Estate Planning

What is an Estate Plan and Why Have One?

An Estate is the all of the property, both real (land and houses) and personal (such as autos, furniture, etc.), owned by a person prior to distribution through a trust or will.

Estate planning is the process by which an individual, or close family (spouse, children, and/or parents) with the person’s consent and approval, arranges the transfer of assets to heirs or other beneficiaries. The reason for this is to provide the family, or other miscellaneous beneficiaries, with legal rights to the property after the individual dies.

Estate Planning consists of a host of options. Aspects of Estate Planning include:

  • Trusts
  • Wills
  • Uniform Probate Code
  • Gift Tax Planning
  • Living Wills and Durable Powers of Attorney

A good Estate Planning lawyer can do more than just draft a simple will. Estate planning also typically minimizes potential taxes and fees, and sets up contingency planning to make sure that your wishes regarding which items are allocated and who the main beneficiaries are.

Many trusts are created as an alternative to or in conjunction with a will. Arkansas law establishes the framework for determining the validity and limits for both.

An Estate Planner can assist you with organizing your personal and business records such as:

  • Brokerage Accounts
  • Retirement Plans
  • Savings and Checking Accounts
  • Insurance Policies
  • Business and Partnership Interests
  • Debt Personal Property

An Estate Planner can also assist all other possible estate planning law concerns.

Most of us spend a considerable amount of time and energy in our lives accumulating wealth. With this, there comes a time to preserve wealth both for enjoyment and future generations. A solid, effective estate plan ensures that your hard-earned wealth will remain intact as it passes to your beneficiaries, instead of being paid to government processes and bureaucrats, or unintended beneficiaries.

Probate Administration

Probate administration is the process of paying the debts and distributing the assets of the deceased. This process includes the distribution of non-probate assets (assets that are not distributed by a will or trust). Non-probate assets are transferred according to Arkansas laws and procedures. Spears & Butler assists clients with probate of estates in which a will was prepared and estates where the deceased dies intestate (without a will).

Disputes over the interpretation or administration of wills and/or trusts can result in litigation. Our probate litigation attorneys are experienced litigators who effectively balance the client’s desire for privacy with the public nature of litigation involving wills and trusts. The firm represents plaintiffs and defendants in will contest and probate litigation proceedings.

Wills

Everyone should have a will, although it must be a free and voluntary act. Although you may feel you do not have enough property to justify drafting a will, life situations change often. Children are born; you may come into a sizable estate through inheritance or windfall business opportunity; or even marriage or divorce may change the size of your family. The following people especially need a will:

  1. Individuals with minor children. Without a will, a court has little valid guidance to help determine where to place minor children. The court will normally follow the designation of a guardian for the children in a will. More importantly, such designation normally prevents indecision and family disputes concerning who will now care for orphaned children.
  2. People with extensive or certain valuable property. Even as between husband and wife with little property other than a house, a surviving spouse may find settling affairs easier with a will. Many states have family probate laws which allow a spouse to probate a valid will without a lawyer and with minimal expense. Without a will, property is distributed according to Arkansas law.

Generally, Arkansas law leaves all property in the following order of precedence: surviving spouse, children, parents, then siblings. Different states’ laws vary, but generally the property will only pass to blood relatives, not to in-laws or stepchildren.

A common misconception is that without a will, all of a person’s property goes to the state. Normally, a state will not receive the property unless there are no surviving relatives.

The bottom line is: If a person does not want state law to determine what happens to his or her estate, the person MUST make a valid will.

A will is normally written in general language and will be effective until changed or revoked by the testator. However, events may impact specific provisions in the will. Therefore, a will should be reviewed periodically and whenever any of the following occur.

