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Why Estate Planning Matters More Now Than Ever

Mon, 16 Feb 2026 15:23:38 GMT

For many people, the phrase estate planning conjures images of sprawling estates, complex trusts, and wealthy families and individuals. In reality, estate planning is something almost every adult should consider, regardless of income or asset level. At its core, estate planning is about control, protection, and peace of mind for you and for the people you care about most.

Estate planning involves making legal arrangements for what happens to your property, finances, and personal decisions if you pass away or become unable to manage your affairs. Without a plan in place, those decisions are often left to the courts, state law, or family members who may not agree on what should be done.

What Happens Without a Plan

When someone dies without an estate plan, their estate is typically handled through probate, which is a court-supervised process that determines who inherits property, who pays debts, and who has authority to act on behalf of the estate. While probate is not always inappropriate or avoidable, it can be time-consuming, costly, and emotionally draining for families, particularly when no clear instructions exist.

Incapacity planning is another commonly overlooked issue. If a person becomes ill or injured and is unable to make decisions, a court may appoint a guardian or conservator to manage financial or personal affairs. With proper planning, this process can often be avoided entirely.

The Core Pieces of an Estate Plan

A basic estate plan often includes several key documents:

A Will , which directs how property should be distributed and who should manage the estate
Powers of Attorney , which allow a trusted individual to handle financial or legal matters if you are unable to do so
Healthcare Directives , which outline medical wishes and appoint someone to make healthcare decisions on your behalf
Trusts , in certain situations, which can be used to manage assets, protect beneficiaries, or reduce court involvement

Estate planning is not a one-size-fits-all process. A young professional, a married couple, a blended family, and a retiree will all have different needs. The goal is clarity, not unnecessary complexity.

More Than Money

While finances are an important part of the process, estate planning involves far more than deciding who receives what. It allows parents to nominate guardians for minor children, helps protect beneficiaries with special needs, and provides guidance that can prevent family conflict during an already difficult time.

Estate planning also gives individuals the opportunity to plan for long-term care, nursing home expenses, and medical decision-making. These are issues that affect far more families than many expect.

When to Start and When to Update

The best time to create an estate plan is before you need one. Major life events such as marriage, divorce, the birth of a child, purchasing property, or changes in health are all signs that a plan should be created or reviewed. Even an outdated plan is often better than no plan at all, but regular updates are essential to ensure documents reflect current wishes and circumstances.

Peace of Mind for the Future

Estate planning is ultimately an act of responsibility and care. It reduces uncertainty, eases stress for loved ones, and ensures that your wishes, rather than default legal rules, guide important decisions.

No matter your age or financial situation, having a thoughtful estate plan in place can make a meaningful difference. It is not about preparing for the worst. It is about protecting what matters most.

Ryan F. Villano is an associate attorney at Farrar & Williams, PLLC, a law firm focusing its practice on trusts, estate planning, and elder law. The firm is located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas.

For more information or to schedule a complimentary 30-minute estate planning consultation, call (501) 525-4401 or email ryan@farrarwilliams.com.

What happens if you die without a will in Arkansas?

Mon, 24 Nov 2025 14:23:25 GMT

If you pass away in Arkansas without leaving a valid will, you are considered to have died “intestate.” In that case, Arkansas intestacy laws, not your personal wishes, control how your property is divided, who manages your estate and who cares for your minor children.

Under Arkansas law, the distribution of property without a will depends on your family situation. If you are married with children, your spouse does not automatically receive everything. Instead, your spouse typically inherits one-third of your personal property and a life estate in one-third of your real estate, while the remainder passes directly to your children in equal shares. If you are married but have no children, your spouse may inherit all of your personal property and a life estate in your real estate, but if your parents, siblings, or nieces and nephews are living, they may also inherit part of your estate. If you have children but no surviving spouse, your entire estate passes to your children in equal shares, with grandchildren inheriting their parent’s share if a child has already passed away.

Blended families face unique challenges when it comes to estate planning, which makes having a will especially important. In Arkansas, stepchildren do not inherit from a stepparent under intestacy laws. This means that if you die without a will, your stepchildren will not receive any part of your estate, even if you raised them as your own or intended for them to share equally with your biological children. Similarly, without clear planning, children from a prior marriage and a current spouse may end up in conflict over how property is divided. A carefully drafted will allows you to provide for both your spouse and all children, biological and step, according to your wishes.

In addition to determining who inherits your property, intestacy also affects who manages your estate. If you have a will, you get to appoint an executor, also called a personal representative, to handle probate, pay debts and distribute your assets. Without one, the court appoints someone, often a surviving spouse, adult child, or another relative. This can create delays, additional expenses, and sometimes conflict if family members disagree over who should serve.

Perhaps the most serious consequence of dying without a will involves your minor children. A will allows you to designate a guardian, someone you trust to raise your children if something happens to you. Without that guidance, the court must decide who will serve as guardian, and the result may not reflect your wishes.

The burden on your family can be significant when there is no will in place. Fortunately, these problems are preventable. By creating a valid Arkansas will, you can decide exactly who should inherit your property, appoint a trusted person to manage your estate, and choose the guardian who will raise your children. Even better, a comprehensive estate plan that includes not only a will but also trusts, powers of attorney and health care directives can provide further protection and peace of mind.

Bottom line: If you die without a will in Arkansas, state law decides what happens, and the results may not be what you intended. Taking the time to create a will ensures that your wishes are followed, your family is protected, and your legacy is preserved.

Ryan Villano is an attorney at Farrar and Williams PLLC which is conveniently located at 1720 Higdon Ferry Rd., Hot Springs, AR. To discuss your estate planning needs or to schedule a consultation, give us a call at 501525-4401 or visit our website at www.farrarwilliams.com.

Naming IRA & 401(k) beneficiaries

Mon, 24 Nov 2025 14:21:34 GMT

Many people make costly estate planning mistakes when it comes to individual retirement accounts. Unlike other assets, IRAs and 401(k)s are not typically covered by a will or a standard type of trust. Instead, the funds go to inheritors according to beneficiary designation forms that are on file with the IRA custodian. Oftentimes individuals do not know who is listed on their beneficiary forms because the account and beneficiary designations were created many years ago.

It is a good idea to make sure all of your beneficiary forms are in order and up to date. You should check the designation on file to make sure it’s what you intend. You should also be sure to name both primary and contingent beneficiaries on your plans in case the primary beneficiary predeceases you.

You can name any beneficiaries you want with an IRA or 401(k), including family members, friends, a trust or charity.

Alternatively, with a 401(k) or other workplace plan, your spouse must give written permission for you to leave the account to anyone else.

If there is no beneficiary form on file, your heirs must use the IRA custodian’s default policy. This may also mean someone other than the person you intended will receive your IRA (i.e. your heirs- at-law). Typically the custodian will award an IRA first to a living spouse and then to your estate. Sometimes the custodian may send it straight to the estate, which will cut short the tax benefits and most likely require a probate proceeding.

If you list your children as beneficiaries, it is often a good idea to provide for “per stirpes” distributions (if the form allows this designation). This means that if your child predeceases you, their children would become the beneficiaries, instead of your other children, or the co-beneficiaries. Sometimes clients wish to leave their IRA to a trust to accept retirement assets. There can be many reasons for leaving your IRA to a trust, which include:

• If your intended beneficiaries are minors.

• If you are fearful of creditors or in-laws.

• If you wish to control the cash flow to beneficiaries with money management problems.

• Second-marriage planning.

Many complex IRS rules govern IRA trusts. Therefore, it is critical that you speak with your trusted advisors to ensure that an IRA trust meets your goals as well as the government criteria.

Regardless of who you ultimately decide to name as beneficiary of your retirement accounts or plans, it is crucial that those assets make their way to your intended beneficiary. A proper beneficiary designation form should accomplish this.

Wesley W. Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, and can be contacted at 501-5254401 or by email at wesley@farrarwilliams. com. The firm’s website is farrarwilliams. com.

How to plan for long-term care costs

Fri, 19 Sep 2025 16:06:25 GMT

It is a reality that as we live longer, the need for long-term medical care continues to rise. A question I often get asked is, “How do we plan for the cost of long-term care, including nursing home costs?” Long-term care insurance is by far the preferred option, since it offers the possibility of keeping people out of nursing homes by paying for care in the home or in assisted living facilities. Statistics show that the vast majority of people do not purchase long-term care insurance and are forced to rely on other alternatives to pay for long-term care costs. Unfortunately, the other alternatives often do not include care in the home and instead require the long-term care to be in a nursing home.

Without insurance, there are two primary options for the payment of nursing home costs. First, a person may have sufficient income and assets to pay for such costs on a private pay basis. However, since such costs average in excess of $6,500 per month, the private pay option is not a long-term solution for most people. The second option is the Long Term Care Medicaid Program. Since this is a government benefit program, there are asset and income requirements to be met in order to qualify. The rules differ depending on if you are single or married. As a result of the eligibility determination process, many clients structure their estate plans in a way to enhance their eligibility in the event such costs become necessary. The remainder of this article will focus on one of the more popular estate planning tools used to enhance Medicaid eligibility for long-term care costs.

A special type of trust often referred to as an “irrevocable trust” is a popular planning option. I prefer to call this trust a Medicaid Asset Protection Trust. It is important to note that most trusts that are set up are revocable trusts which offer no protection from nursing home costs. In most cases, in order to gain eligibility, one must either give away assets or structure assets in a MAPT.

Gifting assets to your children is usually a poor option, since those assets then become exposed to the children’s debts and liabilities, divorces, etc. For these reasons, the MAPT may be a preferred option as it leaves you in control. The primary disadvantage of the MAPT is that it limits you and your spouse to the income earned on the trust assets, as the principal is restricted and protected for the benefit of your remainder beneficiaries, usually your children. The MAPT does allow you to have full use and benefit of your home and real property, including the right to sell it (provided the proceeds stay in the trust).

As with most asset transfers the creation of a MAPT is subject to a Medicaid “look back” of five years. This means the trust should be created and funded at least five years prior to applying for any Medicaid benefits. It is important to note that most clients who set up a MAPT elect to keep a sufficient amount of assets out of the trust so they will have full access and control to a comfortable level of assets for their lifestyle. IRA’s and other retirement plans are usually left out of a MAPT.

In summary, planning for the cost of long-term care is an important issue that many people need to consider when setting up their estate plan. This type of planning is very specialized and should only be implemented with the help of an experienced elder law attorney.

Bitcoin and Beyond: Protecting Your Digital Wealth for Future Generations

Mon, 30 Jun 2025 17:51:17 GMT

In an era of rapidly evolving technology, a new asset class has emerged that has captured the attention of investors worldwide: cryptocurrency, particularly Bitcoin. While Bitcoin and other cryptocurrencies offer a decentralized and borderless financial system, they also introduce unique challenges for estate planning—challenges that can leave families struggling to manage or even access digital wealth after a loved one’s passing.

If you haven’t thought about how your cryptocurrency holdings will be handled after you’re gone, it’s time to take action. The rise of digital currencies, such as Bitcoin, presents a new dimension to estate planning that requires both attention and foresight.

Why Cryptocurrency Requires Special Attention in Estate Planning

Unlike traditional financial assets like bank accounts or real estate, cryptocurrency operates outside of the traditional financial system. Transactions are recorded on a decentralized ledger called the blockchain , and ownership of cryptocurrency is verified through a system of cryptographic keys. These private keys act as a digital "password" to access your holdings, and without them, your crypto assets are as good as gone.

This is where the estate planning process becomes critical. If a family member or loved one doesn’t know how to access your Bitcoin wallet or other digital assets, your wealth could be lost permanently. In fact, millions of dollars in Bitcoin have already been lost due to forgotten keys or inadequate estate planning.

The Cryptocurrency Challenge: Securing and Sharing Your Keys

The most important step in ensuring your cryptocurrency is accessible to your heirs is safeguarding your private keys . These keys are the keys to your digital wallet, and without them, nobody—not even the most skilled hacker—can access your coins.

Here’s the catch: Private keys are not like regular bank account login details. If you lose your private key, there is no password recovery system to fall back on. Therefore, it is imperative that you store your keys securely and make sure your family knows how to access them when the time comes.

What You Need to Do Now: Planning for Your Digital Wealth

When it comes to planning for Bitcoin or other cryptocurrencies, there are a few practical steps you can take right now to ensure that your assets are passed down smoothly:

1. Create a Detailed Cryptocurrency Inventory : List all of your cryptocurrency holdings, including any Bitcoin, Ethereum, Litecoin, and other tokens you own. Don’t forget to include where these assets are stored (whether on a hardware wallet, a software wallet, or an exchange platform like Coinbase).

2. Store Your Private Keys Securely : Your private keys are the cornerstone of your crypto holdings. There are multiple ways to store them securely:

Hardware wallets (such as Trezor or Ledger) are physical devices that store your keys offline, providing the highest level of security.
Paper wallets involve printing out the private key and storing it in a safe location.
Password managers can also securely store private keys, but make sure the password manager itself is protected by multi-factor authentication.

3. Whichever method you choose, make sure your family knows where to find these keys.

4. Designate a Trusted Executor for Your Cryptocurrency : A digital executor is someone you trust to manage your digital assets upon your passing. This person should have clear instructions on how to access your crypto holdings. You can even choose a backup executor in case your first choice is unavailable.

