Arizona Living Trust Portfolios
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Mike On Money

August 27th, 2025. Well it’s time to add to my blog. Seems like the Covid ordeal put a damper on posting. This blog post is about disinheritance actions. I can say very honestly that this subject is one of the most controversial consulting areas in my legal documents practice. When I am hired to draft legal documents in estate planning that limit or completely disinherit a child or grandchild, my heart starts beating faster. I have had to do it a lot over my long career and it never sets well with me. However, the dictate to create terms of disinheritance for offspring does have value in the estate planning arena.

Perhaps, more and more children, grandchildren in the past few decades have gone against the wishes of their parents or grandparents and acted in ways, (including inactions as well) that did not please the estate client who after much deliberation, has come down to dictating this legal move to remind them, after the death, that there was a cost to pay for certain habits, actions, in-actions, harmfully spoken words in anger never recalled, abandonment of visiting, etc.

I hate to see the “hammer” come down this way after a client dies, but they are in charge at the time they draft and they have their reasons to restrict or eliminate certain beneficiaries, normally their own children, who they are unhappy about their lifestyle, habits, that have hurt the estate owner/s. So it is a way to remind after a death, the true cost of their actions. (or inactions) If this is something you are exploring, I have a lot of experience in drafting legal documents (Wills, Trusts) that will help carry out your wishes to disinherit someone. Smart attorneys can contest the provisions and try to prove a “senior” was not at full mental capacity when the disinheritance clauses were drafted. Or try to prove in a formal “contest” court filing they simply forgot them.

Just know, as much as I hate doing these, I have studied for years the best terms to draft so that the decision does not get amended by a Judge in a formal court contest filing. Since 2009, Arizona trust code law is pretty liberal in this area compared to other states (such as my home state of Iowa who will let a Judge disinherit you if you even get mad at a Executor or Trustee), as it takes a formal “contest” court procedure here in Arizona and an extremely clear and egregious situation in order to lose your share of an estate you were named a beneficiary (heir) of.

I close in saying the wording in Wills and Trusts will normally in most states contain language that you are to be treated as if you (and perhaps all of your offspring) are to be treated as if you pre-deceased the descendent. I tell clients that in honest frank language, (without practicing law of course), that this pretty well means you are “dead” to the parent who disinherited you and thus, not able to get any share. Leaving other siblings to redivide the money and assets amongst themselves right in front of your eyes. (legally dead, personally very much alive).

A free 15 minute conference by Zoom or in person can discuss the general legal information pertaining to drafting such a provision in your Will or Trust with me. Call me at 1-800-782-2806 or email me at mdanderson@webfsi.com

I hope and pray this blog post does not apply to you!

M.D. Anderson

IRA Trusts

Your heirs will love the big dollar withdrawals your inherited IRA may sprinkle on them year after year, but if you leave Roth money, they will love you even more!

Your heirs will love the big dollar withdrawals your inherited IRA may sprinkle on them year after year, but if you leave Roth money, they will love you even more!

Our graphic is for those lucky beneficiaries of Roth IRA's. EVERY DOLLAR YOU GET LEFT TO YOU THAT FALLS DOWN FROM THE SKY ABOVE -- YOU GET TO KEEP!  Getting left a traditional Inherited IRA is great, but you have to pay tax on the withdrawals. But Roth money is "party time" money. No taxing authority gets a cut because your loved one or friend that named you as beneficiary PAID IT ALL FOR YOU!  So, don't be like the young man from Texas who at age 46, was left over $1,000,000 in a Roth IRA, refused to hire us, and cashed it in! Knowing he works for the United States government is not very comforting...

More on that one later most likely in this blog. (Search for "Stupid People")  Now, regarding IRA trusts, I must first digress back to the beginning of time.  Stretching IRA payout time that is. In 1998, I was there in the beginning of the Decedent IRA birth. Don't understand the term? Well, before the "Beneficiary IRA" existed or the "Inherited IRA" existed, before most of the IRS private letter rulings that have paved the way the past 20 years for my consulting practice, we had what was called a Decedent IRA.  Our firm was one of few in the United States that ran radio ads, spoke many weekends on a financial radio show here in Phoenix and ran ads to let Arizona residents discover ways to stretch out payouts on their retirement plans when they die.

