Sunday, December 30, 2018
Monday, December 24, 2018
Living on Borrowed Time
Living without a plan is living on borrowed time
1 in 3 people will become disabled or worse before retirement age. Those odds are simply too high to ignore.
If you become incapacitated – unable to make your own legal, financial, and healthcare decisions – due to accident, health incident, drugs, or alcohol you family may have to seek a guardianship in court!
A guardianship is also sometimes called “living probate.”
You can think of a guardianship as a limited power to oversee and assist you with your affairs, under court approval.
Guardianship are public record!
If you and your spouse (or children) own things together, they will need a guardianship to be able to access accounts (like a 401(k) or IRA) or sell real estate if needed. It doesn’t matter if you have setup a beneficiary on the account because that only takes effect on death.
Mary never expected her husband John to have a major stroke when he was only 53. John pulled through but was left with enough mental deficits that he needed help managing money and making healthcare decisions. He was also left with a few physical deficits that made climbing stairs difficult.
Mary needed to sell the house to downsize and get a single level home that was easier to get around in.
Mary had to, at an expense of time and money:
1. Hire an attorney to get a guardianship ($$$$$)
2. Go to court to get a ruling on the guardianship petition
3. Get 3 appraisals on the property ($$$)
4. Petition the court (ask for permission) to sell the house ($$$)
5. Sell the house
6. Report to the court with the sales information in it ($$)
7. Report annually to the court how the money was used ($$)
8. Repeat as needed
9. If John needs Medicaid, hope the Judge will approve the Medicaid plan
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Reality Check
I need to give you some bad news.
You’re not going to live forever. Sorry to be so grim, but it’s true! Your lifespan has a finite time frame, and as you read this the minutes of your life are ticking away. Tick…Tock…
One in five will die before reaching the age of 65.
According to the Social Security statistics (https://www.ssa.gov/planners/disability/) disability is a reality many people will face.
Studies show that just over one in four of today’s 20-year-olds will become disabled before reaching age 67.
Disability is a subject you may read about in the newspaper, but not think of as something that might actually happen to you.
Your chances of becoming disabled are probably greater than you realize.
While we spend a lot of time working to succeed in our jobs and careers, few of us think about ensuring that we have a safety net to fall back on should we become disabled.
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Monday, December 17, 2018
Friday, December 14, 2018
Joint Accounts and Medicaid
I am on my uncle’s savings and checking accounts at his bank in Pennsylvania. I am his power of attorney. I live in Arkansas and I am on Medicaid. Will being on his account as a power of attorney effect my Medicaid review next year? I appreciate any help you could offer.
Being a power of attorney for your uncle shouldn’t affect your eligibility because the money is never yours. Just be sure to not be writing yourself checks on the account. A power of attorney doesn’t make you the owner of the account.
However, when money is deposited into a joint account, it belongs to all the people on the account equally. It doesn’t matter who deposited the money. Anybody on the account can access the money in the account without the other people’s permission.
Joint accounts may affect Medicaid eligibility. The State will look at your assets to see if you still qualify for assistance. A joint account has multiple names on it, but most states will assume the applicant owns the entire amount in the account. It doesn’t matter who deposited the money because you have full access to it.
And, if you are an owner of a joint account and anybody transfers money out of the account, it can be considered an improper transfer of assets – a gift – for Medicaid purposes. That means that you or the other owners may be ineligible for Medicaid assistance for a while.
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Sunday, December 9, 2018
What Happens When You Live & Die…Without a Plan
Living Without a Plan
Living without a plan is living on borrowed time.
1 in 3 people will become disabled or worse before retirement age. Those odds are simply too high to ignore.
If you become incapacitated – unable to make your own legal, financial, and healthcare decisions – due to accident, health incident, drugs, or alcohol you family may have to seek a guardianship in court!
A guardianship is also sometimes called “living probate.”
You can think of a guardianship as a limited power to oversee and assist you with your affairs, under court approval.
Guardianship are public record!
If you and your spouse (or children) own things together,they will need a guardianship to be able to access accounts (like a 401(k) or IRA) or sell real estate if needed. It doesn’t matter if you have setup a beneficiary on the account because that only takes effect on death.
Mary never expected her husband John to have a major stroke when he was only 53. John pulled through but was left with enough mental deficits that he needed help managing money and making healthcare decisions. He was also left with a few physical deficits that made climbing stairs difficult.
Mary needed to sell the house to downsize and get a single level home that was easier to get around in.
Mary had to, at an expense of time and money:
- Hire an attorney to get a guardianship ($$$$$)
- Go to court to get a ruling on the guardianshippetition
- Get 3 appraisals on the property ($$$)
- Petition the court (ask for permission) to sell the house ($$$)
- Sell the house
- Report to the court with the sales information in it ($$)
- Report annually to the court how the money was used ($$)
- Repeat as needed
- If John needs Medicaid, hope the Judge will approve the Medicaid plan
Probate or Bust
If you don’t have anything, then nothing needs to be done…
But, if you have assets or property just in your name, then that property will have to go through court approval before it can be transferred to your family.
That process is commonly called “probate” and I will use that word throughout. (However,technically probate involves a Last Will and Testament. It is called administration when there is no Last Will and Testament).
Probate typically takes 8 months or more in Arkansas to get done. The average is close to 12 months. 6 months of that is taken up because of required notices to be published in the newspaper. If all of the heirs and beneficiaries don’t waive inventory, account, and more, the process will take closer to 18 months.
Minimal Probate
If there are no bills payable, under $100,000 of assets not including the primary residence, and 45 days have elapsed, the entire process consists of filing an affidavit and deeding real estate to the heirs.
However, this is not typical.
Typical Probate
In general terms, the process begins with filing a Petition with the court to appoint an Administrator. If the choice of Administrator is not valid or unacceptable, the Court will appoint somebody, perhaps even a complete stranger, as Administrator.
Unless you have a very simple estate, your Administrator usually hires an attorney to help.
Your Administrator must publish, in a paper of local circulation, the fact your estate is being administered and creditors can make their claims. Notice of the administration of your estate must be sent to all known creditors, preferably by certified mail.
That’s just the beginning. Then somebody must value and inventory everything you’ve left behind.
Your family may be denied access to assets, or only allowed a small stipend, until the final distribution.
Before the process is done, your creditors will be paid off,estate taxes paid, attorneys paid, and your administrator paid. Only after these expenses are paid will your heirs divide what remains, if anything.
Public Scrutiny
Your and your family’s private affairs will be open to public scrutiny. It goes beyond just publishing the fact of your probate in the newspaper. It can also expose your family to crimes of opportunity. Con artists, creditors,overly aggressive sales people, and people eager to exploit financial weakness routinely look at the Probate records. There might not be a bad reason, but on the other hand they may be looking to exploit your family.
Regardless of motive, these people present a threat to your family that they don’t need. You can’t protect your family from them if your estate goes through probate.
Probate Works
The good news is that Probate normally works without a hitch. Your wishes are carried out. The bad news is that it takes time and money.
The average time for Probate varies from state to state, but you can expect at least a year. A year if your affairs are straightforward and nobody objects to anything.
Paying for Probate
Long, red tape filled processes take a long time and money to finish. Everyone else gets paid first: administrator, attorneys, funeral home, appraisers, the court, taxes, and creditors. Only then will your heirs get what’s left.
How much is left varies considerably depending on your state and how much you owed. A simple estate and straightforward administration doesn’t mean it’s cheap.
Whether paid by flat-fee or percentage, you can expect Probate and its associated expenses to eat up 6% or more of your gross estate. That is the value of your possessions without taking away expenses and what you owe on the assets. That doesn’t include accounts fees,appraisers’ fees, and more.
Spoilers
Making out a Will doesn’t mean your plan will be followed. Disgruntled family members can challenge the Will and process.
Probate is a vulnerable time for your family.
Just about any disgruntled relative can challenge a Will,sometimes with devastating consequences. Even if your heirs win the contest and prevail, they may find they won the battle and lost the war because all of the money was used up in defending the estate and will.