By taking proactive steps—creating an inventory of your crypto holdings, securing your private keys, designating a trusted executor, and communicating your plans with your family—you can ensure that your digital wealth is passed on seamlessly to the next generation.

The future of money is digital, but the future of your wealth doesn’t have to be uncertain. Start planning today to secure your cryptocurrency legacy for tomorrow.

Ryan Villano is an attorney at Farrar and Williams PLLC which is conveniently located at 1720 Higdon Ferry Rd., Hot Springs, AR . To discuss your estate planning needs or to schedule a consultation, give us a call at (501-525-4401) or visit our website at [www.farrarwilliams.com].

Do I need an LLC?

Mon, 30 Jun 2025 17:46:10 GMT

Limited Liability Companies (LLC's) are a popular business planning structure. Whether you operate a large or small business or own rental property, an LLC may be something you should consider. An LLC is an entity that you obtain through the Secretary of State in the State where you conduct business. An LLC must have its own unique name as well as member(s) and officer(s) who own and control the LLC. The documents to form an LLC are generally prepared by an attorney and consist of Minutes, Agreement to Form, Operating Agreement and Certificates of Ownership.

An LLC is beneficial for several reasons. First, and perhaps foremost, is personal liability protection. For example, if your business is formed as an LLC and said business has liabilities (from debts, injuries such as a tenant getting hurt at the property, or otherwise), said liabilities do not become the LLC owner's personal liability. If the business fails, then such loss can be limited to the business and not extend to other personal assets of the owner. In addition to liability protection, LLC's offer many tax benefits. Rather than venturing into the many tax benefits, I would encourage my readers to explore the tax advantages of an LLC with your accountant.

LLC's are also very beneficial as an estate planning tool. For my clients that have a Revocable Trust, I typically advise that the LLC be owned by the Client's trust or that the Client transfer their LLC ownership to their trust. This allows for an LLC and the property held within to pass to your chosen beneficiaries without the need for probate. However, LLCs are generally subject to probate unless the interest has been assigned or designated to transfer upon the owner's death.

Prior to state law authorizing the formation of an LLC, people used General Partnerships and corporations for business planning. Corporations remain a viable entity to consider for business planning; however, General Partnerships have all but gone away as they offer no liability protection. Determining what type of entity best suits you and your business is something you should discuss with your attorney and accountant.

As with most business planning options, there are costs to consider when setting up an LLC. Attorney fees to establish, annual franchise tax, and accounting fees are all expenses involved with setting up and managing an LLC.

Should I have my estate plan reviewed and updated?

Fri, 27 Jun 2025 14:40:35 GMT

Whether you recently moved to Arkansas or you have always called Arkansas home, it is a good idea to have your estate plan reviewed by an attorney to ensure that it is current and still fulfills your estate planning goals. If you have not set up an estate plan, now is the time to do it.

The complications of moving from state to state are not difficult; however, there are still legal issues to be concerned with.

While your Last Will and Testament, Durable Power of Attorney, and medical directives will most likely be effective in Arkansas, your Durable Power of Attorney and medical directives typically need to be updated to include the statutes of the state where you reside.

Each state may have special exceptions to consider.

For example, if you have children that you are not providing for under your Last Will and Testament, Arkansas has a law, known as the “pretermitted heir law” that requires your Will to at least mention the child, even if you do not wish to leave that child an inheritance.

Likewise, if you have a deceased child leaving children, you need to mention those grandchildren’s names in your Will.

Failure to mention the child or grandchild can result in that person you wished to disinherit instead receiving a portion of your estate, despite the terms in your Last Will and Testament.

I often get asked about the estate or inheritance tax.

Fortunately, Arkansas has eliminated its state estate tax, so that is not a problem.

The federal estate tax still applies to estates in excess of $13,990,000 (per person) for 2025, and there are even larger estate tax exemptions for married couples.

Many estate plans for married couples have special provisions to maximize the exemption from estate taxes; however, those provisions need to be reviewed in light of the much larger exemptions in place as of 2025.

Do you still own real estate in another state? For example, many families own vacation condominiums in other states.

If so, you will want to plan for that to avoid “ancillary probate” (a probate court proceeding in another state). This can be an expensive and time-consuming legal problem for your surviving spouse or children.

Setting up a Trust is often the best way to avoid probate, including ancillary probates in other states and jurisdictions.

In summary, if you have moved here from another state, the laws are usually not significantly different from state to state.

However, we typically advise that you have an attorney review your out of state documents, and possibly make updates to your documents in accordance with the laws of the state where you currently reside.

An experienced estate planning attorney can advise you on any other issues that might affect your estate plan now that you are a resident of Arkansas.

Wesley W. Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas, and can be contacted at 501-525-4401 or by email at wesley@ farrarwilliams.com. The firm’s website is farrarwilliams.com.

Why Everyone Needs an Estate Plan or Powers of Attorney

Wed, 21 May 2025 13:08:08 GMT

A common misconception about estate planning is that it’s only for the elderly or the wealthy.

The truth is, none of us can predict the future — but we can take proactive steps to prevent unnecessary complications for our loved ones. Estate planning isn’t just about money; it’s about ensuring your wishes are carried out and protecting the people you care about most.

For younger families, especially those with minor children, having a Last Will and Testament is essential.

One of the most crucial reasons is to legally designate a guardian for your minor children in the event of your passing. Without a will, the court will decide who takes on this responsibility, which may not align with your wishes.

Additionally, if you pass away without a will — known legally as dying intestate — your assets will be distributed according to state law, which may not reflect your personal relationships. This can be especially problematic in blended families, where you may have a stronger bond with stepchildren than with biological heirs. Without a will specifying your intentions, stepchildren typically do not inherit under intestacy laws. Estate planning ensures that your wishes — not the state’s default rules — dictate what happens to your assets and your loved ones. No matter your age, having a well-structured plan in place provides peace of mind and protection for those you care about most.

Perhaps one of the most important documents that you should have in place is a Power of Attorney. Regardless of age, none of us can predict what the future may hold. A Power of Attorney is a legal document that grants one person (attorney-in-fact) the authority to act on behalf of another person (the principal). The agent can be authorized to handle financial matters, legal decisions, healthcare choices, or other specified tasks.

There are different types of Powers of Attorney, each serving a unique purpose:

• A Durable Power of Attorney allows your designated agent to manage your financial affairs if you become incapacitated.

• A Healthcare Power of Attorney enables someone you trust to make medical decisions for you if you are unable to do so.

Without these documents in place, your loved ones may be forced to go through costly and time- consuming court proceedings to gain the authority to act on your behalf. Decisions about your health, finances, and legal matters could be left in the hands of the courts — or worse, individuals who do not have your best interests at heart. Estate planning and Powers of Attorney are not just about protecting wealth — they are about protecting your family, your choices, and your future. By putting these essential documents in place, you ensure that your loved ones are spared unnecessary stress and uncertainty during difficult times. Taking action now, no matter your age or financial status, is one of the most responsible and caring decisions you can make.

Estate Planning for Families Without Children

Wed, 21 May 2025 13:04:42 GMT

Many families become motivated to create an estate plan once they have children, in order to name a guardian for their minor children and to ensure their minor children are cared for through the use of trusts.

Sometimes, the motivation may not be there if an individual or family does not have children.

However, an estate plan is just as important for those without children, as it is for those with.

Who would receive your estate assets if you passed away today? If you die in Arkansas without a will, intestate succession statutes govern who is to receive your estate and it may not be who you would want it to be. Intestate succession depends on whether you have living children, a spouse, parents and other close relatives.

Therefore, it is important to consider who you wish to be beneficiaries of your estate upon your death. Families without children might be in a unique position to be generous with charity or other family members and friends. You can make these wishes in your Last Will and Testament, or if you wish to avoid probate upon your death, you might consider creating a revocable living trust or other estate planning strategies.

Who would take care of your financial affairs if you became incapacitated? All of us run the risk of becoming incapacitated by reason of stroke, accident, or advanced age. Therefore, you should also consider executing a durable power of attorney.

This is the most basic building block of an estate plan. A power of attorney is a legal document where you appoint a trusted person as your agent to act for you regarding management of your assets in the event of your incapacity. A guardianship might be necessary if you become incapacitated and do not have a power of attorney in place.

Further, a living will and advance medical directives are important documents to consider. A Living Will is a document directing that your physician not take extraordinary medical steps to prolong your life in the event you are suffering from a terminal illness or injury from which you have little possibility of recovering. If you feel strongly about avoiding prolonged and expensive medical care in hopeless situations, you may also wish to utilize a Medical Power of Attorney. A Medical Power of Attorney is a document by which you appoint another trusted person to act on your behalf in the event you are unable to act for yourself, with regard to the hard decisions that must be made if you are terminally ill.

Estate planning for cryptocurrency

Fri, 28 Mar 2025 14:44:03 GMT

A new legal issue in estate planning is how to handle digital assets during one’s lifetime, and how to pass on these digital assets to future generations.

Digital assets can include a variety of things, but in this article, we will focus on cryptocurrency. Cryptocurrency can most easily be defined as a virtual currency that uses a heightened security technology called blockchain. Due to their intangibility, cryptocurrencies are stored and traded electronically. We are seeing more clients and estates with investments in cryptocurrency, such as Bitcoin. As a reference for readers who are new to cryptocurrency, one Bitcoin was valued at less than one cent in 2010, and as of the writing of this article, one Bitcoin is valued at $104,620.10. Additionally, the full market cap of all available bitcoin is a staggering $2.06 trillion. The rise in the value of cryptocurrency and a newfound public investing interest presents new legal challenges when crafting the best estate plan for each client.

One of the most important goals in estate planning is making it as easy as possible for your loved ones to access and administer your estate.

If a client currently holds or has plans to invest in cryptocurrency, it is crucial to obtain information on any cryptocurrency held by the individual and to include language or proper directions in the estate planning documents that permit fiduciaries to access, retain, and manage the cryptocurrency without limitations or liability. It is important to provide these powers to the fiduciaries in an estate or trust, because even if the decedent provides the fiduciary with their cryptocurrency passcode during their lifetime, the fiduciary’s use of the passcode after death — without the proper permissions in the decedent’s estate planning documents and related laws — could cause the fiduciary to violate federal or state privacy laws, terms of service agreements, or computer fraud and data protection laws.

Many trusts or wills created more than five years ago might not include the necessary language to properly and legally manage cryptocurrency.

At a minimum, a cryptocurrency investor who wants to establish a trust holding cryptocurrency should release a trustee from any duty to diversify and provide the trustee with the necessary indemnification.

However, as noted earlier, is important to ensure that doing so does not violate any applicable laws or terms of service agreements.

It may be that a specific gift of the cryptocurrency is contained within the Will itself, or a Memorandum is prepared to sit alongside the Will, detailing instructions on how to access the funds or the private key itself. It is generally not recommended that an individual share his or her passcode with others for security reasons, but once a passcode is lost, it can be virtually impossible to recover.

Leaving cryptocurrency to your loved ones after your death and avoiding probate requires more planning than traditional assets.

For example, Coinbase, a popular cryptocurrency wallet, does not support naming a beneficiary for individual accounts and they require estate planning documents or proper probate court documents to transfer a Coinbase account. With proper estate planning, you can simplify the process for your beneficiaries and ensure that they inherit your cryptocurrency while avoiding unnecessary delay or expense.

Wesley W. Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas, and can be contacted at 501-525-4401 or by email at wesley@ farrarwilliams.com. The firm’s website is farrarwilliams.com.

The importance of long-term care planning

Fri, 28 Mar 2025 14:06:58 GMT

Did you know that nursing home care in Arkansas can be nearly 70% more expensive than assisted living facilities? This staggering statistic underscores the importance of planning for long-term care — not just for yourself, but for your loved ones, as well.

As you look ahead to 2025, here’s a New Year’s resolution worth adding to your list: Take time to explore your options and make a plan for long-term care. It’s not exactly a topic people enjoy thinking about, let alone discussing. In fact, the discomfort around aging is one of the biggest reasons many people delay or avoid proper estate and long-term care planning. If this sounds familiar, don’t feel guilty — you’re not alone.

Long-term care insurance is often the best way to prepare for the future. This type of insurance can help you avoid the high costs of nursing home care by covering expenses for in-home care or assisted living. Despite its advantages, most people don’t purchase long-term care insurance, leaving them with limited and often less desirable options when the need for care arises.

Here’s the reality: without long-term care insurance, your options for covering nursing home costs are limited to two primary paths:

1. Private Pay: You can pay out of pocket if you have sufficient assets. However, with nursing home costs averaging between $7,000 and $10,000 per month, this method quickly becomes unsustainable for most families.

2. Long-Term Care Medicaid: This government program can help cover nursing home costs, but it comes with strict income and asset requirements. The eligibility rules can vary depending on whether you’re single or married, adding another layer of complexity to the process.

Unfortunately, without long-term care insurance, Medicaid is often the only viable option. However, it’s important to note that Medicaid typically does not cover in-home care, which means nursing home care may become unavoidable for those relying solely on this program.

