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 5^th 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.

---

 

The post March 2018 appeared first on .

from http://ift.tt/2osVYDe


from DeWitt Law Firm, PLLC

quiz

Welcome to the survey...

1) How important is avoiding probate - cost, stress, delays & time on your family?

12345

2) How important is getting your financial life organized?

12345

3) How important is protecting your children's inheritance from creditors?

12345

4) How important is protecting yourself from guardianship proceedings (i.e. living probate) if you become incapacitated?

12345

The post quiz appeared first on .

from http://ift.tt/2HKYg8Q


from DeWitt Law Firm, PLLC

The Shocking Truth About Not Planning

Estate planning is about more than who gets what when.  Estate planning is the way you give instructions and create a map for how you want to live out your life in somebody else’s care.

This article is in 2 sections.  Section 1 describes what can happen without your plan in place.  Section 2 tells you what life is like with a plan.

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.

The post The Shocking Truth About Not Planning appeared first on .

from http://ift.tt/2nUbnMH


from DeWitt Law Firm, PLLC

How Will the New Tax Law Affect Your Family?

President Trump signed the new Tax Cuts and Jobs Act bill into law on December 22, 2017, and the law includes a number of historic changes to the federal tax code. However, the vast majority of the most dramatic changes are aimed at business taxation, not individual taxpayers.

That said, there are several fairly significant changes to personal income tax laws, which we’ve highlighted below. But keep in mind, unlike the new business tax laws, which are permanent, nearly everything listed here for personal taxes sunsets after 2025 and will revert to the 2017 code in 2026 unless Congress extends the changes.

Higher standard deduction

The standard deduction increases to $24,000 for joint filers, $12,000 for single taxpayers, and $18,000 for heads of households, all adjusted for inflation. The law also eliminates nearly all personal exemptions, however, so those with dependents won’t see quite as much savings.

Note that if you’re a 1099 wage earner, regardless of how much you earn, you pay approximately 15% of your earnings toward payroll taxes, which would otherwise be covered by your employer and taken out of your paycheck. So even though the standard deduction has increased, if you’re a 1099/ independent contractor, you may still face a big tax bill if you’re not structured properly.

Changes to mortgage interest deduction

For existing mortgages the limit on deducting interest on up to $1 million of mortgage interest stays the same. Deductible mortgage interest for new mortgages taken on after December 15, 2017, however, is now capped at $750,000. Additionally, homeowners may no longer claim a deduction for existing and new interest on home equity loans.

Increased child tax credit

The child tax credit increases up to $2,000 per child, and the first $1,400 is refundable, meaning the credit could reduce your tax liability to zero, and you would still receive a tax refund. The cut off for the tax credit increases to $400,000 for married couples filing jointly.

Expanded estate tax exemption

The estate tax exemption increases to $11.2 million for individuals and $22.4 million for couples, indexed for inflation. The rate for those estates still subject to taxation remains at 40%. However, don’t let this increase lead you to believe you don’t need to handle your estate planning if your estate is less than $11 million. Estate planning is what keeps your family out of court and out of conflict; it’s not just about taxes. Very few people will be impacted by the estate tax, but everyone’s family is at risk for court and conflict.

Eliminated state and local income tax deductions

State and local income tax deductions are repealed. This means that you will pay your state and local income taxes from after-tax income. However, you’ll be able to deduct up to $10,000 for state and local property taxes paid.

Changes to medical expense deduction

Under the new law, taxpayers can deduct any medical expenses that exceed 7.5% of their adjusted gross income in 2017 and 2018. But this new deduction level sunsets on Jan. 1, 2019, when it will revert back to the previous level of 10%.

The post How Will the New Tax Law Affect Your Family? appeared first on .

from http://ift.tt/2EsaJzJ


from DeWitt Law Firm, PLLC

The Disastrous Dangers of Putting Your Children on Your Accounts and Deeds

So many people think that they need to put their children’s names on their checking accounts, savings accounts, and deeds to their property so that the children can help them out and inherit without probate.