The Solution: A Revocable Living Trust
The Revocable Living Trust is one of the most widely used and powerful Probate avoidance tools available!
First, the Revocable Living Trust avoids Probate and the problems that come with it like:
- Expenses
- Challenges
- Delays
- Opportunistic Criminals and con artists
With a Revocable Living Trust you protect your and your family’s privacy. You expedite the process. Assets are available on an as needed basis.
That’s just a few of the benefits. Here are some more:
- You can use a Revocable Living Trust to take care of your assets and healthcare needs should you become disabled or incapacitated mentally.
- Maximize estate tax planning to minimize taxes
- Maximum control over your assets for years to come. This is especially important if you leave behind minor children, incapacitated heirs, or other people that need time to learn to manage sums of money.
- No-contest clauses
- A Revocable Living Trust in some states does not have to pay your final expenses or creditors.
- As long as your heirs leave their inheritance in the Trust, the assets are protected from their creditors and financial predators.
How a Revocable Living Trust Works
When you have a Revocable Living Trust, you literally own nothing. Your Trust owns it all. But don’t worry. Because you are the trustee (trust manager)and the beneficiary of the Trust, you stay in full control of all the assets. You can have the income, spend the money, sell, buy, and do anything you need to with the property in the trust. In every practical sense, have a Revocable Living Trust is almost identical to owning all your property directly.
The difference happens when you are gone or incapacitated.
Since technically you didn’t own the property, there is nothing to go to Probate. Instead your property and assets are quickly distributed to your heirs without all the red tape and bureaucracy. Your successor Trustee doesn’t have to get the approval of the courts.
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Sunday, December 2, 2018
Sunday, November 25, 2018
Reality Check
I need to give you some bad news. You’re not going to live forever. Sorry to be so grim, but it’s true! Your lifespan has a finite time frame, and as you read this the seconds of your life are ticking away. Tick…tock…
One man in five will die before he reaches the age of 65.
According to the Social Security statistics (https://www.ssa.gov/planners/disability/) disability is a reality many people will face.
Studies show that just over one in four of today’s 20-year-olds will become disabled before reaching age 67.
Disability is a subject you may read about in the newspaper, but not think of as something that might actually happen to you. But your chances of becoming disabled are probably greater than you realize.
While we spend a lot of time working to succeed in our jobs and careers, few of us think about ensuring that we have a safety net to fall back on should we become disabled.
The post Reality Check appeared first on DeWitt Law Firm, PLLC.
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Sunday, November 18, 2018
Thursday, November 15, 2018
Estate Planning for Blended Families
What is a Blended Family?
A blended family is when two people that have children from prior marriages marry.
Blended Family Problems
After her father passed away, Mary remained close to her step-mom, Helen, over the years. Helen choose a few years before her death to move closer to her own biological children and left the area. After Helen passed away, Mary discovered her step-mom had changed the terms of her estate plan to leave everything to her own biological children.
Everything that Helen did was legal. Helen’s husband, Mary’s father, signed an estate plan that left Helen in 100% control of the estate. As the survivor, Helen had full control to amend and modify the plan.
Spouses can Separate Assets and Have Individual Trusts
Upon the passing of the first spouse, a Trust can establish a sub-Trust to provide income to the spouse but protect the assets from their children.
Choose the Trustee carefully. The surviving spouse should not be the Trustee. The Trustee will have the power to withdraw all the assets from the sub-Trust.
Consider giving children a gift on the first to pass. That way the surviving spouse can use all the assets remaining if they need them.
Make a Joint Trust Irrevocable
When the first spouse passes, have a clause in the Trust that it becomes irrevocable. In sense, locking the assets in the Trust.
Consider Keeping Assets Separate
Think about keeping your separate assets in a separate account. Name your children as the beneficiaries of those assets and accounts.
Consider Your Attorney-in-Fact
Think about naming your spouse and children as co-attorney-in-fact for your power of attorney.
Double Check Beneficiary Designations
Beneficiary designations occur outside a Will or Trust, but are important pieces of an overall estate plan. Regardless of what your Will or Trust says, beneficiary designations go directly to the beneficiaries. If your Trust is not the beneficiary, then the assets don’t go to the Trust.
For example, if mom’s brokerage account has a beneficiary designation of her children, then her children take all regardless of what her Will or Trust says.
Another issue is when somebody names their spouse as 100%primary beneficiary and their children as the secondary. If they pass while their spouse is living,then their spouse gets 100% of the money and 100% of the control over that money or asset. You can avoid this by naming your spouse and children all as primary beneficiaries and designating percentages.
Also, make sure to double check your beneficiary designations on all your accounts at least every 2 years, preferably every year. If you make a change to your beneficiaries,then check them about 6 months later to make sure everything was entered correctly.
Avoid Problems with a Living Trust
A Trust can avoid step-parents from changing the disposition of your parent’s property.
You give ownership of your property to your Living Trust. You don’t own the property in your own name, but you still have full control and dominion over your property. Your Living Trust owns your property. You own your Living Trust.
Many people are scared because they think they are giving up control and dominion over their property. That just isn’t the case. You make the trust, put property into the trust, and have the benefit of the trust property. You and you alone control the trust, and therefore the property in the trust. You can buy, sell, trade, mortgage, lend, borrow just as before you created your Living Trust.
In short: the fact your Trust owns the property makes no or little difference on the way you live and conduct your affairs.
The big difference happens later, when you pass on. Because of the way a Trust is structured,your successor Trustee steps in and follows the directions you left in the Trust. Because you didn’t own the property in your name, there is no probate to be done. There’s no publicity, and compared to a Probate, little expense, or convenience, or time spent for your loved ones.
Your parent and step-parent can agree now how the assets are to be distributed and when they are to be distributed. Once your parent passes, their part of the Trust becomes irrevocable (can’t be changed).
The Living Trust also helps if you are incapacitated. It helps you avoid the indignity of a Guardianship. A Living Trust names somebody to manage the assets in Trust if you lose the ability to manage your own affairs, perhaps due to dementia.
Not Just for the Wealthy
Trusts aren’t just for the wealthy.
If you have just a $100,000 estate, they financial cost would be $6,000 (in today’s dollars).
Let’s say that is a house that should appreciate at 5% per year. In 10 years, it’s worth about$163,000. The cost of probate is now$9,780. That’s 50% more in just 10 years.
If you created a trust and put the house in it, you spend$2,000 today. Your family saves $7,780 or more later… Not to mention the time and anguish of Probate.
Just imagine the cost of Probate in 20 years. (Its actually about $16,000 for that $100,000 house.)
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Sunday, November 11, 2018
Saturday, November 10, 2018
What You Should Know About Probate
What is Probate?
Probate comes in 2 flavors.
The first is “living probate” or guardianship. This is the legal process that determines your legal rights when you can’t because of mental incapacity.
The second is what you probably typically think of. It is final Probate. Having a Will almost makes sure that your estate will go through Probate. However, not having a Will does too.
Probate comes with its own set of problems.
What is the Impact of Probate?
Probate has a financial, emotional, and time impact.
First, probate will cost 6% or more of your GROSS estate. Your gross estate is all you own without deducting expenses and what you owe. For example, if you have a $200,000 house with a $200,000 mortgage (that is $0 of equity), it will still cost 6% of the $200,000 ($12,000).
Emotionally, people often feel lost and at the mercy of the system. A lot of this is from fear of the unknown. They’ve never been through a probate.
Time is also a huge factor in probate. Even if everybody agrees on everything, it will take at least 8 months. 6 months of that is a required period of time for creditors to make their claims.
Probate is not necessary. By planning now, you can avoid probate later.
Is Probate Necessary?
Final probate has these functions:
- Verifies and validates your Last Will and Testament
- Give your creditors time and opportunity to make their claims
- Gives upset family members an opportunity to challenge your Will
- Inventories your estate (makes the contents public)
- Finally, distribute your estate and transfers title
Is probate needed to accomplish all this? No.