Over the years, our firm has helped hundreds of individuals and families navigate the challenging process of obtaining long-term care Medicaid eligibility. Our expertise ensures that you don’t have to face these hurdles alone.

Now is the time to take control of your future. Planning ahead for longterm care not only protects your assets but also provides peace of mind for you and your loved ones. Don’t wait until it’s too late — start the conversation today.

Family conversations

Fri, 28 Mar 2025 14:05:53 GMT

If you are like me, you will be spending a lot of time with family and friends this holiday season. I often encourage clients to use this family time as an opportunity to discuss their estate plan and as a way to instill values in their children or grandchildren. I was recently reminded of this by Warren Buffett’s most recent shareholder letter, where his one suggestion to all parents, whether they are of modest or staggering wealth, was when your children are mature, have them read your will before you sign it.

While it might not sound like the merriest conversation to have around the dinner table, it can often help avoid surprises and even increase family harmony. Families that speak freely about these matters might avoid surprises and can oftentimes make better plans involving choice of Executor or Trustee, succession plans for a family business, and long-term care decisions.

If you have never considered an estate plan, this might be a good time to seek your family’s opinion. As Warren Buffett continued in his letter, be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death. You don’t want your children asking “Why?” in respect to testamentary decisions when you are no longer able to respond.

The conversation might be less about what the family thinks of your current estate plan and more about what the family’s role is in the event of your incapacity or death. It is important to let the person you have named as your agent under a Power of Attorney, Executor or Trustee know that they have been named, in order that they understand their responsibilities. It might even be a good idea to introduce your Executor or Trustee to your estate planning attorney.

These conversations can also encourage your children to consider their own estate plan, including naming a guardian for their minor children through their Last Will and Testament, or setting up a family trust.

How each family handles these delicate conversations depends on personalities and preferences of the family. Perhaps this conversation should be held through a series of talks instead of one large one. It might be best to talk only to the child(ren) you have named as Executor or Trustee, or even to talk separately to each child to hear their opinions and fears.

Daughters and sons-in-law

Fri, 28 Mar 2025 14:04:49 GMT

Many of my senior clients report to me that they are having conflicts with their daughter-in-law or son-in-law. While none of us like to discuss tensions in our families, the fact still remains that in many families, you may not have a close relationship with the spouse of your adult child. Indeed, sometimes these relationships are quite unpleasant and even hostile.

Many seniors wish to take steps to ensure that any inheritance received by their adult child does not ultimately pass to the inlaw with which the senior has a bad relationship. Rather, many seniors would rather that their child’s inheritance, instead, ultimately pass to their grandchildren (either in the event that the adult child should predecease, or alternatively in the event the adult child receives the inheritance).

If you wish to prevent your daughter-in-law or your son-in-law from receiving a part of your estate, how do you do this?

First, you need to be clear in your estate planning documents that if your adult child should predecease you, their share passes to your grandchildren. Further, you can also include a direction that the adult child’s inheritance continues in a trust that ultimately reverts to the grandchildren and not to the in-law. This can give your adult child generous access to his or her inheritance but eliminate the rights of the in-law of whom you are not fond.

Eliminating the possible inheritance rights of your son-in-law or daughter-inlaw is not difficult to implement as part of your overall estate plan. It can be a good solution for the many seniors who just cannot abide the thought that an inlaw, who has a bad relationship with the senior, might receive a large portion of the seniors’ estate.

Out of state new arrivals

Fri, 28 Mar 2025 14:03:39 GMT

Did you recently retire or move to Arkansas from another state? If so, you might want to read this article. The legal complications of moving from state to state are not as complicated as they were in past years. But you still want to be “street smart” about the tax and legal issues that can differ from one state to another.

The good news is that you will probably not owe any tax on the sale if your profit was less than $500,000 (this exemption may vary from state to state, but the federal exemption for a married couple is $500,000 in profit on sale of the principal residence)

What about your will, trust and power of attorney? Are these documents legal in Arkansas?

As a general rule, the answer is yes. A legal document properly executed in another state is legal in Arkansas. But then the legal system always has exceptions to consider.

Do you have children that you are not naming your will?

Arkansas has a law, known as the “pretermitted heir law” that requires your will to at least mention the child, even if you do not wish to give that child anything under your will.

Likewise, if you have a deceased child leaving children, you need to mention those grandchildren’s names in your will. Failure to mention the child or grandchild can result in that person you wished to disinherit instead of receiving a large portion of your estate despite the terms of your will to the contrary.

What about Arkansas estate tax?

Fortunately, Arkansas has eliminated its state estate tax, so that is not a problem.

The federal estate tax still applies to estates in excess of $13.61 million and there are even larger estate tax exemptions for married couples.

Do you still own real estate in another state? For example, many families own vacation condominiums in Florida or Colorado.

If so, you will want to plan for that to avoid “ancillary probate,” which is a probate court proceeding in another state.

This can be an expensive and time-consuming legal problem for your surviving spouse or children.

In summary, if you have moved to Arkansas from another state, the laws are usually not significantly different from state to state.

But you still may want to double-check your will or trust to avoid any legal problems that may be unique to your family situation.

Planning for children with disabilities

Fri, 28 Mar 2025 14:02:20 GMT

People with disabilities or handicaps face many obstacles in life, including costly heath care and limited ability to earn money. Parents with disabled children must carefully consider their estate plan to make sure the long-term needs of a disabled child are provided for. This type of planning is often referred to as “special needs” planning. The goals of special needs planning are different from conventional estate planning. Many children with disabilities benefit from government benefit programs such as SSI and Medicaid.

These government programs require the disabled person to have limited income and assets in order to be eligible.

While living, the parents can assist with the needs of their disabled children without a loss of benefits.

However, at the death of the parent or parents, specialized planning is required to make sure the disabled child does not lose their benefits based on an inheritance.

In order to preserve the government benefits that are so desperately needed for a person with long-term disabilities, the parent can structure the inheritance in the form of a Trust, known as a “Special Needs Trust” or SNT.

A SNT provides for the disabled child’s needs over and above what is provided by the government benefit programs.

There are limits on what the funds from a SNT can be used for; however, they can provide for the disabled child’s long-term benefit and allow the health costs to be paid by the government programs in place.

The SNT also names a Trustee and Guardian for the disabled child so that the proper persons are in place to look after the well-being of the disabled child.

An SNT can revert back to other family members at the death of the disabled child.

In addition to planning for the inheritance of a disabled child, there are other legal issues a parent must consider once the “child” has attained adulthood.

If the child has mental deficiencies then the parents may need to file to become the legal Guardian of the child at age 18.

In order to learn more about the benefits of structuring your estate to protect the needs of your family, please consult with an experienced estate planning attorney.

The peace of mind that comes from a well-thought-out estate plan is worth its weight in gold!

Probation avoidance strategies

Fri, 28 Mar 2025 14:00:57 GMT

Probate is a court-supervised proceeding where a person’s Last Will and Testament is enforced and administered at the time of death. Since it is a court-supervised process, it can be quite expensive (up to 6% of the estate value) and time-consuming (minimum of six months in Arkansas). Based on these issues, most seniors attempt to avoid having their estate pass through probate. Estate planning often focuses on probate avoidance. This article will focus on some probate avoidance strategies that should be avoided or at least carefully considered.

Before addressing strategies to avoid probate that are undesirable, I would like to provide a brief explanation on the best probate avoidance planning, which is the use of a Revocable Living Trust. Trusts are the most popular estate planning document primarily because they avoid probate while at the same time thoroughly addressing all issues that can come up in administering an estate at death. A Trust is simply an agreement that not only controls your assets while you are alive (with you serving as your own Trustee and remaining in full control), but also controls the disposition of your assets at death (much like your Will would).

Based on the perceived high cost of setting up a Trust, many people attempt to avoid probate by other means, most commonly through joint accounts, payable on death (POD) accounts, and transfer on death (TOD) accounts.

Joint accounts are when a child or other beneficiary is named as a joint owner. POD accounts designate a beneficiary(s) at death and are available for most bank accounts. TOD accounts (much like POD accounts) are allowed for most investment accounts.

The problem with these planning strategies is that they do not plan for the “what if’s” in life, such as the prior death of a named beneficiary or a beneficiary who has financial or personal problems. They also do not require the payment of your final expenses such as funeral expenses. POD and TOD accounts simply distribute the funds outright to the named beneficiary with no other contingency plans. Joint accounts create an additional risk in that the named joint account owner is an owner of your account, thereby subjecting the assets in said account to their creditor and marital claims. This author strongly discourages the use of joint accounts. If your family needs access to your funds in the event of your incapacity, your estate plan will have a Power of Attorney to allow such access for your benefit. For this reason, there is no need to have a joint account owner (other than your spouse) with a proper estate plan.

In my experience, these “shortcut” strategies often have poor results and end up costing more in legal fees to clean up. Further, based on unattended consequences as a result from such strategies, your family may end up in conflict with one another over what your true intentions were. If you or a loved are interested in avoiding probate, I encourage you to discuss the pros and cons of the various strategies with an estate planning attorney.

Wills, probate and estate taxes

Fri, 28 Mar 2025 13:59:41 GMT

There is much confusion about the relationship between wills, probate, and estate taxes. This article will attempt to explain these subjects.

First, I will address the confusing topic of wills and probate. If you die leaving a last will and testament, and you own property that is just in your name (i.e. property not in joint ownership with someone else or set up in a beneficiary designated account), your will must go through probate.

There is a common misconception that a will avoids probate. This is incorrect; a will must go through the probate process. The probate court, which is a division of the circuit court, determines a will’s validity and oversees the administration of the will. So to summarize, if your estate plan consists only of a will, then your estate will go into probate.

But what about the family who holds everything in joint ownership (either with spouses or children)? In that case, the will does not operate to transfer the assets, since the joint ownership controls (so the estate is not required to go through probate). However, joint ownership is often a poor planning choice as the joint owner’s creditors and/or spouse could attach to your assets.

Finally, just what is probate and why does it have such a bad name? Probate is the process of a will being filed at the courthouse, and an executor being appointed by the probate court. It is in essence a court-supervised administration of your estate. This procedure involves lawyers, courts, fees (probate fees can be up to 6% of your estate value in Arkansas), and delays (minimum time for probate in Arkansas is six months). These are the primary reasons probate is so unpopular with the public. The process is also a public record so a nosy neighbor can check on your affairs!

What is the best solution to avoid probate? A living trust avoids probate; with none of the disadvantages of joint ownership (joint ownership assets with your children can be subject to their IRS liens, lawsuits or divorce claims). Living trusts have become increasingly popular as the costs to establish a trust are quite reasonable, especially when you factor in the savings you get from avoiding probate. At our firm, a typical living trust estate plan costs approximately $1,950 (for a single person), whereas a basic will plan costs approximately $600. So even though the trust costs more on the front end, your family saves a lot of time and money by avoiding probate.

Next, there is confusion between “probate” and “estate taxes.” These are completely separate problems. Probate is a court-supervised proceeding to transfer assets owned by a deceased person at death. Estate taxes are federal and state taxes levied on the total assets in a person’s estate (whether in a trust or a joint account or otherwise). In other words, a family can be faced with probate and no estate taxes, or estate taxes and no probate. The goal of a good estate plan is to avoid both probate and estate taxes. Many people think you only need a trust if you have an estate tax problem, but as this article shows, probate is involved even when estate taxes are not.

What is the best solution to avoid estate taxes? First, only families with assets in excess of $13.61 million (as of 2024) are subject to federal and state estate taxes. Secondly, if your family has a larger estate, and you are married, proper use of “A-B Trusts” can double your exemptions to $27.22 million, since both spouses have an exemption.

In summary, many people assume that since they have a will, they will avoid probate. This is a common misconception. The goal of a good estate plan is to avoid both probate and also state and federal estate taxes.

Procrastination in estate planning

Fri, 28 Mar 2025 13:58:27 GMT

Did you make any New Year’s resolutions for 2024? Maybe you planned to eat healthier, spend more time with family, or learn a new skill. Now that half the year has passed, it is a good time to evaluate where you stand with those resolutions and maybe resolve to follow through with them. Eighty percent of New Year’s resolutions fail by February!

Procrastination is often listed as the number one estate planning mistake that most Americans make. It is human nature for us to not want to think about death or disability. However, there can be some major risks or unintended consequences when you procrastinate.

First, what if you die unexpectedly? In the event you die without an estate plan, your family will be put in the difficult position of trying to dispose of your assets without any specific guidelines from you. They might have to go through the probate process, which can be costly and time consuming. It could also mean unintended inheritance rights or increased estate taxes. If you do not have an estate plan and die intestate, the state of Arkansas has intestate succession laws that govern who will receive your estate upon your death. A second risk of procrastination is that of disability. If you become disabled and do not have at the least, a durable power of attorney, your family may be faced with the need to establish a court supervised guardian. A durable power of attorney will permit your spouse, or your children, to have the authority to act on your behalf in the event of your disability. A third risk of delay is that of the possibility that a terminally ill person will be faced with the difficult task of implementing an estate plan in the last weeks of their life. When estate planning is postponed until a person is terminally ill, several major problems can arise. First, there is the basic problem of a terminally ill person having to deal with the paperwork. Secondly, an estate plan prepared when a person is near death is subject to attack by reason of questions of possible incapacity (either from illness or medication).

