If you’ve been researching estate planning in Arizona, you’ve probably come across the idea of a living trust. Maybe a lawyer, financial advisor, or even a friend has suggested that you set one up to protect your assets and ensure your loved ones avoid probate. While a living trust can be a useful tool, it’s not always necessary for everyone. Depending on your situation, you may be just fine with a well-drafted will and some strategic planning. Let’s break down why a living trust in Arizona might not be the best choice for you.

You Have a Simple Estate

If your estate is small and straightforward, a will is often enough. In some states, including Arizona, small estates can avoid probate through simplified procedures. Moreover, if you have used tools like beneficiary designations and TOD deeds, a well-drafted will may be all you need. A will allows you to: 

• Name guardians for minor children
• Specify how your assets should be distributed
• Express your final wishes

While a will does go through probate, Arizona’s relatively easy probate process means it’s not as burdensome as in some other states.

Probate Isn’t a Big Issue in Your State

One of the main reasons for a living trust is to avoid probate, which can be time-consuming and costly in some states. Probate is the court process of distributing your assets after you pass away. However, in Arizona, probate is generally not as burdensome as in other states, especially for small estates. Here, there are tools like the beneficiary deed that can help you bypass probate without needing a living trust in Arizona.

You Don’t Mind the Probate Process

If avoiding probate is the primary goal, but you’re comfortable with the process, a simple will may suffice. Arizona’s probate process is not as costly or complicated as in some other states.

Therefore, even if some of your assets do end up in probate, Arizona law provides a relatively simple probate process, especially for smaller estates. For example, your total estate is worth less than $75,000 in personal property (such as bank accounts, vehicles, and household items) or less than $100,000 in real estate. Hence, your heirs may be able to use a Small Estate Affidavit to claim your assets without going through full probate (A.R.S. § 14-3971). This can make probate quick, inexpensive, and much less of a hassle than in other states.

You May Not Have Complex Assets

A living trust in Arizona is particularly useful for people with complicated estates. For example,  those who own multiple properties, have business interests, or expect to leave behind a large estate that could be subject to estate taxes. However, Arizona does not have a state estate tax, and the federal estate tax only applies to estates worth over $13.61 million (as of 2024). If your assets are relatively simple and fall below this threshold, you might not need the extra layer of management that a living trust in Arizona requires.

You’re Comfortable with Public Records

Unlike a will, a living trust keeps your estate details private. However, if privacy is not a major concern, this advantage may not justify the extra complexity and cost.

Beneficiary Designations Instead of a Living Trust in Arizona

Many assets, like retirement accounts, life insurance policies, and even some bank accounts, allow you to name beneficiaries. In Arizona, you can also use Transfer on Death (TOD) and Payable on Death (POD) designations for bank and investment accounts to bypass probate.

Transfer on Death (TOD)

Arizona law allows homeowners to use a Beneficiary Deed (also called a Transfer on Death Deed). This document lets you name who will receive your home when you die, without the property going through probate (A.R.S. § 33-405). It works much like naming a beneficiary on a life insurance policy. Once you pass away, the person you named simply records a death certificate with the county, and the home transfers to them automatically. This can be a simple and cost-effective alternative to placing your home in a trust.

Payable-on-Death (POD) 

Another major reason people use living trusts is to ensure their bank accounts, retirement accounts, and investment accounts transfer smoothly to their heirs. But you don’t necessarily need a trust for that in Arizona. Instead, you can use Payable-on-Death (POD) accounts to pass on these assets without probate (A.R.S. § 14-6201). You simply name a beneficiary on each account, and when you pass away, the funds go directly to them—no probate involved.

You Own Property Jointly

If you own real estate or financial accounts with rights of survivorship, those assets will automatically transfer to the co-owner upon your death without probate.

You Don’t Have Minor Children or Incapacitated Beneficiaries

A living trust in Arizona is useful for managing assets for minor children or beneficiaries with special needs. If you don’t have such concerns, a trust may be unnecessary.

It Costs More to Have a Living Trust in Arizona

Establishing a living trust requires time and money, including legal fees and the effort of transferring assets into the trust. If your estate is simple, the cost may outweigh the benefits.

Maintaining a Trust Requires Time and Effort

Creating a living trust is not just a one-time task—it requires ongoing effort to keep it effective. If you set up a trust but forget to transfer new assets into it, those assets could still end up in probate. You’ll also need to update it regularly as your life circumstances change. This added responsibility isn’t necessary for everyone, especially when Arizona provides other ways to ensure a smooth transfer of assets.

When a Living Trust Might Be Worth It in Arizona

There are still situations where a living trust could be beneficial. If you have:

• A blended family and want to ensure assets are distributed in a specific way
• An own out-of-state property that could trigger probate in another state
• A loved one with special needs (a Special Needs Trust could be a valuable tool)

While living trusts can be useful, they aren’t a one-size-fits-all solution. Arizona’s estate laws provide several alternatives to achieve the same goals with less cost and hassle. Before deciding to set up a trust, take a close look at your assets, family situation, and long-term needs. If you’re unsure, consulting with an Arizona estate planning attorney can help you make the right choice for your unique circumstances.