This is such a dangerous, and possibly disastrous thing to do I rarely, if ever recommend it.

When you put their name on your accounts, you are giving the children free reign.  They can write checks or withdraw money without your permission for any purpose.  They could decide to “borrow” a little money that never gets paid back.  This is not the worst danger however.

In Arkansas, the minimum requirements for liability in auto insurance are $25,000 to cover injury to any one person, and $50,000 to cover all.  The minimum requirement for property damage is $25,000.

So, you child gets into an accident that is their fault.  They “total” the other car, a fairly new Cadillac Escalade, and put the drive into the Intensive Care Unit (ICU) for 10 days.  The average cost for ICU is $4,000 per day.  Multiply that by 10 days and it comes to $40,000 in immediate medical bills.  That doesn’t count lost work, pain, suffering, and ongoing medical treatment.

Your child’s insurance covers $25,000 of the hospital bill, leaving $15,000 owing.  They cover $25,000 of the damage to the other car.  A 2017 Escalade sells for about $61,000.  That leaves $46,000 unpaid by insurance.  $25,000 + $46,000 is $61,000 your children owe.

But, as most younger people, they only have a few thousand in the bank and little equity in their home.  But, the court finds out their name is on your account!  Since their name is on your account, the money in the account is considered at least partially theirs.  The court orders that half the money be paid out of the account towards the damages and medical bills.  That is money you were depending on for retirement savings.

The same applies to the deed to your house.  In that same scenario, the court could order a lien be placed against your house for the damages to the Escalade.

You have better options to

1. Allow your children to write checks for your benefit
2. Pass accounts to children without probate
3. Pass real estate to children without probate and the courts

The post The Disastrous Dangers of Putting Your Children on Your Accounts and Deeds appeared first on .

from http://ift.tt/2EBl5e4


from DeWitt Law Firm, PLLC

Adoption and Inheritance – Who Loses Out and Who Wins?

A man had given his daughter up for adoption to his deceased spouse’s mother (the daughters maternal grandmother).  Because he gave her up for adoption, she lost her rights to inherit from her biological father.  And, the biological father was well off.  Since he passed without a Will or Trust in place, his estate will be divided up by law.  That is, first to surviving parents, then to surviving siblings.

This is a double-edged sword.  If you give a child up for adoption, then they lose their right to inherit from you under the law.  If you adopt a child, they lose the right to inherit from their biological parents.

Conversely, if you adopt a person, they gain the right to inherit from you as if they were your biological child.  That is, they get an equal share under law.

If you give up a child for adoption, but want them to inherit from you, you need to plan accordingly.  This includes writing them into your Will or Trust after they have been given up for adoption.  If you write the in before, you risk the statutes nullifying that part of your Will.

As adoptions were unknown to the common law, they are governed entirely by statute. (Ducharme v. Gregory, 2014, 435 S.W.3d 14, 2014 Ark. App. 268.)

Adoption statutes are to be strictly construed and applied. (A.C.A. §§ 9-9-212, 9-9-215,  9-9-216.  Tate v. Bennett, 2000, 20 S.W.3d 370, 341 Ark. 829.)

Adoptions were unknown to the common law, so they are enacted completely in the law of the state and controlled by the law of the state legislature.  Because there were unknown to the common law, the courts have ruled that the adoption statutes are to be adhered to very strictly.

In Arkansas, an adoption relieves the biological parent of all parental rights and responsibilities. (ACA § 9-9-215.) Furthermore, adoption destroys the child’s rights of inheritance from the parent or parents giving the child up for adoption.