Finally, many terminally ill persons simply do not have the stamina to go through the decision-making process that is involved in estate planning. A final consideration in a comprehensive estate plan is preplanning one’s funeral so as to avoid the difficulty of your family being required to make funeral decisions within hours of your death. Many people go into detail about the type of funeral services they wish to have, the pallbearers, the cost, etc. You are encouraged to contact your funeral director to preplan your funeral.

In summary, for the benefit of both your own peace of mind and that of your loved ones, you should not postpone the preparation of your estate plan. Otherwise, you run the risk of creating additional stress and expense for your family, and possibly even yourself. Do not make the number one estate planning mistake in 2024!

Transferring real estate outside of probate

Fri, 28 Mar 2025 13:56:46 GMT

In Arkansas, all assets in a decedent’s estate must go through probate, or if the assets total less than $100,000, a small estate can be utilized. When a decedent’s estate contains real estate, typically a full probate is needed.

A probate proceeding is a minimum six-month process and requires court approval to sell the property during the probate proceeding. Real estate in a probate proceeding cannot be transferred to a beneficiary or heir until the probate court authorizes final distribution after the estate has been administered.

A central theme when meeting with clients is that they want to avoid probate for their beneficiaries. For real estate, there are three typical ways you see property transferred to your beneficiaries without the need for probate. One option is adding a co-owner on the property with you. The drawback to this option is that you now open the property up to the creditors of the person or persons you named as a co-owner and the new co-owner will not receive a step up in tax basis because they did not inherit the property.

To ensure that your beneficiaries receive the most favorable tax treatment, we recommend the use of a revocable trust or a beneficiary deed to avoid the need for probate but still receive the benefits of inheriting the property. The author notes that this article only discusses the favorable tax treatment of revocable trusts and not irrevocable trusts.

For a revocable trust, the real estate is transferred to the trust by way of a deed, and ownership of the property is transferred to the trust, then from the trust to your beneficiaries, avoiding probate. In some certain cases, we may recommend the use of a beneficiary deed to a trust as well. You should consult with an estate planning to determine the best plan for your situation.

For clients that are looking for a simple and easy solution to transferring their property without probate, we recommend a beneficiary deed. A beneficiary deed, also referred to as a transfer on death deed, does not take effect until the death of the owner or owners and goes automatically to the person or persons named to inherit without the need for probate court proceedings.

Another benefit to a beneficiary deed is that the Department of Human Services may only make a claim against the estate of a deceased recipient for the amount of any benefits distributed or paid or charges levied by the department, such as Medicaid or long-term care services. Because a beneficiary deed keeps real property out of a decedent’s estate, it is not subject to claims by the Department of Human Services.

If you have not made plans for your real property at your passing or want to explore any new planning options available, you should consult with an elder care attorney to make sure you are achieving your estate planning goals without subjecting your assets to unnecessary risks or claims.

Making things easy for your surviving spouse

Fri, 28 Mar 2025 13:50:07 GMT

Most spouses have a goal of not leaving their surviving spouse with a

“mess” in settling their estate. So what can you do to make sure that your spouse does not have estate problems following your death?

First, do you have a master list of all of your legal and financial information?

This should include a summary of all your investment accounts, beneficiary designations you have created for your retirement accounts, life insurance information (usually naming your spouse as a primary beneficiary, and children second), and your computer passwords. Have you discussed with your spouse your annual budget? How much should your spouse plan on spending each year? Which account should she tap first for living expenses? Many retirees postpone tapping your IRAS until age 72 if you have other assets available in order to obtain maximum income tax deferral).

You can simplify routine monthly financial transactions through direct deposits into your bank account and direct bill payment. For example, most brokerage companies will set up your monthly distributions so the funds are automatically payable directly into your checking account. What advisers do you recommend for your spouse, including tax accountant, investment adviser, or home insurance agent? You might consider having your spouse accompany you to your annual meetings with your accountant or investment adviser so that your spouse can become familiar with your financial affairs.

Finally, your spouse will want to remember to handle those pesky annual tax reporting tasks. This includes assessing your county personal property, paying real estate taxes by Oct. 10 of each year, paying quarterly IRS estimates, and organizing your income tax information to be delivered to your accountant each spring.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas, and can be reached at 501-525-4401 or by email at wesley@farrarwilliams.com. Wesley can answer any questions you have about this subject.

New year, new (or updated) estate plan

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:43:52 GMT

I am a firm believer that everybody — rich, poor, and those somewhere in-between — needs an estate plan. If you have never thought about an estate plan, perhaps that should be your New Year’s resolution.

If, however, you have an estate plan already in place, but have not reviewed it or updated it in the past several years, perhaps that should be your New Year’s resolution. It is a common misconception that once you execute all of your estate planning documents, they do not need further attention.

However, it is a good idea to review your estate plan annually to ensure that it is current and still fulfills your estate planning goals in the event you become incapacitated or pass away.

It is also a good idea to review your estate plan if major circumstances have changed since you executed or last updated your estate planning documents. The following is a list of some family circumstances that could warrant an update to your estate plan.

1. Marriage or divorce. In the event you get married, remarried, or get a divorce, you need to make any necessary adjustments to your estate plan and your beneficiary designations.

2. The birth or adoption of a child. Your Last Will and Testament needs to include guardianship provisions for your minor children in the event something happens to you and/or your spouse.

3. The death of a beneficiary. Chances are, updating your estate plan in the midst of losing a family member is far from your mind. However, it is an important step that must not be forgotten.

4. A change in trustees and/or personal representatives. Are your nominees still able and willing to serve?

5. Moving to a new state. Upon moving to a new state, it is important to have a lawyer review your current estate plan to ensure that it complies with state laws.

6. A substantial increase in assets or income. If your assets are over the federal estate tax limits ($13,610,000 in 2024), you will likely want to structure your estate in a way that minimizes estate tax.

7. Changes in the law. You will need to speak to an experienced attorney to make any appropriate changes to your estate plan if a major law changes regarding estate tax, probate, etc.

8. Illness or incapacity. Have you outlined your desires in the event you become incapacitated in your estate plan? What if one of your beneficiaries becomes incapacitated?

These life changes can lead to disputes among your family that may have been avoided with a periodic review or update to your estate plan.

Structuring your children’s inheritance through a trust

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:40:14 GMT

Many of my clients indicate that their adult children are having a difficult time, especially from a financial standpoint.

Many are experiencing difficulty holding jobs, keeping marriages together, and in some instances, suffering from substance abuse. This is a difficult topic to discuss, as parents often blame themselves for their children’s problems. This type of problem has become somewhat of an epidemic, which makes estate planning vital to protect for the long-term welfare of families.

The establishment of a well-thought out trust is the best solution. A trust can minimize the ability of the child to lose their entire inheritance through bad decision-making, reckless behavior or through a divorce. Also, certain types of trusts (often called spendthrift trusts) can protect the inheritance from the claims of creditors. If you have a child with creditor or marital problems, you should consider structuring their inheritance so as to protect against these very common risks.

These continuing trust funds are often called “dynasty” trusts or “legacy” trusts as they are designed to shelter assets for children as well as grandchildren or other beneficiaries, so that the inheritance can serve as a family legacy. The trusts are normally created in the parent’s revocable living trust as a continuing trust share. In essence, the revocable trust of the parent is divided into continuing trust shares for the children with each trust drafted to meet the needs of each respective child. Typically the goal of such trusts is to ensure the comfortable and long-term security of your family, but not to allow for the purchase of luxury items.

However, your trust provisions can be drafted as you desire and tailor-made for your unique family situations. Some clients elect to structure the children’s trust share to allow for a monthly “allowance” from the trust, while others elect to limit the distributions from the trust based on the income that the trust generates.

One additional factor to consider for these continuing trusts is who should be named as the trustee of each continuing trust share. Sometimes it makes more sense for an independent, corporate trustee to manage your children’s funds, to insure that your goals are being met following your death.

As stated above, this kind of trust can ultimately protect your grandchildren as well as your children. The trust can provide college assistance for your grandchildren, or other needs related to their health, education, maintenance or support. In order to learn more about the benefits of structuring your family’s inheritance, please consult with an experienced estate planning attorney. The peace of mind that comes from a well thought out estate plan is worth its weight in gold!

Protection of your estate from liabilities

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:36:33 GMT

Many of our clients look for advice regarding the structure of their estate plans, which is certainly a worthy goal; however, many clients fail to recognize the importance of protecting their assets from liabilities, especially unforeseen creditors. This article will focus on some basic strategies to consider as a part of your overall estate planning.

There are many unforeseen liabilities in life. For example, personal liability associated with the ownership and operation of a business is a significant risk. In the event a business venture suffers loss, or worse yet, a customer is injured while doing business on your premises, personal liability can result as a result of such event. One way to protect your personal assets from business-related liabilities is to have your business set up as a separate legal entity. The most popular entities are the limited liability company (LLC) and business corporation. Both of these entities help shield your personal assets from business liabilities. Please note that in order to have such protection, the entity must be properly set up and maintained as a separate legal entity. Paying personal bills directly from your LLC or corporation jeopardizes the liability protection. There may also be tax benefits from having your business incorporated or set up as an LLC that you should discuss with your accountant. As a planning tool, we often recommend that our clients who own rental property or businesses have said businesses set up as a LLC or corporation. However, we also suggest that the business maintain appropriate business liability coverage, which offers additional protection from claims.

Another liability that many people overlook (or assume they have adequately covered), is personal liability associated with a home(s) and automobile(s). Most people do not maintain enough liability insurance on their home and automobile. The minimum automobile liability coverage in Arkansas is approximately $50,000, which will not begin to cover the actual costs of a serious accident. If your insurance coverage is inadequate, then personal liability may result. For this reason, we encourage our clients to increase their liability coverage on their home and automobiles to insure against this significant risk. In addition to increasing your liability coverage, we also recommend that our clients consider obtaining a separate policy for personal liability known as an “umbrella” liability policy. In essence, an umbrella policy offers additional personal liability protection over and above the liability protection that you may already have on your automobiles and home. Such policies are available at reasonable costs. We encourage our clients to discuss an umbrella policy with their insurance agent as a part of a comprehensive estate plan.

A comprehensive estate plan should factor in many things, and in particular, personal liability protection. People work hard to accumulate assets and to have such assets subject to liability unnecessarily must be avoided. The use of business entities such as LLCs and corporations are a good planning option that should be considered. Additionally, setting higher liability limits and obtaining an umbrella personal liability policy are key components to insure against such liabilities. A comprehensive estate plan should include these goals so as to protect assets for the benefit of one’s family.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas, and can be reached at 501-525-4401 or by email at wesley@farrarwilliams.com . Wesley can answer any questions you have about this subject.

Estate privacy in the 21st Century

kname@customerswhostick.com (Kyle Name) — Tue, 16 Apr 2024 13:33:57 GMT

We are seeing more clients come in for estate planning with concerns about their privacy, especially in probate proceedings.

Any documents admitted in a probate proceeding will be publicly accessible for viewing, including an individual’s last will and testament, inventory of assets, and names and addresses of heirs. While a last will and testament allows an executor to distribute your assets pursuant to your wishes, it must be filed and admitted to probate in order to be valid. In Arkansas, we have a very good public court records system, and almost all documents in a probate proceeding will be easily accessible to the public. The main way to avoid your estate being publicly viewable in a probate proceeding and to protect your privacy is by setting up an estate plan using a revocable or irrevocable trust.

As mentioned above, trusts can be administered outside of court oversight and out of the view of the general public. For example, when the grantor of a trust passes away, under Arkansas law, only the beneficiaries of a trust are entitled to copies of the documents. If all beneficiaries consent to the terms of the trust and sign waivers, we can move forward with distributing the assets pursuant to the terms of the trust. In a probate proceeding, we must wait at least six months before distributing assets so that creditors have time to file claims against the estate. Additionally, in a probate proceeding, we must get approval from the court to distribute assets to beneficiaries, and all of this information will be accessible by the public.

With a trust plan, there may be instances where certain assets were not titled in the name of the trust, and a last will and testament will need to be filed with the probate court to correctly transfer title to these assets to the trust. This type of will is often called a “pour-over will.” For individuals with a trust plan, their last will and testament’s contain a pour-over provision, which states that all assets not in the name of the trust at death are to be transferred to the individual’s trust. While this would be viewable by the public, the public won’t be able to see the bulk of the assets that were already in the trust at the time of a person’s death and the public won’t be able to see who a person’s beneficiaries are. The probated assets are transferred to the trustee of the trust, who can then administer the trust outside of the probate court pursuant to the terms of the trust. This provides privacy for your beneficiaries as the general public won’t see what assets they received nor be able to ascertain the amount a beneficiary inherited.

While a trust plan will not guarantee that all of your assets avoid probate, a correctly drafted and funded trust plan will limit the publicly available information to the public and will shield your beneficiaries and their inheritance from publicly accessible documents.

What estate planning should a young adult consider?

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:31:11 GMT

What is the proper age to think about a living will or a power of attorney? What about a will or trust? No college student or parent of one wants to think about estate planning documents like these. But the reality is, there are a few basic documents that even the college freshman (or any adult — 18 years of age or older) could benefit from and that become even more important for young adults in their 20s or 30s.