  1. The birth or death of any person affected by the will
  2. The marriage or divorce of the testator
  3. A substantial change in the testator’s estate

The requirements for making a valid will vary widely from state to state. Therefore, do-it-yourself wills are designed to be very general in nature to try and fit all possible state laws. For this reason, individuals should avoid do-it-yourself wills. The attorneys at Spears, Huffman & Butler ensure a will is validly executed under the applicable state law. Contact us today to schedule an appointment to review your estate to discuss your options.

Trusts

A trust is a relationship among a grantor, a trustee, a beneficiary, and property. A grantor is the person who creates the trust,. The trust consists of “assets,” or a “corpus,” which is property, either real, personal, or a combination of both. A trust is generally considered not to be in existence until it is funded. The “beneficiary,” is the person who receives the benefits of the trust property. The trustee holds and manages the trust property.

These three roles need not be filled by three different persons. In almost all states, a grantor can establish a trust and appoint himself or herself as both trustee and beneficiary. In a trust declaration, the grantor and the trustee are the same person, and grantor “declares” that he or she is holding assets in trust. In a trust, ownership of the assets is split between the trustee and the beneficiary. The beneficiary owns equitable title, meaning that the beneficiary has the use and enjoyment of the property. The trustee owns legal title, which means that the trustee is listed as the owner of the property, pays taxes, buys, sells and mortgages property, and is responsible for its management and distribution. Since the trustee owns only the legal title, in a representative capacity, the trustee’s interest is not one that is subject to the trustee’s creditors. A trustee who is also a beneficiary holds bare legal title in a fiduciary capacity as trustee, and equitable title as a beneficiary.

A trust has many differences from wills, each of which may make a trust more advantageous over a will and vice-versa. Because each person’s life situation is different, a thorough review of all the options is the proper course. Please contact us today to schedule an appointment to review your estate to discuss your options.

Powers of Attorney

A Power of Attorney (POA) is a document that allows someone else to act as your legal agent. Though the agent may not be an attorney-at-law, he or she becomes an attorney-in-fact when granted authority under a POA. The attorneys at Spears & Butler are available to draft POAs which can be tailored to any given situation.

Although a POA can be very useful, it can be abused as well. Individuals should be careful choosing to whom they grant authority. Third parties, e.g., businesses or banks, may or may not accept a POA, at their discretion. To revoke a POA before its expiration, individuals may execute a revocation of POA and give a copy to any person that might deal with the person who has the original POA.

There are several types of POAs:

  1. Special POA. A Special POA grants limited authority to accomplish specific transactions. The duration is limited by the person giving the POA or to a reasonable time within which to accomplish the transaction, usually not more than one year. Examples of situations wherein a Special POA is appropriate include buying/selling real estate, purchasing/selling a car, or shipping/storing household goods.
  2. General POA. A General POA gives comprehensive authority over virtually all legal and some non-legal affairs. Basically, the person named can do any and all things the grantor could do. Because the authority granted is so expansive, this type of POA should only be used if a Special POA will not suffice and if the agent is completely trustworthy. A person with a general POA, who is not trustworthy, has the ability to cause very serious problems of all kinds, i.e., financial or legal, for the grantor. For this reason, many banks and realtors will not accept a general POA for the purchase or sale of real estate, and require a special POA containing the legal description of the property and the actions authorized
  3. Durable POA. This type of POA takes effect upon, or is still effective notwithstanding, a person’s medical incapacity and designates another person to make decisions on behalf of the incapacitated person. This POA allows the attorney-in-fact to make decisions or manage affairs on behalf of the incapacitated person for the duration of the incapacity. The authority may extend to decisions for medical purposes, including a decision regarding terminating or limiting medical care in appropriate cases. It generally eliminates the need for a court to establish a guardian and conservator for the incapacitated person. The Durable POA can be considered a Living Will, although a Living Will is basically a direction from you to all those concerned (doctors and family) when you are no longer able to make your decisions known that you wish for all life sustaining activity to cease and you be allowed to die. For assistance with the options of either a Living Will or Durable POA for Health Care Decisions, contact us today for an appointment.