ACA § 9-9-215

(a) A final decree of adoption and an interlocutory decree of adoption which has become final, whether issued by a court of this state or of any other place, have the following effect as to matters within the jurisdiction or before a court of this state:

(1) Except with respect to a spouse of the petitioner and relatives of the spouse, to relieve the biological parents of the adopted individual of all parental rights and responsibilities, and to terminate all legal relationships between the adopted individual and his or her biological relatives, including his or her biological parents, so that the adopted individual thereafter is a stranger to his or her former relatives for all purposes. This includes inheritance…

The post Adoption and Inheritance – Who Loses Out and Who Wins? appeared first on .

from http://ift.tt/2DYB0Ca


from DeWitt Law Firm, PLLC

The Top 5 Estate Planning Traps

Since estate planning involves thinking about death, many people put it off until their senior years or simply ignore it all together until it becomes too late. This kind of unwillingness to face reality can create major hardship, expense, and mess for the loved ones and assets you leave behind.

While not having any estate plan is the biggest blunder you can make, even those who do create a plan can run into trouble if they don’t understand exactly how estate plans function.

Here are some of the most common mistakes people make with estate planning:

Not creating a will

While wills aren’t the ultimate estate planning tool, they’re one of the bare minimum requirements. A will lets you designate who’ll receive your property upon your death, and it also allows you to name specific guardians for your minor children. Without a will, your property will be distributed based on your state’s intestate laws (which are probably not in alignment with your wishes), and a judge will choose a guardian for your children under 18. Oh, and then your kids will get whatever you own outright, with no guidance, direction, or intention, as long as they’re over 18.

Not updating beneficiary designations

Oftentimes, people forget to change their beneficiary designations to match their estate planning desires. Check with your life insurance company and retirement-account holders to find out who would receive those assets in the event of your death.

If you have a trust, you’ll likely want the trust to the beneficiary. This does not happen automatically upon creating a trust. You actually have to make the change. See the section below for more on funding your trust.

And you never want to name a minor as a beneficiary of your life insurance or retirement accounts, even as the secondary beneficiary. If they were to inherit these assets, the assets become subject to control of the court until he or she turns 18.

Not funding your trust

Many people assume that simply listing assets in a trust is enough to ensure they’ll be distributed properly. But this isn’t true. Some assets—real estate, bank accounts, securities, brokerage accounts—must be “funded” to the trust in order for them to be actually transferred without having to go through court. Funding involves changing the name on the title of the property or account to list the trust as the owner.
Unfortunately, most lawyers have been trained to create a trust, but not make sure assets are actually transferred into the trust. Crazy, right?!? But we see it all the time. And of course, when you acquire new assets after your trust is created, you must make sure those assets are also titled into your trust. However, most lawyers are not trained to make sure this happens either.

Part of being a Personal Family Lawyer® law firm means we make sure your assets are inventoried, titled properly, and the inventory is maintained throughout your lifetime, so your assets aren’t lost and do not get stuck in court upon your incapacity or death.

Not reviewing documents

Estate plans are not a “one-and-done” deal. As time passes, your life circumstances change, the laws change, and your assets change. Given this, you must update your plan to reflect these changes—that is, if you want it to actually work for your loved ones, keeping them out of court and out of conflict.

We recommend reviewing your plan annually to make sure its terms are up to date. And be sure to immediately update your estate plan following major life events like divorce, births, deaths, and inheritances. We’ve got built-in processes to make sure this happens—ask us about them.

Moreover, an annual life review can be a beautiful ritual that puts you at ease knowing you’ve got everything handled and updated each year.

Not leaving an inventory of assets

Even if you’ve properly “funded” your assets into your trust, your estate plan won’t be worth much if heirs can’t find your assets. Indeed, there’s more than $58 billion dollars worth of lost assets in the U.S. coffers right now. Can you believe that? And it happens because someone dies or becomes incapacitated but their assets cannot be found.

That’s why we create a detailed inventory of assets, indicating exactly where to find each asset, such as your cemetery plot deed, bank and credit statements, mortgages, securities documents, and safe deposit box/keys. And don’t forget digital assets like social media accounts and cryptocurrency, along with their passwords and security keys. We cover all of this in our plans.