Avoid Probate with a Living Trust
Whether or not you have a Will, Probate will be required if you owned any property in your name.
A Living Trust makes Probate unnecessary by changing the way your property is titled and owned. You give ownership of your property to your Living Trust. You don’t own the property in your own name, but you still have full control and dominion over your property. Your Living Trust owns your property. You own your Living Trust.
Many people are scared because they think they are giving up control and dominion over their property. That just isn’t the case. You make the trust, put property into the trust, and have the benefit of the trust property. You and you alone control the trust, and therefore the property in the trust. You can buy, sell, trade, mortgage, lend, borrow just as before you created your Living Trust.
In short: the fact your Trust owns the property makes no or little difference on the way you live and conduct your affairs.
The big difference happens later, when you pass on. Because of the way a Trust is structured, your successor Trustee steps in and follows the directions you left in the Trust. Because you didn’t own the property in your name, there is no probate to be done. There’s no publicity, and compared to a Probate, little expense, or convenience, or time spent for your loved ones.
The Living Trust also helps if you are incapacitated. It helps you avoid the indignity of a Guardianship. A Living Trust names somebody to manage the assets in Trust if you lose the ability to manage your own affairs, perhaps due to dementia.
Not Just for the Wealthy
Trusts aren’t just for the wealthy.
If you have just a $100,000 estate, they financial cost would be $6,000 (in today’s dollars).
Let’s say that is a house that should appreciate at 5% per year. In 10 years, it’s worth about $163,000. The cost of probate is now $9,780. That’s 50% more in just 10 years.
If you created a trust and put the house in it, you spend $2,000 today. Your family saves $7,780 or more later… Not to mention the time and anguish of Probate.
Just imagine the cost of Probate in 20 years. (Its actually about $16,000 for that $100,000 house.)
Maximizing Your Living Trust
- Fund your Trust. A Trust only works if you remember to put your assets in it. If you keep your property in your name, you have defeated the purpose of a trust.
- Keep your Trust current.
- Update your Trust if family circumstances change.
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Thursday, November 8, 2018
I recently moved from another state do I need to change my will and/or trust?
I recently moved from another state do I need to change mywill and/or trust? Kendra, Elkins
I have found that most out of state Wills and Trusts will work in Arkansas just fine. However, after the move is a great time to review your Will and Trust to make sure they are still as you wanted. Often, if you are going to stay in Arkansas, a Trust Amendment and a Codicil to your Will is done to change the Trust to use Arkansas law for interpretation. If this change isn’t done, and somebody challenges the Will or Trust,then the Arkansas courts must look to the other state’s laws to interpret the Will or Trust.
The other documents you should have looked over are your durable power of attorney, power of attorney for healthcare, and living will. More often than a Will or Trust, these documents need updated or rewritten to meet Arkansas law and so that local businesses and institutions will accept them. Many times, these documents were written to depend on state law instead of detailing the provisions.
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Sunday, November 4, 2018
Sunday, October 28, 2018
Sunday, October 21, 2018
Sunday, October 14, 2018
Friday, October 12, 2018
Star 101.5 Legal Minute – October 2018
Barbara from Bella Vista asks: How do I make sure my bank accounts go to my loved ones when I pass away?
I get asked this question all the time.
You have at least two ways to do this, but these are my favorites.
First, you can add a payable on death to your account. This is very similar to a beneficiary on life insurance or retirement accounts. When you pass away, the money will immediately be available to your children or spouse.
Second, you can create a revocable living trust and retitle your bank account into the trust. The trust is much more flexible than just adding the payable on death. With a trust, you get to decide when they get the money, how they can have it, and if they are receiving government benefits, those benefits can be protected. You can also protect children with addictions by using a trust.
Probably the most common way people try to get this done is by adding people to the account as co-owners. I never recommend adding your children to the account as co-owners. If they get into credit problems or divorce, the other party may be able to reach part or all the money in the account. Co-ownership can also cause Medicaid issues.
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Monday, October 8, 2018
Monday, October 1, 2018
Monday, September 24, 2018
Monday, September 17, 2018
Wednesday, September 12, 2018
Tuesday, September 11, 2018
What is a Will?
A will is a document expressing your final gifts.
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Monday, September 10, 2018
Sunday, September 2, 2018
Monday, August 27, 2018
Thursday, August 23, 2018
Aretha Franklin Didn’t Have an Estate Plan
How sad… Aretha Franklin passed away without a Will or a Trust. This opens her entire estate to public scrutiny and family fighting over her assets.
“I was after her for a number of years to do a trust,” Los Angeles attorney Don Wilson told the paper. “It would have expedited things and kept them out of probate and kept things private.”
“Franklin’s lawyer has represented her in entertainment matters for nearly three decades, and told the paper that he constantly asked her to do a trust, but she never got around to it.”
“I just hope (Franklin’s estate) doesn’t end up getting so hotly contested,” Wilson said. “Any time they don’t leave a trust or will, there always ends up being a fight.”
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Sunday, August 19, 2018
Did you?
Many of the people I talk to don’t realize the State has already written an estate plan for them.
Did you?
The state has already decided who gets how much of your stuff. But, the State didn’t say who gets exactly what, just how much. This invites family fighting over your goods. And, the State doesn’t put a time limit on how long the process will take, and it may take a year or more. That’s a year or more of hearings, motions, petitions, and more. That’s a year or more that money and assets can be tied up waiting for the process to finish.
Many people don’t realize they don’t have the legal right to make their spouse’s legal, financial, and healthcare decisions.
Did you?
The State has already decided how somebody can apply to manage your legal, financial, and healthcare decisions when you can’t. Yes, they must apply, via a petition to the court. Then they have to appear in court to finish the process. Even if it’s an emergency, they still have to go through the process. Then, the power they have is limited. They must ask the Judge to do certain things for you.
You can stop all of this by writing your own plan!
In a Law Will and Testament or Trust, you get to decide who gets what. With a Trust, you can choose when.
With a Durable Power of Attorney, Power of Attorney for Healthcare, and Living Will you choose who will take care of you when you can’t.
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Wednesday, August 8, 2018
Tuesday, July 24, 2018
What The Worst That Can Happen (Without an Estate Plan)?
Despite the importance of having an estate plan, a minority of Americans have their own plan in place. If you don’t have a plan, the State has a plan for you, and you probably won’t like it.
The purpose of an estate plan is twofold. The first is the traditional planning you probably think of, passing your property to the next generations. The other is the lifetime part of planning. The planning many people haven’t thought about. This planning is setting up control now and keeping control later if you can’t make rational decisions.
Both parts replace the State’s plan for you with your own plan.
Court Interference in Your Financial, Legal, and Healthcare Choices and Affairs While Living
Arkansas, like most states, has a process in place for a person to take over your decision making if you are mentally incapacitated. It’s called a “Guardianship.” The Judge may take away part or all your legal right to make decisions and give those rights to somebody else. The Court is “ripping away” your rights.
If you are incapacitated – unable to make your own rational decisions – family members may be forced into court to take over your affairs against your will. It may not be the family member you would pick to manage your affairs. Maybe it’s your daughter. The one that has a hard time managing her own finances.
The other issue with becoming a guardian is that the person must be qualified. By qualified, they must be 18, not have an unpardoned felony on record, and not be guardian to more than 4 other people among other qualifications. So, if you only have one child and they have been convicted of even a minor felony and not pardoned, they aren’t qualified to be your guardian. If you are a single parent, and all your children are under 18, they aren’t qualified to be your guardian.
You can stop this from happening by creating a power of attorney for finances, legal affairs, and healthcare.
Intestate Succession – “Probate Without a Will”
Something is going to be done with your property. And you don’t get a say in what it is.
Most states, including Arkansas, have a legal process in place to pay your final bills and expenses; settle disputes; and distribute your property. Without a plan in place, disputes over who gets what must be resolved by a Judge.
Without a plan in place, your family will have a more difficult time navigating the process. The Court will be in charge of the entire process from beginning to end.