If something happens to your adult child, you as the parent have no right to see their medical records because of the “HIPAA” rules. Legally, parents are not able to make health care decisions without a signed health care directive naming them as agents authorized to act on the adult child’s behalf while they are incapacitated or unable to speak for themselves. For this reason, basic medical directives are a good idea at a young age.

A power of attorney is a document that a young adult could also benefit from. Powers of attorney name an agent to act on the young adult’s behalf if they are unable to take care of their financial affairs for health reasons. If you, as the parent, are named as the power of attorney for your young adult child, you would be able to pay their bills or handle their financial affairs as needed in an emergency situation. A power of attorney is inexpensive and easy to set up so there are no excuses!

While most young adults do not have substantial assets, a simple will might be needed to designate who should receive his or her assets and belongings in the event of death (even if it is just a baseball card collection). Wills become especially important once young adults have their own children, as this is the document that will name guardians for their minor children, as well as establish trusts for the minors to make sure the assets are protected and managed properly for the minor children.

These simple estate planning documents will give the young adult as well as their family peace of mind in knowing that a plan is in place in case a tragedy occurs.

How to plan for long-term care costs

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:29:07 GMT

It is a reality that, as we live longer, the need for long-term medical care continues to rise. A question I often get asked is, “How do we plan for the cost of long-term care, including nursing home costs?”

Long Term Care Insurance is by far the preferred option, since it offers the possibility of keeping people out of nursing homes by paying for care in the home or in assisted living facilities. Statistics show that the vast majority of people do not purchase long-term care insurance and are forced to rely on other alternatives to pay for long-term care costs. Unfortunately, the other alternatives often do not include care in the home and instead require the long-term care to be in a nursing home.

Without insurance, there are two primary options for the payment of nursing home costs.

First, a person may have sufficient income and assets to pay for such costs on a private pay basis.

However, since such costs average in excess of $5,500 per month, the private pay option is not a long-term solution for most people.

The second option is the Long Term Care Medicaid Program. Since this is a government benefit program, there are asset and income requirements to be met in order to qualify. The rules differ depending on if you are single or married. As a result of the eligibility determination process, many clients structure their estate plans in a way to enhance their eligibility in the event such costs become necessary.

The remainder of this article will focus on one of the more popular estate planning tools used to enhance Medicaid eligibility for long-term care costs.

A special type of trust often referred to as an “irrevocable trust” is a popular planning option. I prefer to call this trust a Medicaid Asset Protection Trust (MAPT). It is important to note that most trusts that are set up are revocable trusts that offer no protection from nursing home costs. In most cases, in order to gain eligibility, one must either give away assets or structure assets in a MAPT. Gifting assets to your children is usually a poor option, since those assets then become exposed to the children’s debts and liabilities, divorces, etc. For these reasons, the MAPT may be a preferred option as it leaves you in control.

The primary disadvantage of the MAPT is that it limits you and your spouse to the income earned on the Trust assets, as the principal is restricted and protected for the benefit of your remainder beneficiaries, usually your children. The MAPT does allow you to have full use and benefit of your home and real property, including the right to sell it (provided the proceeds stay in the trust).

Donations through your IRA

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:25:37 GMT

Starting at age 73, the IRS mandates IRA owners to take annual income withdrawals, known as Required Minimum Distributions (RMDs). Retirement-age individuals and couples may not want to take an RMD for a variety of reasons. For example, they may have other sufficient sources of income for certain years. Additionally, the withdrawal, which is subject to ordinary income tax, may push individuals or couples into a higher tax bracket, which can have adverse impacts on Social Security payments and Medicare benefits.

Individuals and couples over age 70 and a half years old can take advantage of a qualified charitable distribution (QCD). The QCD allows a donor to instruct an IRA administrator to send up to $100,000 per year, which could be all or part of a person’s annual RMD, to one or more qualifying charities. Couples who submit tax returns with married filing jointly status each qualify for annual QCDs of up to $100,000, for a potential total of $200,000. It should be noted that 401(k), 403(b), and ongoing SEP or SIMPLE plans do not qualify for the QCD gift option, but assets from these accounts may be rolled over into a traditional IRA and thereafter gifted to charity using a QCD.

What does this law permit you to do? If you are an IRA owner over age 70 and a half years old, you can direct that gifts be made from your IRAs of up to $100,000 to a religious organization or charity of your choice. This is done by directing your IRA plan administrator to make a direct distribution to the charity (you do not want to withdraw that money into your own name, and then make the gift because this would disqualify the favorable tax treatment).

What economic benefit do you get from taking advantage of this law? Although the gift from the IRA cannot be claimed by you as a charitable deduction, the IRA payout does not increase your taxable income as would normally be the case. For families with higher income, this means you avoid raising your adjusted gross income in a way that could trigger higher Medicare premiums or taxes on your Social Security benefits.

Who should consider taking advantage of this tax break? Only families who wish to make fairly large gifts to charity, and have substantial annual taxable income really benefit from this tax break.

Some probate avoidance strategies

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:22:16 GMT

In my experience, these “short cut” strategies often have poor results and end up costing more in legal fees to clean up. Further, based on unattended consequences as a result from such strategies, your family may end up in conflict with one another over what your true intentions were. If you or a loved are interested in avoiding probate, I encourage you to discuss the pros and cons of the various strategies with an estate planning attorney.

When are guardianships needed?

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:17:36 GMT

A guardianship is a court proceeding in which a person is declared incompetent by a court and a guardian is appointed by a court to have the care and custody of the person or of the estate, or both, of an incapacitated person. A guardianship is a public court proceeding that may be avoided, in most cases, by having a power of attorney executed as a part of your estate plan.

Without a durable power of attorney in place, a guardianship is sometimes needed when an incapacitated person is unable to manage their own affairs. Oftentimes a guardianship is sought when an individual is unable to pay their own bills or properly manage their financial affairs, needs to be transferred to a short or long-term care facility due to failing health, or there is a dispute regarding an individual’s healthcare or financial needs. When there is no proper estate plan in place, no one is authorized to make decisions on the incapacitated person’s behalf, and therefore a guardian might need to be appointed.

A court hearing is required to initiate a guardianship where the alleged incapacitated individual has the right to be present, be represented by counsel, present evidence, cross-examine adverse witnesses, remain silent and require the attendance of the medical professional who prepared an evaluation. If it is found that the individual is substantially without capacity to care for himself or his estate, a guardian for the person or estate, or both shall be appointed.

It shall be the duty of the guardian of the person, consistent with and out of the resources of the ward’s estate, to care for and maintain the incapacitated individual. A guardian of the estate is responsible to exercise due care to protect and preserve the estate; to invest it; to account for it faithfully; and at the termination of the guardianship, to deliver the assets to the persons entitled to them. Guardians have the duty to report to the court, at regular intervals, or as the court may direct.

Alternatively, a durable power of attorney is a document by which you delegate to another person or institution the authority to act for you if you are disabled. However, a power of attorney must be executed while you have the capacity to execute a legal document. Proper estate planning can minimize the need for court oversight in your personal or financial affairs.

Do I need an LLC?

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:07:16 GMT

Limited Liability Companies (LLC’s) are a popular business planning structure. Whether you operate a large or small business or own rental property, an LLC may be something you should consider.

An LLC is an entity that you obtain through the secretary of state in the state where you conduct business. An LLC must have its own unique name as well as member(s) and officer(s) who own and control the LLC. The documents to form an LLC are generally prepared by an attorney and consist of Minutes, Agreement to Form, Operating Agreement and Certificates of Ownership.

An LLC is beneficial for several reasons. First, and perhaps foremost, is personal liability protection. For example, if your business is formed as an LLC and said business has liabilities (from debts, injuries such as a tenant getting hurt at the property, or otherwise), said liabilities do not become the LLC owner’s personal liability. If the business fails, then such loss can be limited to the business and not extend to other personal assets of the owner. In addition to liability protection, LLC’s offer many tax benefits. Rather than venturing into the many tax benefits, I would encourage my readers to explore the tax advantages of an LLC with your accountant.

LLCs are also very beneficial as an estate planning tool. For my clients that have a Revocable Trust, I typically advise that the LLC be owned by the Client’s trust or that the Client transfer their LLC ownership to their trust. This allows for an LLC and the property held within to pass to your chosen beneficiaries without the need for probate.

Pitfalls of gifting and joint ownership of assets

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:04:57 GMT

There is a popular misperception among many seniors that in order to protect their assets from creditors, including the cost of nursing home care, they should consider gifting their assets to their children. There are three significant problems inherent with such an asset transfer strategy.

First, the laws that govern eligibility for government-funded nursing home benefits (Medicaid), provide for a 60-month “look-back” period designed to capture gifting of assets. This results in the person making the gift being ineligible for any Medicaid benefits for a period of time of up to 60 months (and potentially longer) from the date the gift was made.

Secondly, creditors of the person making the gift could claim that the transfer was a fraudulent transfer made in an attempt to defeat the rights of creditors. This could result in both the parent and child being tied up in court over a creditor claim.

Lastly, and possibly most problematic, is the possibility that the creditors of the child will attach the assets in order to satisfy their claims against the child. The child’s creditors could also include the child’s spouse in a divorce proceeding. As a result of these inherent risks, seniors who seek to protect assets by making gifts to their children are often creating more problems than they are solving.

Gifting of assets was a popular estate planning strategy to reduce or eliminate estate taxes. In past years, there were significant gift/estate tax advantages to a person making annual or periodic gifts to their children. However, in light of the increased federal gift and estate tax exemptions, (the current exemptions are $12.92 million per person), gifting as an estate planning technique is no longer needed for the majority of families.

Another disadvantage to gifting is that a gift is a transfer of tax cost basis from the parent to the child for capital gains tax purposes. The child would be forced to pay capital gains taxes on the increase in value from the parent’s tax cost (usually the purchase price) versus the ultimate sales price. Contrast this with a child who inherits an asset at death from a parent. When the child inherits the asset at death, the asset receives a “step up” in tax basis to its date-of-death value. This is one of the most favorable tax rules remaining which is lost when gifting is used. For these reasons, many seniors should seriously evaluate whether gifting is an appropriate method for transferring assets. In most cases, the senior will discover that gifting is not the best strategy for achieving their goals. If asset protection from a nursing home is the goal, an irrevocable trust is a much better alternative to gifting.

An additional problem that seniors encounter in managing their assets are jointly owned assets, especially bank accounts. I see many clients who have been instructed (often by the bank) to title their bank account in the joint name(s) of their children. The bankers are trying to be helpful to their clients since a joint account is easily accessible by the child to help pay their parents’ bills, etc. However, the problem with a jointly owned bank account is that by placing the child’s name on the account, the parent may be unwittingly subjecting their account to the potential claims of the creditors or spouses of their children.

Further, since a jointly owned bank account normally passes only to the surviving joint owner (in this case the child who was put on the account), the parent may be circumventing their estate planning goals by having that account pass directly to one child rather than passing equally to all the remaining children under their Will or Trust. A better planning method is to have your bank accounts (as well as certain assets) either titled in your individual name (or joint with your spouse) or in the name of your trust. Of course, if you are going to have assets in your individual name you will need a Durable Power of Attorney authorizing your child or other trusted person to manage your affairs in the event you become incapacitated.

A properly set up estate plan can avoid many of the pitfalls associated with gifting and joint ownership. Prior to making gifts or establishing joint accounts with your children, I strongly recommend you consult with an elder care attorney to make sure you are achieving your goals without subjecting your assets to unnecessary risks.

What happens to my digital legacy?

hotsr-clientservices@wehco.com (Master Account) — Tue, 16 Apr 2024 13:01:28 GMT

Now more than ever our clients are storing their most precious memories on their cellphones.

When a person passes away and has not shared their password information with anyone, it can be a chore for families to get access to a loved one’s account.

Fortunately, Apple and Android have provided avenues for a person to appoint a Legacy Contact or account manager.

To gain access to a decedent’s Apple account, one must provide a death certificate and papers showing they are the decedent’s legal representative. For decedents whose estate does not require probate, this can be a cumbersome process.

Apple now allows a person to appoint a Legacy Contact, which can be added through the settings of an Apple device.

Adding a Legacy Contact is the easiest, most secure way to give someone you trust access to the data stored in an Apple account after death.

Accessible data may include photos, messages, notes and files.

However, data such as movies, music, books, subscriptions, payment information, and passwords from an Apple ID cannot be accessed by a Legacy Contact.

For Android users, it is a slightly different process.

The easiest way to allow access to your Android device is to leave your password(s) for your chosen executor.

In the event that your executor does not have your login information, access to your digital information will be limited.

For Android/Google users, it is best to use Google’s Inactive Account Manager, which allows a person to be very specific about what is done with their digital information after your account has been inactive for a set period of time, such as after a person’s death.

The Inactive Account Manager allows a person to specify what data can be shared and who will be notified.

It is important to have plans in place to handle your digital legacy or run the risk of your loved ones not being able to access memorable digital items such as photos, videos, and other files that may be stored on a cellphone.