Conclusion

Beyond these common errors, there are many additional pitfalls that can impact your estate planning. We’ll guide you through the process, helping you to not only avoid mistakes, but also implement strategies to ensure your true Family Wealth and legacy will continue to grow long after you’re gone.

The post The Top 5 Estate Planning Traps appeared first on .

from http://ift.tt/2s7fSbe


from DeWitt Law Firm, PLLC

Wills and Trusts are Different. What is the Difference?

Wills and Trusts are Different.  What is the Difference?

Everyone has heard of Wills and Trusts. Most articles written on these topics, however, often presume that everyone knows the basics of these important documents. But, in reality, many of us don’t – and with good reason – as they’re rooted in complicated, centuries-old law.

Let’s face it, if you’re not an estate planning attorney, these concepts tend to remain merely that – concepts. So, if you’re “fuzzy” about wills and trusts, know that you are not alone. After we show you the difference between these two documents, we’ll tell you why a trust is the better choice.

Wills vs. Trusts: Defined

Let’s take a minute and define both “will” and “trust”:

Will. A will is a written document that is signed and witnessed. A will is considered a “death” document as it only goes into effect when you die.

A will:

• provides for the distribution of assets owned by you, but not assets directed to others through beneficiary designations (e.g. life insurance or retirement benefits)
• sends assets in your individual name or payable to your estate through the probate process
• allows you to appoint permanent guardians for your minor children
• names the person you wish to settle your estate (e.g. executor or personal representative)
• doesn’t always include protective trusts for beneficiaries and tax planning because many wills are simple 2-3 page documents
• permits you to revoke or amend your instructions during your lifetime
• tends to cost less than a trust on the outset but costs more to settle during court proceedings after death

Trust. A trust is a legal document, signed and witnessed, and effective during your lifetime, during any period of disability, and after death. Because the trust is effective during your lifetime and you can change it, it’s referred to as a “living” document.

A trust:

• has lifetime benefits
• provides for the distribution of your assets
• avoids probate if fully funded
• provides for a successor trustee upon your death or incapacity
• allows for the management of your property – even if you’re incapacitated
• can address appointing disability guardians for minor children
• often includes protective trusts for beneficiaries and tax planning
• permits you to revoke or amend your wishes during your lifetime
• costs more than a simple will on the outset but much less upon administration, while typically providing significantly more value

The Probate Process: A Key Element in Deciding Between a Will and Trust
One key element in deciding between a will and a trust is understanding the probate process. The term “probate” – which literally means “proving” – refers to the process wherein a decedent’s will must be authenticated, outstanding legitimate debts paid, and assets transferred to the beneficiaries.

The downside is that probate can take a long time – even years – it’s expensive in many places and the entire process is completely public, meaning your nosey neighbor Nancy and evil predator Paul both know exactly who got what and how to contact them. In virtually all cases, the only upside of probate is that creditor claims are cut off.

• Probate Guaranteed with a Will. If you use a will as your primary estate planning tool, you own property in your individual name, or property is made payable to your estate, probate is guaranteed.
• Probate Avoided with a Trust. If you use a fully-funded trust as your estate planning tool, probate is avoided – saving your family time and money.

The Bottom Line on Wills vs. Trusts
HOW TO DECIDE: As everyone’s situation is different, it’s important to analyze every aspect of your situation – and what the future may hold – so that you can determine what’s right for you and whether probate avoidance, incapacity planning, and trust protections have value to you and those you love. Most people receive the greatest overall benefit from having a trust.

What Revocable Living Trusts Can Do – That Wills Can’t

• Avoid a conservatorship and guardianship. A revocable living trust allows you to authorize your spouse, partner, child, or other trusted person to manage your assets should you become incapacitated and unable to manage your own affairs. Wills only become effective when you die, so they are useless in avoiding conservatorship and guardianship proceedings during your life.