Your family can expect this process to take about a year. It involves multiple trips to court for hearings. During this period, assets are frozen. Family can qualify for an allowance, but it isn’t very much.
The rules aren’t necessarily terrible. The State Legislature thinks the rules are the closest to what the average person would want done. However, most people would change these defaults some. For example, the rules say your children take first, then parents, then siblings. Maybe you want your siblings to take it all because your want to disinherit your child. You may want to give something to charity or a friend.
When the first person in a marriage passes, the process isn’t usually too bad if most of the assets are co-owned by both spouses. Ownership simply changes to the living spouse. However, when the second person passes, the process is long and a hassle for the remaining family. And, if both pass in the same accident, then the distribution of your property goes to Court.
Arkansas is different than some states in how the property is distributed. Your spouse gets one-third of everything but the real estate that isn’t co-owned. Your spouse gets a one-third “life estate” in the real estate that isn’t co-owned, including the family home. If your children are under 18, then the Court will force the assets into a Trust to be managed for their benefit. The Court also gets to pick the Trustee to manage the Trust. This may be a professional who will charge high fees to manage the Trust.
Intestate success is stopped with a variety of tools. One of the most common ways is the revocable living trust. A revocable living trust completes circumvents the courts. Another advantage is that you can maintain control over the assets after you’ve gone.
Life Support
While you may have thought about who will manage your money and who should get it, many people haven’t considered the possibility of being on life support for decades while their family fights over them.
Terri Schiavo was a young lady who had a heart attack. She was left in a permanent vegetative state. Her husband and her mother fought over removing life support for 15 years before life support was finally removed. This case involved 14 appeals and numerous filings. The autopsy revealed such extensive brain damage that she could never have been expected to wake up. (https://en.wikipedia.org/wiki/Terri_Schiavo_case)
And, if you review the section above on guardianships, your healthcare decisions may be taken over by a family member if you can’t make them.
For example, if you have a major stroke and are having troubles with decision making, a family member (or adult protective services) can step up and ask the Court for permission to make your healthcare decisions until you are capable again. It might not be the person you expected or wanted it to be.
If nobody steps forward to make decisions, then it is up to the social workers and doctors to make decisions, or to call Adult Protective Services. Adult Protective Services is a branch of the Department of Human Services in Arkansas that steps in to protect adults when nobody else will or can.
Create an advance directive (living will) and healthcare powers of attorney to make sure you don’t have to go through something like Terri Schiavo.
Family Fighting
Maybe the worst thing of all is hoping your children won’t fight, but they end up fighting over the little stuff – the sentimental stuff. Or they end up fighting over small sums of money because they feel it’s unfair that the State decided to evenly split the money between them.
You can read about how a family fought for years over a $1.50 Tweety Bird statue mom kept in the kitchen here https://www.cnbc.com/2017/10/10/7-ways-that-cheap-tweety-bird-figurine-can-screw-up-your-estate.html.
That is just one example of families fighting.
A friend of mine told me he and his brother fought over their dad’s estate. He said they literally fought over nothing. Their dad had very little, yet they fought over it.
While parents don’t expect or want their children fighting over their stuff, it happens. And it often rips families apart.
You can minimize the chance of family fighting by creating a comprehensive plan that includes passing of goods in line with your wishes and making your decisions now.
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Thursday, June 21, 2018
The Unvarnished Truth
You have an estate plan. What? I do?
This isn’t meant to scare you, but to present the unvarnished, cold, hard truth of the legal system of probate/estate administration and how it affects you. To prepare you for what lies ahead.
Yes, you do have an estate plan, the state of Arkansas has written it for you already…It’s called “intestate succession” and “guardianship.” Both involve your family and/or you suffering through the hassles of court and judicial intervention.
During your lifetime, if you are incapacitated, in order to manage your affairs, your family will have to go to court to seek a guardianship. That is, they ask a judge to rip your rights away and take over your decisions and life. Your rights to make financial, legal, and medical decisions.
After your lifetime, your family will face the seemingly endless hassles of the court system in “intestate succession.” This is a form of probate and administration when you didn’t leave a last will and testament. Your family ends up in court to divide up your belongings and property. It takes at least 6 months to get done (because of legal requirements), and in the meantime, the money and property is tied up. The lawyer gets paid first from your probate estate.
Your probate estate is divided up like this:
- Your children split the probate real estate subject to a 1/3rd life estate of your spouse. If you are not married, your children split the probate real estate.
- Your spouse doesn’t get the probate real estate outright.
- Your children get 2/3 of the other property, like money, of your estate and your spouse 1/3.
- If you aren’t married and don’t have children, there is a table to look up who gets your stuff in the statutes.
But, there is a solution!
You can create your own plan. And, the best way to get started is to read my book.
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Saturday, June 9, 2018
What Do You Have to Lose?
Every day you don’t have a plan is another day you risk:
- Losing Independence. Stay independent for as long as possible, even if you become unable to do things completely on your own.
- Losing Control. Take control and stay in control of your affairs, matters, and money. Pick somebody now that you know and trust to take control if you can’t. You want to be the person who decides who manages your affairs, not a judge. And, you decide who gets what when and how much, not the courts.
- Money. Probate and Guardianships are not only more expensive and time consuming but also highly stressful on your family.
- Stress on you and your family. Be ready to spring into action in stressful situations instead of forcing your family to seek legal help from a lawyer and judge.
- Legal Red Tape (probate and guardianships). Your family can get caught up in a seemingly endless loop of court appearances and legal paperwork not to mention fighting with each other to manage and settle your affairs.
You can minimize your risks and maximize your peace of mind when you create your risk management plan!
Feel free to reach out to me at (479)717-6300 with any questions or to setup your first meeting.
Planning protects you now and your family later from risk, stress, expenses, fraud, duress, scams, and more… Stop your family from going to court to manage your affairs. Minimize your risk and maximize your peace of mind by creating your risk management plan!
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Sunday, May 20, 2018
Why does probate in Arkansas take so long?
Probate, with or without a Last Will and Testament, will take a minimum of 6 months!
Opening Probate
Opening probate is done by filing a petition with the clerk. In Arkansas, if nobody objects, a hearing can be done immediately. However, if any party has entered a demand for notification, then a hearing will happen after about 30 days, delaying the opening of probate by a month.
Advertising and Notification
This is due to the advertising requirement:
Arkansas Code Annotated § 28-40-111 – Notice of appointment of personal representative requires that creditors be given 6 months to present claims to the personal representative for payment.
…all persons having claims against the estate to exhibit them, properly verified to him or her, within six (6) months from the date of the first publication of the notice, or they shall be forever barred and precluded from any benefit in the estate.
Accounting and Inventory
If accounting and inventory is required, there is a 2 month advertising requirement for each accounting. This doesn’t include the time to prepare the accounting and inventory. After the inventory is advertised, then it must be approved by the Judge which requires a petition to be entered and and order to be issued by the Judge. This can add 30 more days if the Judge wants anybody to appear.
The first accounting can be done while the 6 month notification period is running. So it can overlap that waiting period.
The second and subsequent accounting add 2 months each to the probate.
So, if even one person involved didn’t waive the requirement for accounting, then the Probate is now up to 8 months.
Preparation
Allow another month in here for preparation of documents, inventory, and accounting. Now the Probate is up to 9 months.
Close
After the advertising period, payment of creditors, inventory, and accounting, a petition to make the final distribution and close the probate can be made. Getting all of this wrapped up should take about a month.
Overall, the Probate has taken 10 months. Without inventory and accounting, it can be cut back to 8 months.
Hitches and Glitches
Of course, this is assuming everything goes as it should. That nobody challenges any part of the process. That no petitions have to be entered to sell property, and more.
If any of this happens, then it could add more months.
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Monday, May 7, 2018
Estate Planning Misconceptions – Mistakes that Cost – Part 4
MISCONCEPTION #12: I should just put my children on my accounts and deed. No! Only do this if you understand all the negative consequences putting your children on your accounts and deeds has! Their creditors, predators, and judgments can reach your assets and take them away from you. Assets you may desperately need in your retirement years.
