Arkansas Estate Planning Lawyers Helping Families Avoid Probate & Plan for Their Futures
The probate process occurs when you leave your estate to your loved ones using a will. This means that everything in your estate, everything you own, will pass through a process that is costly in both time and money and is also open to the public in probate court.
The court retains control of the process until the estate has been settled and distributed. In the meantime, it is not uncommon for probate courts to freeze assets pending the final disposition of the estate. All this can be avoided, however: with proper estate planning, your assets can pass on to your family without going through probate, in a manner that is faster, less expensive, and private.
Making Sure Your Wishes are Followed While You’re Alive
You are not dead yet! We are living longer and longer. Now incapacity comes before death for a lot of Arkansans. Incapacitation not only affects you physically; it can have serious consequences for the management of your financial affairs. It’s often mistakenly assumed that one’s spouse or adult children can automatically take control should he or she become incapacitated.
If you do not have an estate plan in place, the truth is more complicated: to arrange for another person or persons to manage your finances, they must petition a court to declare you legally incompetent, a process that can be long, expensive, and stressful. And, the Court may not appoint who you wanted!
Besides considerations of your financial affairs during incapacity, it’s often wise to establish a plan for your medical care. Much as you would designate a person or persons to make decisions about your finances while you are incapacitated, you can appoint someone you trust, like a family member or friend, to make decisions on your behalf about medical treatment options.
Life Stages and Estate Planning
Estate Planning: Single & Employed
If you’re a young worker struggling to pay off student loans, you probably don’t think of yourself as having any assets to pass on. But you still might have a 401(k) or life insurance policy at work. Make sure you have completed the beneficiary designation forms for these, since those forms (not a will) control who gets them.
If you die without signing a valid will or living trust, “intestate,” Arkansas law will determine how your other belongings and accounts—those without beneficiary forms—are distributed. In Arkansas, the assets of a single, childless adult go to his parents, if they are still alive. If you would prefer your assets to go to other people or a charity, then you will need to look into getting an estate plan drawn up.
Estate Planning: In a Relationship
A growing number of unmarried couples are living together, acquiring assets, and having children. There is no common law marriage in Arkansas and you will not inherit if you are in this situation.
For this reason alone it is far better to record your wishes in a Will. If you are worried blood relatives might object, consider using a living trust as part of your estate plan, because it’s harder for them to challenge. Like a Will, a living trust spells out who gets your stuff when you die, but the assets in the trust avoid probate—the process through which a court determines that a Will is valid. For a trust to work correctly, however, you must title your assets in the trust’s name (known as funding the trust).
If you want your significant other (and not relatives) to make health decisions for you, make sure to update your health care power of attorney. And, if you want your significant other to make decisions regarding your property, update your durable power of attorney.
Buying a house together? Pay attention to how it’s titled. For example, if you own it as “joint tenants with rights of survivorship” and one owner dies, the other automatically gets the whole house. Alternatively, you might hold the property as “tenants in common”; if one owner dies, just that person’s share gets included in his estate. In this setup, if you want your share to pass to your partner you must say so explicitly in a Will, or it could go to your parents, forcing your significant other to move.
Estate Planning: Just Married
Married couples have more built-in protection than unmarried couples. For example, provided both are U.S. citizens, they can leave each other at death (or transfer to each other while alive) an unlimited amount of property without worrying about estate or gift taxes. And, if a couple has neither children nor wills, the surviving spouse can automatically inherit all of a dead spouse’s property depending on how it is titled.
Arkansas law governs what happens to your assets if you die without a plan. The children of the deceased get the first bite of the apple. This can be a big issue if you have kids from a previous marriage and they do not like your new spouse. If you have no kids, then the spouse gets your estate. However, if you have been married less than 3 years, then your spouse is only entitled to 50% of your estate and the other 50% goes to your parents. If you want to ensure you can care for your new spouse, then a plan that does so is necessary.
Estate Planning: A Bun in the Oven
If you’re a parent or about to become one it is time to get serious about planning. This is the case whether you’re married, single, or cohabitating, the first step is to sign a Will naming a guardian to raise your child.
Couples should agree on the choice of guardian and each of their Wills appoints the same person. The Wills should agree with each other in case both parents die together, e.g. auto accident. But disagreements often delay planning; most people don’t like to think about these things.