What happens to all of my things? Tangible personal property

hotsr-clientservices@wehco.com (Master Account) — Mon, 15 Apr 2024 15:50:37 GMT

When estate planning attorneys begin the conversation about setting up a plan with a client, a great deal of the conversation is centered on what the client’s goals are and how assets are to be divided. The bulk of the conversation regarding a client’s assets involves the client’s real property, bank accounts, and other investment accounts they might have. However, those assets are not the only ones that matter to the client and to their families.

Arkansas Code Annotated §28-25-107 allows for a written statement, which is signed, dated, and describes the personal property items and recipients with reasonable certainty, to be admissible as evidence of the intended disposition of personal property items, except for money, indebtedness, documents of title, securities, and property used in trade or business. This statute allows a person to specify who receives which personal property items without having to amend their will or trust.

It is important to have a conversation with your children or other beneficiaries about which items they specifically want to help limit any confusion or frustration at your passing. Some clients will want to make sure that everything is equal amongst their beneficiaries, so they will have an appraiser help make sure nothing is significantly more valuable than anything else to limit any fighting during an already trying time. Other clients prefer to gift certain items to their intended beneficiaries while they are living, ensuring that a certain beneficiary receives a certain item. In this instance, clients should be aware of the annual gift tax exclusion amount for 2023, which is $17,000 per person.

Another option some clients elect to utilize is to have their beneficiaries draw for an order and take turns picking items that each beneficiary wants. This allows for each beneficiary to have a say in what they receive, which can often lead to a peaceful outcome.

The previous options work best when beneficiaries get along; however, that is not always the case. An extreme approach that often occurs when the beneficiaries cannot figure out a plan for distribution requires the executor or trustee to sell all of the personal property and divide the proceeds. This option often leads to resentment and frustration among family members when this situation could have been avoided.

As with all estate planning, it is best to speak to a trusted estate planning attorney or adviser to devise a plan that works best for your family and your beneficiaries. A properly drafted plan can reduce problems or fighting within the family upon your death and can ensure that your personal property items get to your intended beneficiaries.

Two talks to have in the family

hotsr-clientservices@wehco.com (Master Account) — Mon, 15 Apr 2024 15:47:53 GMT

Most estate planning columnists write articles commonly known as the “talk.”

They are usually writing about the need for good communication between seniors and their adult children. The talk can include topics including when the senior should discontinue driving his car, when the senior should consider moving to residential care, and a number of other difficult topics to discuss.

But there is another kind of talk to be had in families. That is the talk by the parents to the adult child about how the adult child should protect any inheritance the adult child receives from divorce or creditor claims. If the adult child receives an inheritance and co-mingles it with his or her spouse, then the inheritance is usually split 50/50 if there is a subsequent divorce. Usually, neither the parent nor the adult child ever meant that to happen. They simply did not understand the rules.

This is where the senior has the talk with the adult child that his or her inheritance should not be co-mingled with the spouse, unless the marriage is very solid and mature. What does co-mingling mean? It means depositing any inheritance into an account titled in the name of the adult child and their spouse. Another example would be the adult child purchasing a new home with the proceeds of the inheritance and titling in joint tenancy with his or her spouse. In either of those situations, that results in the daughter-in-law or son-in-law being entitled to one-half of the amount so co-mingled.

Finally, if you wish to really keep your in-laws out of your estate, you can have your estate pass in trust for your adult children in a manner that they have generous access but it cannot be co-mingled.

Naming IRA Beneficiaries

hotsr-clientservices@wehco.com (Master Account) — Mon, 15 Apr 2024 15:38:44 GMT

Many people make costly estate planning mistakes when it comes to individual retirement accounts. Unlike other assets, IRAs are not typically covered by a will or a standard type of trust. Instead, the funds go to inheritors according to beneficiary designation forms that are on file with the IRA custodian. Oftentimes individuals do not know who is listed on their beneficiary forms because the account and beneficiary designations were created many years ago.

The Employee Benefit Retirement Institute states “IRAs are a vital component of U.S. retirement savings, constituting 26.5% of all retirement holdings. There are nearly 15 million IRA accounts held by more than 11 million people with total assets of just over $1 trillion.”

You can name any beneficiaries you want with an IRA, including family members, friends, a trust or charity. Alternatively, with a 401(k) or other workplace plan, your spouse must give written permission for you to leave the account to anyone else.

If there is no beneficiary form on file, your heirs must use the IRA custodian’s default policy. This may mean someone other than the person you intended will receive your IRA (i.e. your heirs-atlaw). Typically the custodian will award an IRA first to a living spouse and then to your estate. Sometimes the custodian may send it straight to the estate, which will cut short the tax benefits.

If you list your children as beneficiaries, it is often a good idea to provide for per stirpes distributions (if the form allows this designation). This means that if your child predeceases you, their children would become the beneficiaries, instead of your other children, or the co-beneficiaries.

Sometimes clients wish to leave their IRA to a trust to accept retirement assets. There can be many reasons for leaving your IRA to a trust, which include (1) if your intended beneficiaries are minors; (2) if you are fearful of creditors or in-laws; (3) if you wish to control the cash flow to beneficiaries with money management problems; or (4) second-marriage planning.

Many complex IRS rules govern IRA trusts. Therefore, it is critical that you speak with your trusted advisers to ensure that an IRA trust meets your goals as well as the government criteria.

Regardless of who you ultimately decide to name as beneficiary of your retirement account, it is crucial that those assets make their way to that beneficiary. A proper beneficiary designation form should accomplish this.

What Should You Share About Your Estate Plan

hotsr-clientservices@wehco.com (Master Account) — Mon, 14 Nov 2022 18:17:20 GMT

Communicating with your family about your estate plan is a sensitive but important topic.

The need for good communication between seniors and their adult children is important as the children often have a role in the estate plan (whether it be as Agent under a Power of Attorney, Executor under a Will or Successor Trustee of the Family Trust). In addition to the basic estate planning structure, the discussions can include topics including when the senior should discontinue driving his or her car, when the senior should consider moving to residential care, and a number of other difficult topics to discuss.

In addition to the above talks, there is another kind of talk to be had with your adult children. That is the talk by the parents to the adult child about how the adult child should protect any inheritance the adult child receives from divorce or creditor claims. If the adult child receives an inheritance, and co-mingles it with his or her spouse, then the inheritance is usually split 50/50 if there is a subsequent divorce. This is a result that neither the parent nor the adult child ever meant to happen. They simply did not understand the complex rules pertaining to a divorce (which varies from state to state). An inheritance should not be co-mingled with the spouse, unless the marriage is very solid and mature. What does co-mingling mean? It means depositing any inheritance into an account titled in the name of the adult child and his or her spouse. Another example would be the adult child purchasing a new home with the proceeds of the inheritance and titling in joint tenancy with his or her spouse. In either of those situations that normally results in the daughter-in-law or son-in-law being entitled to one-half of the amount so co-mingled.

Further, if an adult child has creditors that they may be attempting to avoid, the parent should be aware of this so as to possibly structure the inheritance to protect the assets. This is a critical talk to have with the adult child. If one of your estate planning goals is to keep your in-laws out of your estate (or to protect it from your children’s creditors) so as to preserve it for your children and grandchildren, you should have your estate pass in trust for your adult children in a manner that they have generous access but it cannot be co-mingled. This is a common estate planning goal and can be accomplished with proper planning.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located at 1720 Higdon Ferry Road, Suite 202, Hot Springs, Arkansas, and can be reached at (501) 525-4401 or at wesley@farrarwilliams.com . Wesley can answer any questions you have about this subject.

Should I have my estate plan reviewed and updated?

hotsr-clientservices@wehco.com (Master Account) — Thu, 29 Sep 2022 13:36:01 GMT

The complications of moving from state to state are not difficult; however, there are still legal issues to be concerned with. While your Last Will and Testament, Durable Power of Attorney, and medical directives will most likely be effective in Arkansas, your Durable Power of Attorney and medical directives typically need to be updated to include the statutes of the state where you reside.

Each state may have special exceptions to consider. For example, if you have children that you are not providing for under your Last Will and Testament, Arkansas has a law, known as the “pretermitted heir law” that requires your Will to at least mention the child, even if you do not wish to leave that child an inheritance. Likewise, if you have a deceased child leaving children, you need to mention those grandchildren’s names in your Will. Failure to mention the child or grandchild can result in that person you wished to disinherit instead receiving a portion of your estate, despite the terms in your Last Will and Testament. This law is somewhat unique to Arkansas and provides an example of the need to have your plan reviewed.

I often get asked about the estate or inheritance tax. Fortunately, Arkansas has eliminated its state estate tax, so that is not a problem. The federal estate tax still applies to estates in excess of $12,000,600 (per person) for 2022, and there are even larger estate tax exemptions for married couples. Many estate plans for married couples have special provisions to maximize the exemption from estate taxes; however, those provisions need to be reviewed in light of the much larger exemptions in place as of 2022.

Do you still own real estate in another state? For example, many families own vacation condominiums in other states. If so, you will want to plan for that to avoid “ancillary probate” (a probate court proceeding in another state.) This can be an expensive and time-consuming legal problem for your surviving spouse or children. Setting up a Trust if often the best way to avoid probate, including ancillary probates.

In summary, if you have moved here from another state, the laws are usually not significantly different from state to state. However, we typically advise that you have an attorney review your out of state documents, and possibly make updates to your documents in accordance with the laws of the state where you currently reside. An experienced estate planning attorney can advise you on any other issues that might affect your estate plan now that you are a resident of Arkansas.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at wesley@farrarwilliams.com . Wesley can answer any questions you have about this subject.

Estate Planning For Blended Families

hotsr-clientservices@wehco.com (Master Account) — Tue, 06 Sep 2022 15:27:33 GMT

Blended families, or families consisting of a couple and their children from their current and all previous relationships, are becoming increasingly more common. Blended families and second marriages present their own unique challenges to estate planning. The main concern most of my clients in blended families have is ensuring that each spouse’s share of their estate ultimately goes to their intended beneficiary, which is often their respective children.

A client recently set an appointment with me to discuss ownership rights of her current house. The client was on her second marriage and owned her home as tenants by the entirety with her current spouse. Tenancy by the entirety is joint ownership of property by a husband and wife, in which upon the death of one owner, the other owner has title (also referred to as right of survivorship). She was alarmed when I explained that if she is the first to die, her spouse owns the home, and without an estate plan to the contrary, the home will go to his children upon his death.

Similarly, if all assets are owned jointly between a husband and wife, the assets will be controlled by the estate plan of the survivor. If the surviving spouse does not have an estate plan, all the assets will go to his or her children upon their death, leaving out the children of the predecessor.

Traditional estate planning distributes assets to the surviving spouse and then to the children upon the death of the survivor. However, this plan may not work with blended families. The traditional estate plan oftentimes gives the surviving spouse the ability to amend the documents however they choose. This might mean they disinherit certain children, or leave the estate to charities, or even to a new spouse.

The first step to ensuring an estate plan for blended families is set up according to the family’s wishes, is to have open communication about the issue. Openly discuss all of the finances and the ownership of the finances. Discuss how assets are to be distributed upon the death of both spouses. An experienced estate planning attorney can assist with this communication and help ensure that each spouse’s respective children are treated equitably in the estate plan.

So what does an estate plan for a blended family look like? The most common method is to establish a joint trust, which becomes irrevocable upon the death of the first spouse. Upon the death of the first spouse, half of the couple’s assets are placed into an irrevocable trust for the limited benefit of the surviving spouse during their lifetime. Upon the death of the survivor, the assets are distributed according to the terms of the trust (typically one-half to each spouse’s respective children). This ensures that a portion of the couple’s assets are preserved for the benefit of their respective children upon the death of both spouses.

A second method is to establish a residence trust. A residence trust allows the surviving spouse to live in the residence during their lifetime, but upon their death, the home is distributed to the beneficiaries of the trust (typically one-half to the husband’s children and one-half to the wife’s children). If my client in the example above had utilized a residence trust, the home could be distributed evenly to each of their respective children upon the death of both of them.

A third method for estate planning in blended families is the use of a prenuptial agreement. This agreement can protect an individual’s right to distribute his or her pre-marital property in the manner he or she desires. A prenuptial agreement allows each spouse to control who ultimately receives their assets upon their death. However, a prenuptial agreement must be entered into prior to marriage.

Planning for blended families can give each spouse peace of mind that their respective children will not be disinherited upon their death and ensures their children will ultimately inherit a portion of their estate. It also helps eliminate or reduce family tension. The children do not have to worry that the surviving spouse will remarry or leave all assets to their own children.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC and can be contacted at (501) 525-4401 or emailed at wesley@farrarwilliams.com. Wesley can answer any questions you have about this subject.

Estate Planning Provides Peace of Mind

hotsr-clientservices@wehco.com (Master Account) — Tue, 26 Jul 2022 14:11:03 GMT

It is our experience that one of the main motivations that families have in preparing an estate plan is to ensure that your surviving spouse (and other family members) have minimal difficulties following death. The goals of most families include avoiding probate court, family fights, and taxes. In recent years a common estate planning goal often involves asset protection in the event of a nursing home stay. I find that many of my clients are initially anxious about setting up their estate plans. It is easy to procrastinate about such matters, however, proper planning, once completed, provides tremendous relief and peace of mind to my clients.