MISCONCEPTION #13: Estate Planning costs too much. In comparison to what? The value of estate planning outweighs the cost in money. Probate can easily run $3,000 to $4,000 in today’s dollars. In the future it could cost much more. The government could decide to bring the estate tax exemption down to low levels and cost you a fortune unless planning was done ahead of time. What are your personal, financial, and healthcare decisions worth to you? Do you want somebody you know and trust to be there to manage your affairs and money when the time comes? The only way to be sure that all of this happens is to have a plan in place. A plan that includes a Durable Power of Attorney.
MISCONCEPTION #14: I only need a Will. A Will is only part of an overall plan. A Will only controls the assets listed in it. A Will (in most states) does not control beneficiary designations. If you get remarried, or you beneficiary should pass first, you may lose control of hundreds of thousands of dollars of assets! Also, a Will must go through probate to be validated and the assets distributed. The best insurance is to have a Trust as your primary or fallback plan and as a safety net to catch those assets and distribute them as you want.
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Tuesday, April 24, 2018
When Should I Create My Estate Plan?
Even for those who realize an estate plan can benefit them, this realization sometimes comes too late in time — such as when an unexpected death or disability occurs. To avoid the stress of not having a proper estate plan in place, it would be wise to meet with an estate planning lawyer to help you at least draw up a basic estate.
If you look at the picture below, you will see that you have until you are mentally incapacitated by incident, accident, or dementia to create your plan. The only problem is you can’t predict when that moment will arrive.
The best time to create your plan is now.
An unexpected or long-term disability can often have greater consequences on your personal and financial affairs. Decisions such as who will handle your finances, raise your children, or make healthcare decisions on your behalf are extremely important.
Disabilities strike at random and quickly. One day you may be healthy and the next day something has happened that leaves you out of control of your life.
Disabilities come in many forms. They are caused by a variety of things. People have become disabled by falling off a ladder, playing polo, motorcycle accidents, slipping in the tub, just to mention a few.
This doesn’t include medical incidents like heart attacks, strokes, and dementia.
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What is an Estate Plan and How Does It Reduce Risk?
Most people think of Estate Planning as just deciding who gets what when. But, planning is much more than just deciding who gets what.
Wikipedia defines it like this
Estate planning is the process of anticipating and arranging, during a person’s life, for the management and disposal of that person’s estate during the person’s life and at and after death, while minimizing gift, estate, generation skipping transfer, and income tax.
That is only partially right. It is also about protecting you during your lifetime.
Planning is as much about protecting your rights, your family, and your assets during your lifetime as it is about making final gifts.
Estate planning is about protecting your fundamental rights. Your right to make your legal, financial, personal, and healthcare decisions your way.
Planning today is deciding now what will happen tomorrow. You may not be able to predict tomorrow’s circumstances, but you can choose now who will be there for you and how your decisions will be made.
An estate plan is about protecting your dignity and your right to make choices. It is also about deciding who gets what and when instead of letting the state make those choices.
If you do not make your complete estate plan, you are putting yourself in a position where your basic, fundamental liberties you now enjoy can be taken away by complete strangers. Those strangers will ultimately have control of your choices, decisions, rights, and assets.
Estate Plans reduce risk by making decisions now while you are clear headed and rational instead of later under stress and in a reactive mode. You decide now who will be there for you to manage your financial, legal, and personal affairs instead of letting the Government decide for you. The Government may appoint somebody that you don’t even know to manage your life for you.
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Monday, April 23, 2018
Estate Planning Misconceptions – Mistakes that Cost – Part 3
MISCONCEPTION #8: I don’t need a trust because I’m not wealthy. Completely wrong. First, you may not consider yourself wealthy, but your family may. Second, have you added up the value of your estate to find out? There are reasons other than wealth to have a trust. Some of the other reasons are you have children with addictions, your children have rocky marriages, or you have children receiving government benefits and don’t want them to lose them.
MISCONCEPTION #9: My spouse gets everything anyway. Only things owned jointly or setup correctly. If it is an asset or property only in your name, then your spouse doesn’t automatically get the property. The way to make sure that everything goes to your spouse is by making a plan for the property to transfer properly. There are a variety of tools that can be used to make sure your property transfers to your spouse.
MISCONCEPTION #10: My second spouse will deal with my children fairly. Not always. You trust your spouse. You think your spouse will do the right thing and leave everything to your children. But, as soon as you are gone, they rewrite their estate plan and cut your children completely out. It does happen. I’ve seen it firsthand. Not much of anything your children can do about it either because you gave everything to your spouse outright. The best way to make sure what you want your children to have goes to them is with a Trust.
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Sunday, April 22, 2018
10 Questions You Must Have Good Answers To
- How can I protect my family, stuff, money, and affairs from possible lawsuits, disability, incapacity, dementia, and court?
- How can I feel confident my family has what they need when they need it the most?
- How can I rest assured that sure my loved ones feel less stress in very stressful times?
- How can I feel secure about my money in case of incapacity, dementia, or worse?
- How can I feel confident my affairs will be managed properly if I can’t make decisions?
- How can I protect my children’s inheritance from creditors, predators, and divorce?
- How can I save my family months of stress, frustration, and aggravation?
- How can I keep my family out of tiring, prolonged Court proceedings?
- How can I stop a Judge from making my decisions for me?
- How can I develop contingencies against the negative events of life?
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Friday, April 20, 2018
Separating Myths From Truth
The Story of “Estate” Planning
Myth #1: Wills prevent Probate
Probate means that your family’s assets will be tied up in court for months, if not years. Not to mention that their private affairs are made public.
Wills are only valid if Probate is opened.
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Monday, April 16, 2018
Estate Planning Misconceptions – Mistakes that Cost – Part 2
MISCONCEPTION #5: My spouse can manage my affairs if I’m incapacitated. Often thought to be true but is actually false. When you turn 18 years old, you are considered an independent person and are responsible for your own healthcare and financial decisions. Planning is necessary to plan for the unknowns of tomorrow. Who is looking out for you if you can’t regardless of your age? You need to have a Durable Power of Attorney, Power of Attorney for Healthcare, a Medical Information Release, and a Living Will.
MISCONCEPTION #6: A Living Will is the same as a Last Will and Testament (Will). False. They are not even closely related. A Living Will is also known as an Advance Directive and is a healthcare document to be used while you are living. A Last Will and Testament is only used later.
MISCONCEPTION #7: A Revocable Trust protects my assets from the nursing home or Medicaid. Unfortunately, false. A Revocable Trust may make things worse for Medicaid crisis “planning.” If you think you need Medicaid within the next 5 years, you are in crisis mode already. If you have 5 years before you need Medicaid, then you are in planning mode and there are things that can be done to protect assets.
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Monday, April 9, 2018
Estate Planning Misconceptions – Mistakes that Cost – Part 1
MISCONCEPTION #1: Planning can wait/I’m too young (procrastination). And just who is going to take care of you if you can’t and make your decisions? When you turn 18 years old, you are considered an adult and are responsible for your own decisions for healthcare and finances. No matter how much you have, planning is necessary to plan for the unknowns of tomorrow. Who is looking out for you if you can’t regardless of your age? You need to have a Durable Power of Attorney, Power of Attorney for Healthcare, a Medical Information Release, and a Living Will written up.
MISCONCEPTION #2: I don’t have an estate. Absolutely wrong. An estate in law is defined as the stuff you own, not a big house with a manicured lawn. You should take steps to protect what you have and make sure it gets distributed to your family the way you want. For your stuff to go to who you want, when you want, and how you want you need a legally binding plan made to do just that.
MISCONCEPTION #3: I don’t have anything to protect. Do you make your own decisions? Your personal decisions about legal matters, finances, and healthcare are worth protecting. To protect those decisions, you need to have a Durable Power of Attorney, Power of Attorney for Healthcare, a Medical Information Release, and a Living Will written up. Furthermore, those documents will make sure somebody you know and trust is watching out for you when the time comes.
