she become terminally ill and be unable to communicate with a physician or family member. Most states have laws authorizing living wills/advance directives. Arizona’s statutes are found at A.R.S. §36-3201, et.seq. A sample Living Will can be found in A.R.S. §36-3262.

Medical care has become so good that life can be extended artificially for long periods. Physicians often opt to extend life where possible, but this may not be what a patient wants. Few of us want our lives to be artificially extended where we are terminally ill with no chance of recovery. Most want to be allowed to die with some dignity.   This is where a living will comes in.

A Living Will provides a means to control the medical procedures provided to you at a time when you cannot speak for yourself.   In most cases, this amounts to a description of what services are not wanted in the event of a terminal illness. Often, people opt for “comfort care” with instructions that they are to be medicated to be free from pain but other life extending procedures such as feeding tubes, blood transfusions, cardio-pulmonary resuscitation and similar services are rejected. In other cases, patients may wish to preserve life as long as possible using current technology. A Living Will can also be drafted with this goal in mind.

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These days, it is not uncommon for mortgages to be sold or transferred. Many mortgages start out with one company and are almost immediately transferred to a different bank or loan servicing agency. In fact, most homeowners who finance through a mortgage, are probably not paying the same company who originally provided the loan. You may be asking yourself, why does this happen, and how does it affect the average homeowner?

Anyone who has applied for a mortgage can attest to the fact there is no shortage of paperwork to fill out during the process. Very few people actually take the time to read the fine print. In fact, most simply verify the important terms then sign and initial as applicable. However, in most, if not all mortgage contracts, there is a clause stating whether or not their mortgage will be sold or transferred. This language is required by Title 12 Chapter 27 § 2605 of the U.S. Code.

Generally speaking, there are two parts of a mortgage that can be transferred or sold. The two components do not even have to be owned by the same company. However, to most homeowners the distinction is non-existent except in name. The first component is the actual mortgage, also called the note. The note is what sets forth the terms of loan, including the amount owed and when. The note is almost always secured by a deed of trust on the physical property. In Arizona, this is what allows banks to foreclose on homeowners who fail to pay their mortgages. This is what’s known as a non-judicial foreclosure.

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Probate terminology can be confusing. Even Phoenix Probate lawyers sometimes misuse and confuse probate terms.   But you need to know the language if you are to understand what is going on. So here are some common terms used in estate proceedings along with definitions.   More definitions can be found in A.R.S. §14-1201.

Application is a written request directed to the probate registrar for an order of informal probate or appointment.

Petition is a written request to the Court for an Order after notice to interested parties.

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A Living Will is different from a normal Will.   A Will is a common estate planning document that controls the distribution of a person’s property after he or she dies. It is not effective until death. A living will, however, is effective during a person’s lifetime and serves a wholly different purpose.   Also known as an “advance directive” a living will allows a person, in advance, to give written instructions for medical treatment should he or she become terminally ill and be unable to communicate with a physician or family member. Most states have laws authorizing living wills/advance directives. Arizona’s statutes are found at A.R.S. §36-3201, et.seq. A sample Living Will can be found in A.R.S. §36-3262.

Medical care has become so good that life can be extended artificially for long periods. Physicians often opt to extend life where possible, but this may not be what a patient wants. Few of us want our lives to be artificially extended where we are terminally ill with no chance of recovery. Most want to be allowed to die with some dignity.   This is where a living will comes in.

A Living Will provides a means to control the medical procedures provided to you at a time when you cannot speak for yourself.   In most cases, this amounts to a description of what services are not wanted in the event of a terminal illness. Often, people opt for “comfort care” with instructions that they are to be medicated to be free from pain but other life extending procedures such as feeding tubes, blood transfusions, cardio-pulmonary resuscitation and similar services are rejected. In other cases, patients may wish to preserve life as long as possible using current technology. A Living Will can also be drafted with this goal in mind.

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Your Will is an essential estate planning document. However, it covers only those assets that make up your probate estate. There are other assets called non-probate assets and your Will does not control these. Your Phoenix estate planning lawyer needs to know about both types of assets when preparing an estate plan.

Non-probate assets are normally those for which you have already designated a beneficiary upon your death. These are often:

  1. Life Insurance policies,
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When trying to figure out whether an Arizona probate estate is required, the Phoenix probate attorneys at Platt & Westby, P.C. suggest that it is often helpful to look at the decedent’s assets (especially how they are titled) and the decedent’s debts.

The manner in which decedent held title to his/her various assets makes a big difference. Real estate can be held in a variety of ways including solely and separately, joint tenancy, community property, and as tenants in common. Often the joint tenancy and community property titling is coupled with “right of survivorship” language. This additional language means that when a property is held by two or more persons, the surviving persons receive the deceased person’s share of the property automatically at the time the deceased person passes. This happens without the need for probate. On the other hand, property held solely and separately, or as tenants in common usually require a probate in order to transfer title or to sell the property. Similar to the manner in which title is held, it also depends what name the property is titled in. In the event that the decedent titled his/her real estate into a trust, a probate will be unnecessary. Instead, the trustee or successor trustee as the case may be, can usually proceed to administer the trust without court proceedings.

Bank accounts can be a little tricky because you have to distinguish whether a person associated with the account is an owner, a signer, or a beneficiary. Jointly owned accounts will normally pass to the surviving person automatically without the need for a probate. When the account is owned only by the decedent, and there is a surviving person who is only a signer on the account (or acting as an agent under a power of attorney on the account), then the signer/agent will not have access to the funds upon the owner’s death. Instead, it will have to be determined whether the account has another surviving owner or had a beneficiary designation on it. If there is a surviving joint owner, that person will likely own the funds remaining in the account and will have continuing access to them without anything further. If there is no surviving joint owner, then the next step is to determine if there is a beneficiary to the account. These beneficiary designations are often referred to as TOD (transfer on death) or POD (payable on death) designations. Essentially, these POD/TOD designations work just like a beneficiary designation on a life insurance policy. In order to obtain the funds in the decedent’s account where a valid POD/TOD exists, the person entitled to the funds applies to the bank institution for the funds, proving who they are and providing information about the decedent’s passing. In most cases, these kinds of designations will permit distribution of the funds without opening a probate proceeding. An example where such a designation would not work is when the beneficiary passed away before the owner of the account dies and the owner did not update the POD/TOD designations. In that case, a probate would need to be opened up to collect the funds, to determine who gets the funds, and to distribute them to the person(s) entitled to them.