It is important to understand that without proper planning, many problems may be left behind for your family to deal with during a time of grief. What kind of problems might you expect for your family? First, it is often the “little things” that are the cause of problems. For example, do you have an old investment certificate (E-bond, stock certificate, life insurance policy or deed) or bank account titled in just your name, and not as joint tenants with your spouse? This would result in such asset going through probate. Probate is an expensive and time consuming process that is best to avoid if possible. We encourage our clients to add a spouse’s name (or title them in your trust), so that your spouse does not have to deal with the headaches that probate can cause.

I also encourage my clients to prepare a detailed list of assets and make sure your spouse or children know where the list is! A reminder list of when taxes should be paid each year should be made out. Real estate taxes are due mid-October. Quarterly income tax payments should be made to avoid IRS penalties. Does your family know where you keep miscellaneous income tax information each year? These little things may seem routine but can become major problems when your family is dealing with a tragic loss.

With today’s technology, passwords are critical. Can your family access your computer? Can he or she access your investment accounts? Does your spouse know the location of all your legal papers, including your deeds and investment account statements? Have you designated where you want your tangible personal property to go at your death to avoid conflicts and confusion over your wishes? Have you prepared a personal obituary to save your family the difficulty of writing one on short notice following your death? These are all little things that should be considered as part of the estate planning process. It is easy to procrastinate about such things, but rest assured, if you properly handle these matters, you will enjoy the peace of mind from knowing you took care of your loved ones.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC and can be contacted at (501) 525-4401 or emailed at wesley@farrarwilliams.com . Wesley can answer any questions you have about this subject.

Estate Planning for Pets

hotsr-clientservices@wehco.com (Master Account) — Mon, 27 Jun 2022 14:09:15 GMT

An estimated 90 million American families own pets, but most families do not have a plan in place for their pets in the event they become unable to care for their pets or pass away. When preparing for death and disability, it is important to have an estate plan that includes all of your family members.

Prior to having an estate plan for your pets, you will need to decide who you want to care for your pets, what care requirements your pet needs, and what financial resources will be needed to properly care for your pets. Once these key factors are decided, your estate planning attorney can help draft a Will plan or a Trust plan to ensure your pets are taken care of.

When deciding who will take care of your pets, like minor children, you must first feel comfortable with the selection of your pet’s caregiver. Most people consider family or friends, but you should never assume they will be willing to provide lifetime care for your pets. We advise our clients to speak to their prospective caregiver and ensure that their chosen caregiver is willing to take on the responsibility of caring for their pets. If you are not able to find a suitable caregiver, you can always consider a pet sanctuary or a perpetual care organization.

While picking a suitable caregiver is very important, it is also important that a care plan is left to the caregiver that includes any specific health directions, diet choices or restrictions, and any other directives you think are necessary so that your pet receives the best care possible. These directions can be spelled out in a Last Will and Testament or a Trust document, depending on your chosen estate plan.

The last step is determining what financial resources you want to leave for the lifetime care of your pets. In addition to standard costs like food and medical care, you should consider compensation for your pet’s caretaker. Some clients choose to leave a fixed sum of money and their pet to a trusted caregiver, and some choose to create a pet trust for the lifetime care of their pets and select a Trustee to oversee the funds.

By establishing a Pet Trust, which can be a standalone trust or a continuation from a current Trust, you can leave directions as to the care of your pets, choose who you want to oversee the funding and care of the pets, and most of all, you will avoid a probate proceeding for your chosen caregiver. While funding and directions can be made in a Last Will and Testament, a Last Will and Testament must be filed with the Court, and if your caregiver needs to receive funds from your estate for the care of your pets, they will need to go through Probate Court.

Under a Pet Trust, a Trustee is appointed to manage the funds and care for your pet. Under Arkansas law, a Pet Trust terminate upon the death of the pet, or if for multiple pets, it terminates on the death of the last surviving pet. Once the surviving pet passes away, any remaining funds in the Pet Trust will be distributed to your chosen beneficiaries under the Trust document.

In summary, planning for your pets is an important part of your comprehensive estate plan. An estate plan that includes care plans and funding for your pets will ensure that your pets are cared for in the event of your own death or disability.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC and can be contacted at (501) 525-4401 or emailed at wesley@farrarwilliams.com . Wesley can answer any questions you have about this subject.

Wills, Probate and Estate Taxes

hotsr-clientservices@wehco.com (Master Account) — Tue, 07 Jun 2022 21:07:53 GMT

There is much confusion about the relationship between Wills, probate, and estate taxes. This article will attempt to explain these subjects.

First, I will address the confusing topic of Wills and probate. If you die leaving a Last Will and Testament, and you own property that is just in your name (i.e. property not in joint ownership with someone else or set up in a beneficiary designated account), your Will must go through probate. There is a common misconception that a Will avoids probate. This is incorrect; a Will must go through the probate process. The probate court, which is a division of the Circuit Court, determines a Will’s validity and oversees the administration of the Will. So to summarize, if your estate plan consists only of a Will, then your estate will go into probate.

But what about the family who holds everything in joint ownership (either with spouses or children)? In that case, the Will does not operate to transfer the assets, since the joint ownership controls (so the estate is not required to go through probate). However, joint ownership is often a poor planning choice as the joint owner’s creditors and/or spouse could attach to your assets.

Finally, just what is probate and why does it have such a bad name? Probate is the process of a Will being filed at the courthouse, and an executor being appointed by the probate court. It is in essence a court supervised administration of your estate. This procedure involves lawyers, courts, fees (probate fees can be up to six percent of your estate value in Arkansas), and delays (minimum time for probate in Arkansas is six months). These are the primary reasons probate is so unpopular with the public. The process is also a public record so a nosy neighbor can check on your affairs!

What is the best solution to avoid probate? A living trust avoids probate; with none of the disadvantages of joint ownership (joint ownership assets with your children can be subject to their IRS liens, lawsuits or divorce claims). Living trusts have become increasingly popular as the costs to establish a trust are quite reasonable, especially when you factor in the savings you get from avoiding probate. At our firm, a typical living trust estate plan costs approximately $1,750.00 (for a single person), whereas a basic Will plan costs approximately $600.00. So even though the trust costs more on the front end, your family saves a lot of time and money by avoiding probate.

Next, there is confusion between “probate” and “estate taxes”. These are completely separate problems. Probate is a court supervised proceeding to transfer assets owned by a deceased person at death. Estate taxes are federal and state taxes levied on the total assets in a person’s estate (whether in a trust or a joint account or otherwise). In other words, a family can be faced with probate and no estate taxes, or estate taxes and no probate. The goal of a good estate plan is to avoid both probate and estate taxes. Many people think you only need a Trust if you have an estate tax problem, but as this article shows, probate is involved even when estate taxes are not.

What is the best solution to avoid estate taxes? First, only families with assets in excess of $12,060,000.00 (as of 2022) are subject to federal and state estate taxes. Secondly, if your family has a larger estate, and you are married, proper use of “A-B Trusts” can double your exemptions to $24,120,000 since both spouses have an exemption. However, under the current laws, the federal tax exemption is to fall back to $6.2 million at the end of 2025.

In summary, many people assume that since they have a Will, they will avoid probate. This is a common misconception. The goal of a good estate plan is to avoid both probate and also state and federal estate taxes.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC and can be contacted at (501) 525-4401 or emailed at wesley@farrarwilliams.com . Wesley can answer any questions you have about this subject.

Real Estate Trusts for Second Marriages

hotsr-clientservices@wehco.com (Master Account) — Fri, 29 Apr 2022 19:00:12 GMT

Many seniors remarry following the death of a spouse. Often, after remarriage, the seniors move into either the husband’s home or the wife’s home (and the other spouse sells their home). This raises the question of how the home should be handled once the seniors have remarried and established their home in one spouse’s home. What would happen to the home in the event of the disability or death of the spouse who owns the home?

I recommend there be some written understanding in your will or trust that provides that the non-owner spouse has certain rights in the home for some period of time following the death or disability of the owner spouse. Further, you might consider giving the non-owner spouse the first option to purchase the home in the event of the death of the owner spouse. Finally, some families establish real estate trusts to hold title to the home that permits the surviving spouse to have use of the home until the surviving spouse’s death or disability. Then the home reverts to the children of the spouse who owns the home (who predeceased).

Next, there is the matter of who pays the expenses associated with the home. During the joint lives of the couple on the second marriage, most couples usually split the expenses including utilities, basic maintenance, etc. But what about expenses associated with the house following the death or disability of the owner spouse? Most families provide that the surviving spouse pays the basic home expenses including utilities and basic maintenance. However, the surviving spouse probably would not want to be in a situation where they had to pay for a large repair like a new roof on the home or a new central air conditioning system, either of which could easily exceed $10,000. That is where it is appropriate to have clear rules as to what the surviving spouse pays and what the estate of the predeceased spouse pays.

In summary, many seniors remarry following the death of their first spouse. Resolving ownership rights in the home that the remarried spouses live in does take some thoughtful planning so as to avoid controversy at a later date.

Estate Planning in Case of Incapacity

hotsr-clientservices@wehco.com (Master Account) — Fri, 25 Mar 2022 15:20:10 GMT

One of the most important estate planning documents for all persons over the age of eighteen (18) to consider is a Durable Power of Attorney. The primary purpose of a Power of Attorney is to set forth and appoint an agent, also known as an attorney in fact, who will serve to make decisions over business and financial matters in the event a person becomes incapacitated or disabled. In most instances, the Power of Attorney becomes effective at a future date, which is usually either at the time a person signs a subsequent written authority to act under the document, or at the time the person is determined to be incapacitated. A well drafted Power of Attorney will set forth how a person is determined to be incapacitated, and normally sets forth a standard whereby the person’s primary treating physician must sign a notarized statement indicating the person is incapacitated. This type of Power of Attorney is often called a “Springing” Power of Attorney, meaning the Power of Attorney springs into effect at some future event, i.e. your disability.

A Durable Power of Attorney allows you to appoint who you trust to manage your personal and business affairs in the event of your incapacity. It can be customized to include broad powers or may be limited and restricted to only specific transactions. Please note that a Durable Power of Attorney has nothing to do with an attorney managing your affairs, as typically you appoint your spouse and/or children to serve as your agent under the Power of Attorney.

A second method to avoid the complications of a guardianship is to place your assets in a Revocable Living Trust, which is an estate planning device that provides for asset management during your lifetime and which also provides for disposition of your assets, without probate, upon your death. Since the assets in a Revocable Living Trust are to be managed by the person you name as your Successor Trustee, these assets can be managed in the event of your incapacity, thereby eliminating the need for a guardianship. Properly set up estate plans often utilize both a Durable Power of Attorney as well as a Revocable Living Trust to provide for disability management.

Unfortunately, many people fail to set up a Durable Power of Attorney and in the event they become incapacitated, their family is forced to go to court to have a person appointed by the court to manage their affairs. This court procedure is commonly referred to as a legal guardianship. A guardianship is a complicated and cumbersome legal proceeding which is designed to protect the interest of the incompetent individual. It often and rightfully deemed to be a “living probate”. The person who is appointed as guardian is required to file annual accountings with the court documenting how all of the funds are used. In addition, the guardian is often required to post a surety bond, which is designed to protect the assets in case of improper use. Surety bonds have expensive premiums as they are an insurance product. This type of expense could be avoided with a properly structured Power of Attorney.

The author would like to point out that there are times when even a properly constructed Power of Attorney does not suffice in terms of eliminating the need for a guardianship. This typically occurs when the incapacitated person verbally expresses a desire to either revoke the Power of Attorney or refuses to follow the guidance of the appointed agent under the Power of Attorney. Hospitals and long term care facilities are reluctant to rely on the authority granted under a Durable Power of Attorney when the person who created the Power of Attorney is expressing disapproval of its use. Under these circumstances, the institution may request a court appointed guardian as that provides them with more protection for relying on the decisions of the guardian.

In most cases, a person’s assets and affairs can be properly managed by their family under a Power of Attorney. Avoiding the necessity of a guardianship proceeding by setting up such a disability management plan is a critical step in setting up your estate plan. An attorney skilled in estate planning matters can assist you in setting up and implementing the necessary documents to ensure your estate plan will be successful, and to ensure that you have a disability management plan in place in the event of incapacity.

Planning for Children with Disabilities

hotsr-clientservices@wehco.com (Master Account) — Fri, 25 Feb 2022 13:33:48 GMT

The goals of special needs planning are different from conventional estate planning. Many children with disabilities benefit from government benefit programs such as SSI and Medicaid. These government programs require the disabled person to have limited income and assets in order to be eligible. While living, the parents can assist with the needs of their disabled children without a loss of benefits. However, at the death of the parent, specialized planning is required to make sure the disabled child does not lose their benefits based on an inheritance. In order to preserve the government benefits that are so desperately needed for a person with long term disabilities, the parent can structure the inheritance in the form of a Trust, known as a “Special Needs Trust” or SNT. A SNT provides for the disabled child’s needs over and above what is provided by the government benefit programs. There are limits on what the funds from a SNT can be used for; however, they can provide for the disabled child’s long term benefit and allow the health costs to be paid by the government programs in place. The SNT also names a Trustee and Guardian for the disabled child so that the proper persons are in place to look after the wellbeing of the disabled child. A SNT can revert back to other family members at the death of the disabled child.