MISCONCEPTION #4: Wills stop Probate. Halt! Wrong! Wills are the instrument of Probate. Probate is required to validate the Will and follow its instructions. If you want your family to avoid the time, cost, and hassle of Probate court, you need to have other plans in place like a Revocable Living Trust.
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Wednesday, April 4, 2018
Smart Ways to Protect Your Assets
MAKE A PROMISE TO YOURSELF – NOW
Make a personal commitment to yourself and your family that you will do everything possible to protect your family and your assets. Remember, doing nothing is a choice too.
IDENTIFY YOUR PERSONAL AND FINANCIAL GOALS
If you could have anything you want, personally and financially, what would it be? What are your dreams? How do you and your spouse want to spend your retirement years?
DISCOVER WHICH TOOLS YOU CAN USE
You have many legal tools at your disposal that, when used correctly, will create exactly the plan you want for yourself and your family. Ask your estate planning attorney to explain the tools that will achieve your personal and financial goals.
The tools of estate planning are covered in this book.
AVOID PROBATE AND THE COURT SYSTEM, AS APPROPRIATE
Create a family plan that, upon your passing, distributes your assets to your heirs without going through the Court-supervised process called probate. Most often a Revocable Living Trust is used for this purpose.
REDUCE INCOME TAXES WHENEVER POSSIBLE
Create a family asset protection plan that eliminates unnecessary income and capital gains taxes and minimizes all other taxes. Without proper planning, much of your estate can be lost to various types of taxes.
PROTECT YOURSELF WITH INSURANCE
Lawsuits can quickly tie up your assets. And if the other party wins the lawsuit, the judgment against you could quickly deplete your funds. If you drive frequently, own rental property, or operate a business, buy an umbrella liability policy that protects your assets from lawsuits.
PROVIDE FOR FUTURE HEALTH CARE AND FINANCIAL DECISIONS
Your family plan should protect you and your spouse if the time comes when either of you cannot make decisions.
Your estate planning attorney can make sure you have the legal documents in place so a competent, trusted person can make these important decisions according to your wishes.
PLAN NOW TO FUND NURSING HOME CARE
Sadly, many people think the only way they can pay for their nursing home care is by spending down their estate. But, in fact, you can fund your long-term care in ways that do not require that you spend down your estate. One common way is with long-term care insurance. Don’t wait until it’s too late to decide how to fund your nursing home care. Do it now, long before you need it.
PAY CLOSE ATTENTION TO DEMENTIA
Many people who never expect Alzheimer’s disease to strike have had to face its problems with no planning. Plan for Alzheimer’s disease now, while you have time. This includes the need to address issues of backup decision-makers, assisted living, and nursing home care. If your children can care for you later in life, that’s fine. If they cannot, your planning will pay big dividends.
Plan for the worst — and hope for the best. Then, in either case, you will have all your bases covered.
KEEP ALL CONTROL WITHIN YOUR FAMILY
If you don’t plan properly, you could find that a friend or relative has petitioned the Court to intervene on your behalf. Once a judge gets involved, you have ongoing legal and accounting expenses, plus more problems and hassles than you would ever want to endure. The smart way to plan for your later years is to keep total control within your family.
CREATE YOUR PLAN NOW, WHILE EVERYONE IS COMPETENT
Seniors often come to our office seeking help only to learn that they are too late to correct a terrible situation. We feel awful when we must tell them that the much-needed planning should have been done two, five or ten years earlier.
Don’t wait until you need help to create your plan. By then, it’s too late.
REVIEW YOUR PLAN AT LEAST ONCE A YEAR
Every time your circumstances change or your goals change, you should change your estate plan. If your plan is not up to date, the unintended consequences to you and your family could be disastrous. Make an appointment at least every year to meet with your estate planning attorney. Then you can go over your plan and discuss any changes in your life circumstances.
MAKE PROPER BENEFICIARY DESIGNATIONS
Make sure your estate plan maximizes income-tax-free deferrals and minimizes income and estate taxes.
WORK CLOSELY WITH YOUR DOCTOR
Often skilled nursing services and home health coverage are terminated or denied with little or no input from your treating physician. Before you go without health care that could be covered by Medicare, talk with your physician about your concerns so that he or she can help you get the Medicare coverage you deserve.
THINK ABOUT FUTURE HOUSING OPTIONS
Start from the perspective of where you would like to live. Then determine if you could afford this option by comparing your monthly income along with your life savings to the initial cost and the ongoing financial commitment you would have to make. Make sure you consider
(1) your healthcare needs that will not be covered by insurance,
(2) financial security for your surviving spouse, and
(3) your desire to pass on a legacy to your children.
SECOND MARRIAGE AND NURSING HOME CARE
If you are not able to pay $6,000 per month to a nursing home and want your children from an earlier marriage to receive your property, a Marital Agreement alone will not do the trick.
Medicaid ignores these contracts and considers all the couple’s assets, whether owned jointly or individually, in determining Medicaid eligibility.
A better choice is to include in your Marital Agreement a provision that requires each spouse to obtain and maintain long-term care insurance. Also, you can include additional provisions that clearly state that the healthy spouse is able to take all necessary steps to protect his or her separate property from a Medicaid “spend-down.”
KEEP OPEN COMMUNICATIONS
If one of your children will be managing your finances, you should take specific steps to help him or her avoid conflict within your family.
Insist that your child disclose to other family members what has been done on your behalf. You can do this by adding this instruction to your Trust or General Durable Power of Attorney.
By doing this you accomplish two things: One, you keep everyone in the loop, so feelings of distrust are eliminated. And two, you reduce the risks of financial abuse because other family members will know how your finances are being managed.
DON’T LET INCAPACITY PUT YOUR FAMILY AT RISK
Many professionals are responsible for protecting frail and elderly people from predators. If your legal documents don’t provide clear legal authority and guidance on how to manage your assets, the police or adult protective services could step in and question your children’s actions and motives.
If authorities investigate your children’s actions, at worst, they could file criminal charges. At best, an investigation by adult protective services could return a “finding” of no current financial abuse. You can eliminate these risks to your children — and avoid becoming a burden to your children — with a competent estate plan.
HIRE A COMPETENT, EXPERIENCED ESTATE PLANNING ATTORNEY
The areas of estate planning and elder law are far too complex to hire just any attorney. Often, strategies used in estate planning to minimize taxes directly conflict with strategies used in elder law planning to protect assets and achieve Medicaid eligibility for nursing home care.
In situations where both goals are important, you and your family need a lawyer who has in-depth knowledge and experience with both sets of rules and strategies. Most attorneys are not qualified to provide these services. Make sure the estate planning attorney you hire has the knowledge, skill, judgment, and experience to create a competent plan for you and your family.
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Saturday, March 24, 2018
Estate Tax is Gone; Long Live the Estate Tax
If estate tax is gone, why do I need a trust?
For 2018, an individual gets about $11.18 million of estate tax exemption. This means that if you passed in 2018, the first $11.18 million would not be taxed. A couple could possible double that to $22.36 million. The exemption also includes lifetime gifts made.
BUT, that doesn’t mean the exemption is going to stay that large. Congress is constantly changing the exemption.
You should always consider estate tax as part of your planning, even if it doesn’t apply to you today. Congress could change the exemption back to $300,000 tomorrow if they want to.
Trust planning should always be considered, even if you consider your estate simple, not just for tax planning.
You have beneficiaries on all your accounts, your house is in both names…
Why else do I need a Trust?
- You have children
- Under 18; or
- Who are poor money managers; or
- In a rocky marriage; or
- With credit issues; or
- With special needs; or
- Receiving government benefits
- You want to keep control over the money for a long time or put conditions on its distribution
- You want your assets to be managed well even if you are incapacitated
- Medicaid planning
- The 3,2,1 problem
- Incapacity planning
- Prevent Probate
- Keep your private affairs private
- Save on lawyer’s fees
- Keep your family out of court
- Speedy transfer
- Every plan should have a backup and a Trust is an excellent backup
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Thursday, March 22, 2018
Start Planning to Stop Worrying
Worry is bad for your health! Planning can go a long way towards reducing the worry in your life. Make that nagging voice in the back of your mind go away and get a good night’s sleep again. Read on to see how planning reduces stress and worry.
