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

What If I Leave Debts Behind?

The way debts are handled is highly state dependent.  This advice and answer is only for the state of Arkansas.

First, your children are typically not responsible for your debts.  The cases where they may be responsible are:

1. They cosigned a promissory note with you and promised to pay if you can’t or won’t
2. They signed a contract with a promise to pay if you can’t like a nursing home contract

If you leave debts behind, payment depends on your planning.

If you don’t leave a Last Will and Testament or only a Last Will and Testament, your estate will be responsible for paying your debts.  If you don’t have an estate, then no debts will be paid.  But, almost everybody leaves behind some kind of probate estate.

A Last Will and Testament usually includes a section or clause that requires your debts be paid.  These are paid first before any money is distributed to your family.  If you don’t leave a Will, then the State laws require your debts be paid.

Also, with or without a Will, any attorney handling the estate gets paid first.  Your final expenses get paid next, then the debts.

These debts include your final medical expenses and funeral costs.  So, if you spend a few days in Intensive Care (ICU), your estate may be responsible for $10,000’s of debts.  That is money your family will not receive.

You can avoid paying your final debts by planning ahead to leave behind little if no probate estate.  The Revocable Living Trust is one of the best methods to make sure there is no probate estate left behind.  The Trust combined with a few other methods makes sure that your assets don’t go to your probate estate, but instead go straight to your spouse and children.  The Trust avoids court and saves time and a lot of money.

The post What If I Leave Debts Behind? appeared first on .

from http://ift.tt/2n5sLwD


from DeWitt Law Firm, PLLC

4 Warning Signs Your Elderly Relative May Be the Victim of Financial Abuse

Some of the most disturbing crimes against the elderly involve financial exploitation. While physical abuse is often easy to spot, financial abuse can be more difficult to detect, as victims often have no idea they’re being swindled until their money suddenly vanishes.

Most victims are more than 70 or 80 years old, and involve crimes like fraud, embezzlement, identity theft, along with welfare and insurance scams. If you’re caring for an elderly loved one, be on the lookout for the following red flags of financial abuse:

1. Unusual financial transactions or spending

The most obvious sign an elderly family member is being exploited is if there are sudden changes to their spending, banking, and/or financial practices. At the same time, the person may start behaving secretively, confused, or otherwise atypical about money matters. A few of the most frequent actions include:

• Someone who is normally meticulous about their finances suddenly starts seeing unpaid bills, non-sufficient funds warnings, and/or unexplained credit card charges.
• The elderly person starts opening, closing, or changing banking and investment accounts, especially without regard to penalties or fees.
• Someone with consistent spending patterns starts showing a sharp increase in spending and/or investing.
• The person’s account sees a suspicious increase in ATM use, withdrawals, and/or checks made out to unfamiliar recipients.

2. The appearance of a “new” person in their life

Because they’re often alone and isolated, seniors are particularly susceptible to being “befriended” by strangers who take advantage of their loneliness to exploit them. And it may not be a stranger—relatives who haven’t been around for years can suddenly start spending lots of time with the person.

This situation is particularly dangerous when the new acquaintance, caregiver, or relative spends time in the person’s home, where they have easy access to the person’s accounts, financial statements, and personal documents.

One sign that something is amiss is if the senior acts unusual when it comes to the new caregiver or friend. They may seem nervous when that person is around, stop participating in their usual social events, or be reluctant to speak about the person with you. This is a red flag the new person may be trying to isolate or control them.

3. Unneeded goods, services, or subscriptions

Outside of loneliness, the elderly are often physically unable to handle household chores and maintenance like they used to. Given this, they’ll likely need service providers to take care of the work for them. But every new person they surround themselves with is a potential swindler.

Watch for unscrupulous door-to-door salesmen and home repair contractors, who stop by offering unsolicited products or services, especially related to home remediation issues. And they don’t have to physically present to perpetrate fraud—there are countless telemarketing and email scams that target unsuspecting seniors in order to make a quick buck or steal their identity.

One fairly common scam involves inviting the older person to a free lunch or dinner in exchange for listening to a “seminar” about a financial product or service. The elderly often feel obligated to “buy something” after getting what they thought was a free meal.

Make sure that another adult relative is present before signing any contracts, and always consult with us if you’re unfamiliar with a new investment or financial opportunity.

4. Changes to wills, trusts, titles, power of attorney, etc.

The worst cases of financial abuse of the elderly can even involve the person making changes to wills, trusts, and other estate planning documents. Other potentially harmful changes can involve deeds, refinanced mortgages, property titles, and/or adding someone to a joint account.

Pay especially close attention if the older person seeks to grant power of attorney to someone out of the ordinary, as this can open the door for massive theft of assets and potentially fatal changes in a senior’s caregiving services.

One major advantage to establishing a relationship with a lawyer during your early years is so we can get to know you while you’re young, healthy, and clear, and then monitor if anything goes awry in your later years.

One reason financial scams are so hard to detect is that the elderly—like all of us—are embarrassed to admit they’ve been swindled, or they may not want to get a new “friend” or relative in trouble by telling others about their suspicions.

However, anyone can fall prey to financial fraud.

The post 4 Warning Signs Your Elderly Relative May Be the Victim of Financial Abuse appeared first on .

from http://ift.tt/2DRefkp


from DeWitt Law Firm, PLLC