We were one of the few financial consulting firms in the beginning that helped clients craft custom beneficiary forms for so when they died, the IRA could have hope of continuing on in a tax deferred "shell" for the heirs. Namely the surviving spouse or children of the plan owner at his or her death. Since then, values have jumped!  Today, the retirement account is either the largest asset when you die, or second only to the net equity value in your home or other investment real estate. So ignoring the need to do more estate planning regarding your retirement plans is like failing to change your oil in your car for years and years of neglect. Nothing good can come from ignoring a problem and your large IRA may be a problem that needs some help BEFORE you die.

Today, each year I help rescue between  5 to 25 million dollars a year for consulting clients around the U.S. from needless instant taxation.  Without consulting, heirs as beneficiaries often get few years to stretch out the remaining taxable payments (RMD) they must take (if not a spouse treating as their own), mostly because their parent's old advisers wrongly apply the "5 year" rule to survivors. Or worse, get greedy and tell them to cash the account in so they can get new commissions on what is left.  (losing about 1/3 in ordinary income taxes they cost their clients)  Every day, bad choices are made by good people as heirs (beneficiaries) trusting their parent's past financial advisers for help and advice.  The higher educated heirs call me or register on my website to talk it over before signing any paperwork. (which almost always is wrong) 

Therefore, I help stop the bad advise most of these financial advisers give when it comes to large IRA accounts left directly to beneficiaries or indirectly to beneficiaries by first naming the family living trust.  As you will find on my Inherited IRA consulting website, every case we get has some form of malpractice, malfeasance or just outright stupidity which we can reverse if hired early enough in the estate settlement process. Those who call too late.... well, they end up in our so called "Inherited IRA Hell"! 

Few hard working retirement plan owners have an actual "stand alone IRA trust" to receive the death benefits when they die.  When these accounts run $250,000 to over a $1,000,000 in most cases we get hired on for consulting, there is a reason to investigate using a stand alone IRA trust. Of course, you have to set it up before you die and while you are competent and of clear mind. Due to the large demand for these IRA trusts over the years, I have had to refer many clients to Attorney Philip Kavesh who hands down should be your source when you have 8 million dollars in your retirement plans. Just like the last California doctor I referred to Phil last year had. But for those who have smaller IRA combined balances, or Roth accounts you want to make sure your children don't cash them in losing all those years of tax free income -- ANY IRA can have it's own stand alone trust if you desire it of any size.

For smaller amounts, we would just add a Testamentary trust to your current Last Will or Living Trust. Easy peasy maneuver without a lot of stress or cost.  The Will is changed just by making a Codicil and the trust by a simple amendment, in order to add the proper wording and procedures for your Personal Representative or Trustee to follow when you die.  Or, for any IRA (though it should be pretty high value due to the cost to prepare), a stand alone revocable Inherited IRA trust can also be created to stand alongside your current Last Will or Living Trust to better manage the retirement money exactly as you desire. Even from the grave.

What's important is that you now have access to our IRA trust services since these products described being in development all year, are now ready for production and delivery.  (After consultation)  Though not yet in our products page as we formulate pricing (it will be fair and affordable), we are now ready to consult with you on this matter with no obligation on your part. Just fill out a contact form or call us at 1-800-782-2806.  For CPA's, Attorneys, and other financial advisers who have a client that may need this product and service, feel free to contact us as well for professional discounts for our document preparation services that complement your current practice.

M.D. Anderson 

 

Roth IRA, Arizona Estate Planning, IRA TrustsMichael AndersonFinancial Strategies, Inc.IRA Trust, Estate Planning, Trust Planning, Arizona Estate Plans, Arizona IRA TrustComment