Amy and Joe were worried about the future of their children and who would raise them; their money; and their healthcare management. After meeting with their planning attorney, they knew what they needed to get done. They started planning to stop their worries. Once their plan was in place and fully funded, they found a new sense of relief.
Minor Children
Never worry again about who will raise minor children. Name their guardian in you Last Will and Testament so that the Judge knows who you want. Don’t leave it to the whim of the courts and the bickering of your family. In the worst case, they could end up in the foster care system.
Life Support
Don’t fret about being hooked up to machines for a long time. With a Living Will (Advance Directive) you don’t have to worry about it. You have left instructions.
Healthcare
Concern about your healthcare decisions will melt away when you have a Durable Power of Attorney for Healthcare and Medical Information Waiver (HIPAA Waiver). Medical decisions will be made in advance and any that aren’t will be in the hands of somebody you know and trust. With the HIPAA Release, you’ll be certain that trusted loved ones will be able to get information on your medical condition.
Assets
Finally, any doubts about the management of your assets will melt away. With your Durable Power of Attorney and Revocable Living Trust in place you know your assets will never get frozen. Your bills will always be paid. And, you won’t have to worry about Probate, incapacity, care of your minor or special needs children, asset administration, and much more.
Free Webinar – Avoid 9 Disastrous Money & Personal Mistakes
- Start Planning to Stop Worrying
- How to Avoid 9 Disastrous Mistakes
- The Correct Way to Protect Your Dignity, Privacy, Family, and Children
- The Secrets to Safeguard Your Property, Money, and Assets
- and more…
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Sunday, March 18, 2018
Who Raises Your Children if You Can’t?
If both parents should perish, then who raises your children can be a dicey situation.
Some people believe that the God parents get automatic legal guardianship of your children. But, that isn’t the case in Arkansas.
The best way to create the most stable environment possible is to leave instructions as to who you want to have guardianship (raise your children) in your Last Will and Testament (Will). This is the usual place to leave your nomination.
However, a court gets the last say in the matter. They are there as a safety net in case your choice is not longer a good choice. What if they started drinking? Their marriage fell apart? Or worse, what if they have perished as well?
If no nominations were made, then somebody will have to step up and go to court to seek a guardianship. A Judge will get the complete choice.
If nobody steps forward, your children could be wards of the state. That is they enter the foster care system until they turn 18.
And, without a plan, the Judge will decide how their money is managed. But one thing is almost certain, they will get all of it when they turn 18.
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Thursday, March 15, 2018
The 3-2-1 Problem
The 3-2-1 Problem
Setting up beneficiaries is a great way to avoid probate for many assets like life insurance, annuities, and retirement plans.
BUT, there is a serious problem that can happen.
Case 1: The owner of the assets develops dementia and can’t change the beneficiaries anymore. The secondary beneficiary passes first. Then the primary beneficiary passes. This can leave the asset exposed to probate.
Case 2: The owner, primary, and secondary beneficiary are in a care accident. Think of the case where the son is taking mom and dad to the doctor for an appointment. The secondary beneficiary (son) perishes immediately. A few days later, the primary beneficiary (mom) perishes. Then a few days later, the owner perishes. Again, this leaves the assets exposed to probate.
The best way to beat this is to have a Revocable Living Trust as the last beneficiary in the chain, as a catch-all or safety net. The Revocable Living Trust will have instructions in it to handle this case and keep the money out of probate and in the family.
PS: I call it the 3-2-1 problem because there were 3, then 2, then 1…
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Monday, March 12, 2018
Will Law in Arkansas
Will Law
Will law is an ancient area of law, going back to biblical times. Wills and will law from the Greek period forward is common. It can be straightforward, or complicated depending on the circumstances.
A Last Will and Testament is a legally binding document that says how a person (the testator) wants their belongings divided up after they pass. In reality, it is a list of gifts to be given out under the direction of the court (probate). A Will may also name guardians for your children, decide how debts are to be paid, and serve as a backup to a living trust.
Under Arkansas will law, a testator must be 18 years old, know what they have, and who they want it to go to. Wills that are typed must have two witnesses. Writing after the signatures is usually ignored.
The witnesses may sign an affidavit for facts they would typically be required to testify to in order to validate the Will.
Arkansas does allow hand written (holographic) wills. But, a holographic will must have 3 disinterested witnesses. A holographic will must be completely in the handwriting of the testator. A disinterested witness is one who will not inherit under the will and is not related to the testator.
Arkansas will law does not allow oral wills.
An Arkansas Will is revoked by subsequent Wills that revoke prior Wills, burning, tearing, cancellation, obliteration, or destruction with the intent of revocation. No revoked Will may be revived other than by executing the Will again.
If you don’t have a Will, the Arkansas Legislature has already decided who gets your stuff and how much they get. The courts and heirs will control how long it takes.
NOTE: State laws are always subject to change at any time. Usually changes are through the legislature enacting new laws. But, sometimes the courts will modify or interpret the laws through other means.
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Sunday, March 11, 2018
What Kinds of Special Needs Trust?
What Kinds of Special Needs Trust?
A Special Needs Trust is a trust established to supplement government benefits.
Special needs trusts have four major types.
As with any special needs trust, these supplement federal aid and a special needs trust cannot pay for items that the aid is paying for.
Summary of Special Needs Trust
2 special needs trusts are directly authorized by federal law, 1 is allowed, and 1 is implicitly allowed.
The two directly allowed by federal law are authorized in § 1396p(d)(4)(A) and § 1396p(d)(4)(C). These are sometimes talked about using just the last 4 letters: the (d)(4)(A) trust and the (d)(4)(C) trust (d4a and d4c).
Both the (d)(4)(A) trust and the (d)(4)(C) trust have a Medicaid payback provision.
(d)(4)(A) Trust
A (d)(4)(A) trust is a trust established with a person’s own money. Until December of 2017, a person could not establish this type of trust themselves. Other than the person, a guardians, judge, parent, or grandparent may establish this trust. The other require is that the person is under 65 years old.
(d)(4)(A) in summary:
- Person is under 65 years old
- Established by the person, parent, grandparent, legal guardian, or judge (under judicial order)
- Medicaid payback provision
- Only the persons money allowed in the trust
(d)(4)(C) Trust
A (d)(4)(C) trust is a “pooled” trust. A pool of many different people’s money is held in trust. This type of trust doesn’t have the age restriction of the (d)(4)(A) trust. But, it must still be established by a parent, grandparent, legal guardian, judge, or the individual.
While this is a pool of money, the individual’s money is used for and available only to the individual.
(d)(4)(C) in summary:
- No age restrictions
- Can be established by the individual, parent, grandparent, legal guardian, or judge
- Medicaid payback
- Managed by a non-profit trustee
- Unlimited funding allowed
Third Party Trust
Third party supplemental needs trusts are not explicitly allowed under federal law, but implicitly allowed.
The third-party trust is established with funds that do not belong to the individiaul.
With the third-party trust, people other than the individual contribute, the money never legally belongs to the individual, the money can be used for their benefit, then the money goes where you decide.
Anybody can contribute to the trust, in any amount. The trust can contain any amount of money or property.
Again, the money is used to supplement government benefits, not replace them.\
- Contains assets only
- Is established by anyone other than the individual
- No age restrictions
- Unlimited assets allowed
- When the individual passes, the funds are distributed in full without Medicaid payback
- No Medicaid payback
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Thursday, March 8, 2018
Do You Need a Will or a Trust?
Do You Need a Will or a Trust?
- Do you have children under 18?
- Do you have children with special needs?
- Are you leaving money to anybody under 18 or with special needs?
- Do your children have problems managing money?