• Bypass probate. Property in a revocable living trust does not pass through probate. Property that passes using a will guarantees The probate process, designed to wrap up a person’s affairs after satisfying outstanding debts, is public and can be costly and time consuming – sometimes taking years to resolve.

• Maintain privacy after death. Wills are public documents; trusts are not. Anyone, including nosey neighbors, predators, and unscrupulous “charities” can discover the details of your estate if you have a will. Trusts allow you to maintain your family’s privacy after death.

• Protect you from court challenges. Although court challenges to wills and trusts occur, attacking a trust is generally much harder than attacking a will because trust provisions are not made public.

What Wills Can Do – That Revocable Living Trusts Can’t                     

• Name guardians for children. Only a will – not a living trust or any other type of document – can be used to name guardians to care for minor children.
• Specify an executor or personal representative. Wills allow you to name an executor or personal representative – someone who will take responsibility to wrap up your estate after you die. This typically involves working with the probate court, protecting assets, paying your debts, and distributing what remains to beneficiaries. But, if there are no assets in your probate estate (because you have a fully funded revocable trust), this feature is not necessarily useful.

What Both Wills & Trusts Can Do:

• Allow revisions to your document. Both wills and trusts can be revised whenever your intentions or circumstances change so long as you have the legal capacity to execute them.

WARNING: There is such as a thing as irrevocable trusts, which cannot be changed without legal action.

• Name beneficiaries. Both wills and trusts are vehicles which allow you to name beneficiaries for your assets.
• Wills simply describe assets and proclaim who gets what. Only assets in your individual name will be controlled by a will.
• While trusts act similarly, you must go one step further and “transfer” the property into the trust – commonly referred to as “funding.” Only assets in the name of your trust will be controlled by your trust.
• Provide asset protection. Trusts, and less commonly, wills, are crafted to include protective sub-trusts which allow your beneficiaries access but keep the assets from being seized by their creditors such as divorcing spouses, car accident litigants, bankruptcy trustee, and business failure.

The post Wills and Trusts are Different. What is the Difference? appeared first on .

from http://ift.tt/2GIkk3s


from DeWitt Law Firm, PLLC

The Cold, Hard Truth About Planning For Blended Families

The blended family has a set of unique problems when it comes to their estate planning.  How should the assets be divided up and who should get what?

The Situation

Dad passed away last year and left the vast majority of his property to Step-mom by operation of law after 20+ years of marriage.  That is, no Will or Trust required.  When Step-mom passed, she left everything of hers (and what was his) to only her children.  Dad trusted Step-mom to do the right thing.  But, she didn’t.

This story shows the problem of blended families.  While what she did is not right, it is not illegal.  Step-mom was given the property by operation of law.  It was hers to decide what to do with.  Dad didn’t have any say in the matter.  Step-mom made sure her children were well taken care of while cutting her step-children out completely.

Even if Step-mom hadn’t created a Trust in her last days, leaving everything to only her children, the results would have been the same.  Under Arkansas law, without a Will or Trust, your property will be divided between only your biological and adopted children.  Since Step-mom had not adopted Dad’s children, they would have been left out.

How can you stop this from happening?

In no order of importance, here are three things you can do to plan for a blended family:

1. Adopt the people. In Arkansas, adopted children are treated the same as biological children when it comes to inheritance.  And, in Arkansas, you can adopt people of any age.  At least this way they would all get an equal share of the property.
2. Create a Trust (or Trusts) and spell out exactly how the property is to be divided up.  If you want to leave what was hers to her children and what was his to his children, a Trust is the way to go.
3. Create a Last Will and Testament and give the property to the children in the proportions you choose.  But, a Last Will and Testament still has to go through the court process of probate and is easier to challenge than a Trust.

The post The Cold, Hard Truth About Planning For Blended Families appeared first on .

from http://ift.tt/2DZL6Xw


from DeWitt Law Firm, PLLC