Children v. Spouse
Finally, don’t assume that if you are married with children all your assets will go to your surviving spouse. If you have kids in Arkansas the kids receive 2/3 and the spouse receives 1/3. This is oversimplified and it will depend on the ownership and beneficiary of each asset, and of course your estate plan. This can be a big problem if you have kids from other partners or spouses. Or, if your kids are over the age of 18, then the spouse can be left without enough to care for herself.
Estate Planning: Headed for Divorce
The time between a separation and divorce is tricky from an estate-planning perspective. By law, spouses are entitled to inherit a minimum portion of each other’s assets, which is one-third in Arkansas. Unless they waive that right in a prenuptial agreement, it continues until the divorce is finalized. Some divorces are quick and uncontested. Some divorces can last for years and are hotly contested. You should revise your estate planning documents upon separation to protect your assets.
You can name other beneficiaries to receive your assets upon your death and disinherit your soon-to-be ex-spouse. If something does happen to you, then your ex-spouse will have to come to force his or her share to be distributed to them. You also should consider appointing someone other than your spouse as your agent in your Power of Attorney and Healthcare Power of Attorney. If you lost the capacity for some reason, e.g. in the hospital due to a car wreck, your Power of Attorney could give your spouse the right to give himself or herself your assets.
You may also want to consider changing any payable on death (POD) beneficiaries on your bank or investment accounts, as well as life insurance policies.
Estate Planning: Newly Widowed
Estate tax issues arise when your spouse passes away. Portability, allows widows and widowers to add any unused exemptions of their most recently deceased spouse to their own personal exemption. This isn’t automatic. The executor of the deceased spouse’s estate must file a federal estate tax return, even if no tax is owed. The return is due within nine months after the death, but a six-month extension is allowed. That makes the death of a spouse the wrong time to skimp on professional advice.
Other planning moves, too, should be made soon after a spouse’s death. Estate plans often call for certain elections to be made after the first spouse passes. You should contact your attorney to make sure the right elections are made within the necessary time limits. Revise your will and living trust and name new beneficiaries for any retirement assets you inherited from a spouse—otherwise, your own heirs could lose income tax benefits associated with these accounts. Also, make sure your Durable Power of Attorney and Healthcare Power of Attorney name someone other than your spouse.
Estate Planning: Planning to Remarry
Before remarriage, you should discuss your estate plans. This changes from should to must when there are children from a previous relationship. Do you want to leave everything to the kids, or half to the kids and half to the new spouse? If you want to benefit both grown children and your current spouse, decide whether the kids should receive an immediate inheritance or be forced to wait for the death of the surviving spouse. Whatever you decide, spell it out in a prenuptial agreement.
In a remarriage what a surviving spouse receives is often tied to the length of that marriage. For example, a prenup can state that a spouse is entitled to 25% from the date of marriage through the tenth anniversary and 50% after the tenth anniversary. The remaining part of the estate would be given to the children.
If you later change your mind, you can alter the agreement. However, it is important that when people remarry with children from a previous marriage they discuss these estate issues. Also, making your children aware of your decisions can lessen the tension after your demise. Your new spouse will be thankful you did so. The moral is to sign a prenup; it is a lot easier to increase a new spouse’s inheritance than it is to limit it.
What Does an Arkansas Estate Plan Cost?
First, I guess we need to talk about what an Arkansas estate plan can include. It can contain the following:
Living Revocable Trust, Irrevocable Trust, Last Will, and Testament, Power of Attorney, Healthcare Power of Attorney, Living Will, Personal Property Memorandum, Funding of the Trust, deeds, and an LLC
Now, your estate plan can also include single parts of the above list. We try to provide Clients only the services they need. We will provide a free 30 minutes consult to answer your questions and ask questions of our own to try and figure out how best to address your estate planning needs.
Trust Plans include the following documents: 1. trust, 2. certification of trust, 3. funding instructions, and the following: 4. pour-over will, 5. financial durable power of attorney, 6. healthcare power of attorney, 7. living will, 8. assignment of property, 9. personal property memorandum, and 10. deeds.
Will plans include the following: will power of attorney, healthcare power of attorney, living will, and personal property memorandum.
The cost of the plan will be dependent on what your customized plan includes. You can schedule a free strategy session to figure out what that cost would be.