- Are you children young, but over 18? (young people tend to spend rapidly…)
- Do you want to just about guarantee no probate?
- Do you want somebody you trust to manage your money if you can’t?
- Is your estate going to be subject to estate taxes?
- Do you have more than simple instructions for your assets?
- Do you want to minimize fees and costs?
- Do you have a blended family?
If you answered yes to any of these questions, you most likely need a trust…
Otherwise, we can probably use other techniques to pass your assets without probate.
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Sunday, February 25, 2018
March 2018
Quotables
It was one of those March days when the sun shines hot and the wind blows cold: when it is summer in the light, and winter in the shade. – Charles Dickens
March on. Do not tarry. To go forward is to move toward perfection. March on, and fear not the thorns, or the sharp stones on life’s path. – Khalil Gabrin
One swallow does not make a summer, but one skein of geese, cleaving the murk of March thaw, is the Spring. – Aldo Leopold
Legal Term of the Month
Holiday: A religious festival; a day set apart for commemorating some important event in history; a day of exemption from labor.
Family News
February was again super busy between work, basketball, soccer, and wrestling.
Wrestling ended on a great not. Aaron took 5th in the Arkansas State tournament in his division. It was a hard fought two days of wrestling for him and the entire team.
The girl’s basketball team lost out in the first day of the playoffs. However, a majority of the team was dealing with injuries. Madeline finished the season injury free and started Soccer.
Soccer started on a cold, rainy evening. The girls played hard, but lost 8-2 to the Springdale team.
Now that the high school wrestling season is over, Aaron and I are headed to Tulsa to watch the BIG XII wrestling championships. While we are there, Madeline and Winnie will go to the Walton Arts Center and see RENT.
What’s Cooking?
Tarragon Chicken
For the Chicken
- 3 tbsp butter
- 1 tbsp olive oil
- 2.5 pounds chicken, jointed, or chicken pieces
- 1-2 small onions or shallots, finely sliced
- ½ cup dry white wine
- Several sprigs of Tarragon
For the Gravy
- 3 tbsp butter
- Handful freshly chopped mixed herbs
- 1 shoot of thyme
- ¾ cup cream (optional)
Heat the oven to 400°F. Melt the butter with the oil in a cast-iron casserole dish, then brown the chicken on all sides. Towards the end of browning, add the onions, wine and tarragon.
Cover and roast for 30 minutes, or until a thermometer inserted in the thickest part of the breast registers 165°F or the juices run clear. Transfer the chicken pieces to a serving dish and set aside to rest.
Meanwhile, make the gravy. Put the pan of chicken juices on the hob, remove the tarragon sprigs, add the butter and then stir in the herbs, mixing well. Remove from the heat. If using the double cream, slowly stir in until combined. Pour the gravy over the chicken and serve.
Courtesy of houseandgarden.co.uk
The Shocking Truth
Would You
- Flush A $100 Bill Down the Toilet?
- Give an Addict $1,000?
- Let A Complete and Total Stranger Make Your Legal and Financial Decisions?
- Let A Total Stranger Make Your Healthcare Choices?
- Leave Your Finances Unprotected?
- Let the State Legislature Tell You Who Gets Your Stuff, When, And How Much?
- Sue Yourself with Your Own Money?
- Want Your Children’s Inheritance Spent on Court, Lawyers, and Fees?
This is exactly what can happen if you don’t have a plan!!!
Your Care
You probably want a say if you want to stay at home or go to a nursing home if you become incapacitated, agitated, or unable to make your own decisions. You probably want input as to how your money is spent and how your assets would be used for your care. You should have input as to your healthcare decisions that might need to be made and who makes them.
Without your plan in place, a Judge will likely have to approve who makes these decisions. The Judge will have to approve who takes care of you. The Judge who doesn’t know you or your preferences. And, it might be somebody you wouldn’t want or even a complete and total stranger.
In 1995, Terri Schiavo had a heart attack, was resuscitated, but suffered severe brain damage due to a lack of oxygen to her brain. Terri Schiavo lay in a hospital bed for 15 years while her husband and her mother fought over her healthcare decisions. For 15 years, her family shelled out money on lawyers, courts, and hospital costs. Her mom argued that the doctors were wrong in their diagnosis and prognosis, while her husband argued that she wouldn’t want to be kept alive artificially under these conditions. All in all, there were 14 appeals. That is 14 trips to court and all the costly preparation to go to court.
A healthcare power of attorney and an advance directive (living will) could have prevented all of this. A durable power of attorney would have allowed her husband to manage her financial and legal matters with a minimum of court intervention.
Your Money
Without a Will or Trust you don’t decide who gets your money! You are leaving that choice up the State Legislature. Your assets will go partially to your spouse and partially to your children in a ratio already decided by somebody else. If you don’t have children or a spouse, then the next in line are your parents then your siblings.
Even if your property would go, roughly, to the people you want in the amounts you want, court intervention in the distribution is often time consuming and expensive. Expensive as in up to 6% of your gross estate (no debts taken out) and in time and emotions.
Joe and Mary had a blended family. They worked hard together. Joe’s children took care of Mary in her declining years. When Joe passed, he left it all to Mary. However, when Mary passed, she left everything only to her own children. Joe’s hard work went completely to Mary’s children.
Jane’s dad John let his deceased wife’s mother adopt Jane. John never created an estate plan. When he passed away, Jane was very surprised that she got nothing. But, under the laws of adoption, she wasn’t legally John’s child.
Your Adult Children
You concern about who raises them has past. But, don’t you still want the right people in charge and control of the assets. Would you give $1,000 to an addict? How about giving money to a child in a shaky marriage? Your children deserve to be protected against creditors and financial predators.
Mike and Mary worried about their son. He was known to be an alcoholic and may be into drugs as well. They knew if they left him money he would spend it on alcohol and drugs. But, they didn’t know what else to do. A trust could have been used to make sure their son had a place to live and money to pay bills but no more.
Your Minor Children
Losing control is a major issue when you have children under 18 years old. The law considers them minors and will not put money directly in their hands.
If something happens to both parents, and there is not a plan in place, then the courts get all of the decision-making power as to who raises them. Moreover, you don’t get a say in how the money is used for their care.
And, when your children turn 18, they get total control of the money. Few parents feel that is a good idea.
With Your Plan
If you have a plan, the majority, if not all, of the plan the state legislature has already created for you is set aside. Your plan takes its place.
Your Care
Somebody you know and trust will help you make financial and legal decisions. You have already written down how you want your money and affairs managed. No judge or stranger steps in to take your rights away and make your own decisions.
Your Durable Power of Attorney gives your trusted family or advisors the ability to help manage your financial and legal affairs. They must follow the instructions you have left for them in that document.
Your Durable Power of Attorney for Healthcare makes sure your medical wishes are carried out. Combined with a Medical Information Waiver (HIPAA Waiver) and an Advance Directive, you will maintain your healthcare and dignity. If you want to live at home for as long as possible, this is the place to make sure your wishes are written down.
If Terri Schiavo had her healthcare wishes written down like this, she wouldn’t have laid in a hospital bed, costing her family a ton of money and time, for 15 years.
Your Money
Your Revocable Living Trust contains instructions to the next trustee on how you want your money managed and distributed. You maintain “long arm” control of your assets.
Your money goes to who you want, when you want, how you want, and in the amounts you want. You can leave detailed instructions and conditions on how the money is to be distributed and when.
Your Adult Children
Your adult children can be protected against creditors and financial predators by leaving their money in trust.
Mike and Mary setup a trust for their child with alcohol problems. They made sure his rent and bills were paid, but money wasn’t put directly into his hands to fuel his problem. Then, after their son passed away, the money went to his children.
Your Minor Children
You will have guardians, both temporary and permanent, named to take over the instant you aren’t available. Your children will never have to be part of the foster care system, even for just one night.
With your trust, you leave instructions as to how much money they get and when. You children can have their education paid for, their needs met, but not get a lump sum of cash until they are old and wise enough to manage it on their own.
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