In addition to planning for the inheritance of a disabled child, there are other legal issues a parent must consider once the “child” has attained adulthood. If the child has mental deficiencies then the parents may need to file to become the legal Guardian of the child at age 18.

In order to learn more about the benefits of structuring your estate to protect the needs of your family, please consult with an experienced estate planning attorney. The peace of mind that comes from a well thought out estate plan is worth its weight in gold!

How To Structure Your Estate Planning For The Expense of Long Term Care

hotsr-clientservices@wehco.com (Master Account) — Fri, 21 Jan 2022 15:39:41 GMT

One of the most important concerns for people setting up their Estate Plans is how to plan for the cost of long term care, including nursing home costs. Long Term Care Insurance is by far the preferred option, since it has offers the possibility of keeping people out of nursing homes by paying for care in the home or in assisted living facilities. However, most people do not purchase long term care insurance and are forced to rely on other alternatives to pay for long term care costs. Unfortunately, the other alternatives often do not include care in the home and instead require the long term care to be in a nursing home or other approved facility.

Absent a good long term care policy, there are two primary options for the payment of nursing home costs. First, a person may have sufficient income and assets to pay for such costs on a private pay basis. However, since such costs average in excess of $5,000 per month, and will continue to rise, the private pay option is not viable for most people. The second option is the Long Term Care Medicaid Program. Since this is a government benefit program, there are asset and income requirements to be met in order to qualify. The rules differ depending on if you are single or married. As a result of the eligibility determination process, many clients structure their estate plans in a way to enhance their eligibility in the event such costs become necessary. The remainder of this article will focus on one of the more popular estate planning tools used to enhance Medicaid eligibility for long term care costs.

A Medicaid Asset Protection Trust (MAPT), often referred to as an Irrevocable Trust, has become a popular planning tool for people trying to protect assets from the costs of nursing homes. It is important to note that many people have set up Trusts, however, in all likelihood the Trust is a Revocable Living Trust which offers no protection from nursing home costs. In order to gain eligibility, one must either give away assets or structure assets in a MAPT. As a general rule, gifting assets to your children is inadvisable, since those assets then become exposed to the children’s debts and liabilities, divorces, etc. In addition, some children may spend the money, refuse to give it back when needed, or pass away before the parent and pass those gifted assets on to their heirs. For these reasons, the MAPT may be a preferred option.

The MAPT is an irrevocable trust agreement in which you name someone other than yourself and your spouse to serve as the trustee, usually one or more of your adult children. Please note that not all irrevocable trusts are MAPTs. The primary disadvantage of the MAPT is that it limits you and your spouse to the income earned on the Trust assets, as the principal is restricted and protected for the benefit of your remainder beneficiaries, usually your children. The MAPT does allow you to have full use and benefit of your home and real property, including the right to sell it (provided the proceeds stay in the Trust). These trusts are ideal for the home as well as other assets in which the parents are only using the income from in the first place. The parents’ life style is typically not affected since they continue to receive their pension and social security income directly.

As with most asset transfers, the creation and transfer of assets to a MAPT is subject to a Medicaid “look back” of five years. This means the Trust should be created and funded at least five years prior to applying for any Medicaid benefits. It is important to note that most clients who set up a MAPT elect to keep a sufficient amount of assets out of the Trust so they will have full access and control to a comfortable level of assets for their lifestyle and enjoyment. IRA’s and other retirement plans are usually left out of a MAPT, as it is generally not advisable to put such assets into a trust in the first place.

In summary, planning for the cost of long term care is an important issue that many people need to consider when setting up their estate plan. In the event long term care insurance is not an option, a person should consider other estate planning tools, such as a MAPT, that will enhance their ability to obtain government benefits, while at the same time offering some level of protection for their support and maintenance in the future. This type of planning is very specialized and should only be implemented with the help of an experienced elder law attorney.

Wesley Harris is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at wesley@farrarwilliams.com. Wesley can answer any questions you have about this subject.

Considerations for Hiring Private In-Home Caregivers

hotsr-clientservices@wehco.com (Master Account) — Fri, 21 Jan 2022 15:36:22 GMT

When your elderly loved ones reach the stage of needing daily assistance with their essential daily activities, many families look to hire in-home private help. While there are local agencies that will place caregivers in your home, many families want to hire private help and screen the caregivers on their own. Before making any offers to private caregivers for services, families need to be aware of the additional responsibilities involved in hiring a private caregiver.

Many families believe they can hire a private caregiver as an independent contractor and not be liable for payroll and employment taxes associated with having an employee. Pursuant to IRS regulations, an adult over eighteen (18) years of age who works in your private home and to whom you pay more than $2,300 per year creates payroll tax obligations for the hiring family. To be deemed an independent contractor, the family paying for services must demonstrate: (1) the worker performs services that the employer does not have the right to direct; (2) The worker maintains an independent business enterprise, including a workspace, outside the employer’s domain, with his/her own insurance; and (3) the services provided by the worker are outside the household’s usual course of business. With these exceptions in mind, most in-home caregivers who are paid directly by the family, or by a third party payment processor acting on behalf of the family, are employees, not independent contractors, therefore creating payroll tax obligations for the hiring family.

Hiring families have two options when it comes to handling employment and payroll taxes for hired in-home help. If the family is to handle the responsibilities itself, then the family will need to become an “employer”, which includes obtaining an Employer Identification Number from the IRS, registering with the Department of Finance and Administration, and remitting monthly wage withholdings to the state. Families can also hire a third party payment processor for these services, but this option will incur additional fees in addition to the compensation being paid to the caregiver. Lastly, families should consider obtaining Workers Compensation insurance or disability insurance in the event the caregiver is hurt while working for the family.

Another consideration to hiring a private caregiver is what responsibilities will they be required to perform and other associated conditions on their hiring. We strongly recommend outlining all agreed upon terms in a Caregivers Agreement. Will the caregiver only be responsible for cleaning the home and preparing food, or will the caregiver also be required to pick up medications from the pharmacy? Who will be responsible for getting additional help if the hired caregiver becomes sick? If these responsibilities are not outlined, there can be confusion and disagreement on the part of the hiring family and caregiver.

Hiring an in-home caregiver to assist with caring for loved ones comes with many obligations that most families are not aware of prior to hiring assistance. In general, families hiring an in-home caregiver with be classified as an employer, and will have payroll tax obligations that come with being an employer. Prior to hiring an in-home caregiver, I strongly recommend you consult with an elder law attorney to make sure you are following all applicable laws and mitigating unnecessary risks.

Estate Privacy in the 21st Century

hotsr-clientservices@wehco.com (Master Account) — Fri, 21 Jan 2022 15:34:08 GMT

We are seeing more clients come in for estate planning that have concerns about their privacy, especially in a probate proceeding. Any documents admitted in a Probate proceeding will be publicly accessible for viewing, including an individual’s Last Will and Testament, inventory of assets, and names and addresses of heirs. While a Last Will and Testament allows an Executor to distribute your assets pursuant to your wishes, it must be filed and admitted to Probate in order to be valid. In Arkansas, we have a very good public court records system, and all documents in a probate proceeding will be easily accessible. The main way to avoid your estate being publicly viewable in a probate proceeding and to protect your privacy is by setting up an estate plan using a Revocable or Irrevocable Trust.

As mentioned above, Trusts can be administered outside of Court oversight and out of the view of the general public. For example, when the grantor of a Trust passes away, under Arkansas law, only the beneficiaries of a Trust are entitled to copies of the documents. If all beneficiaries consent to the terms of the Trust and sign waivers, we can move forward with distributing the assets pursuant to the terms of the Trust. In a probate proceeding, we must wait at least six months before distributing assets so that creditors have time to file claims against the estate. Additionally, in a probate proceeding, we must get approval from the Court to distribute assets to beneficiaries, and all of this information will be accessible by the public.

With a Trust plan, there may be instances where certain assets were not titled in the name of the Trust, and a Last Will and Testament will need to be filed with the Probate Court to correctly transfer title to these assets to the Trust. This type of will is often called a “Pour-Over Will.” For individuals with a Trust plan, their Last Will and Testament’s contain a Pour-Over Provision, which states that all assets not in the name of the Trust at death are to be transferred to the individual’s Trust. While this would be viewable by the public, the public won’t be able to see the bulk of the assets that were already in the Trust at the time of a person’s death, and the public won’t be able to see who a person’s beneficiaries are. The probated assets are transferred to the Trustee of the Trust, who can then administer the Trust outside of the Probate Court pursuant to the terms of the Trust. This provides privacy for your beneficiaries as the general public won’t see what assets they received nor be able to ascertain the amount a beneficiary inherited.

While a Trust plan will not guarantee that all of your assets avoid probate, a correctly drafted and funded Trust plan will limit the publicly available information to the public and will shield your beneficiaries and their inheritance from publicly accessible documents.

Estate Planning and Cryptocurrency

hotsr-clientservices@wehco.com (Master Account) — Fri, 21 Jan 2022 15:34:04 GMT

A new legal issue in estate planning is how to handle digital assets during one’s lifetime, and how to pass on these digital assets to future generations. Digital assets can include a variety of things, but in this article, we will focus on cryptocurrency. Cryptocurrency can most easily be defined as a virtual currency that uses a heightened security technology called blockchain. Due to their intangibility, cryptocurrencies are stored and traded electronically. We are seeing more clients and estates with investments in cryptocurrency, such as Bitcoin. As a reference for readers who are new to cryptocurrency, one Bitcoin was valued at less than one cent in 2010, and as of the writing of this article, one Bitcoin is valued at $45,766. Additionally, the full market cap of all available bitcoin is a staggering $868 Billion. The rise in the value of cryptocurrency and a newfound public investing interest presents new legal challenges when crafting the best estate plan for each client.

One of the most important goals in estate planning is making it as easy as possible for your loved ones to access and administer your estate. If a client currently has, or plans on investing in cryptocurrency, it is crucial to obtain information on any cryptocurrency held by the individual and to include language in the estate planning documents that permits fiduciaries to access, retain, and manage the cryptocurrency without extraneous liability. It is important to provide these particular powers to the fiduciaries in an estate or Trust, because even if the decedent provides the fiduciary with his or her cryptocurrency passcode during his or her life, the fiduciary’s use of the passcode after death without the proper permissions in the decedent’s estate planning documents and related laws could cause the fiduciary to violate federal or state privacy laws, terms of service agreements, or computer fraud and data protection laws.

For individuals with Trusts that plan on or are currently holding cryptocurrency as an investment, your Trust document should give authority to the Trustee to handle the cryptocurrency. At a minimum, a cryptocurrency investor who wants to establish a trust holding solely cryptocurrency should release a trustee from any duty to diversify and provide the trustee with the necessary indemnification. However, as noted earlier, is important to ensure that doing so does not violate any applicable laws or terms of service agreements. It may be that a specific gift of the cryptocurrency is contained within the Will itself or a Memorandum is prepared, to sit alongside the Will, detailing instructions on how to access the funds or the private key itself. It is generally not recommended that an individual share his or her passcode with others for security reasons, but once a passcode is lost it is virtually impossible to recover. Individuals with cryptocurrency should consider writing down instructions in a Memorandum and storing it in a secure but accessible location, such as a safe deposit box alongside original estate planning documents.

Leaving cryptocurrency to your loved ones after your death requires more planning than traditional assets. With proper estate planning, you can simplify the process for your beneficiaries and ensure that they inherit your cryptocurrency.

Do Your Children Have Money Management Problems?

hotsr-clientservices@wehco.com (Master Account) — Fri, 21 Jan 2022 14:52:38 GMT

Many of our clients express a concern about their children or grandchildren’s inability to manage their finances. Marriage problems, substance abuse problems or erratic spending habits are common concerns for parents. For these reasons, many parents do not have confidence in their children’s ability to manage wealth, including an inheritance. To address these concerns, parents can “rule from the grave” by including continuation of trust provisions in their estate plan to assist in making sure their children’s inheritance has a lasting and beneficial impact on their children’s lives. These types of trust provisions are often referred to as spend thrift trusts or dynasty trusts.

Most of us have acquaintances who inherited money at a time when they were ill equipped to manage such newfound funds. Adjusting to life as an independent adult can be difficult in these situations as people become accustomed to a lifestyle that they cannot sustain on their own. In many cases, one could make the argument that inheriting a large sum of money with no restrictions attached at a young age is more of a curse than a blessing as it can take away ambitions that many other young adults have to be successful on their own. This predicament should be considered when setting up your estate plan.

Many people choose to leave their children’s inheritance in a trust format whereby their children get specific amounts per month or year from their trust. Alternatively, the trust can be set up to provide for discretionary distributions to meet the child’s health, support and maintenance needs in accordance with that child’s accustomed standard living. Discretionary trust provisions present unique challenges as you must name a Trustee who is capable of handling the difficult judgments that come along with making discretionary distributions from such trust. The Trustee must be able to say no to the beneficiary which can be difficult and can create conflict with the Trustee. If a discretionary trust is best for your situation, I suggest a corporate trustee be used instead of a family member so as to avoid family conflicts.

I have found that setting up a specific formula for distribution, for example a monthly or annual distribution over a set number of years or allowing a portion of the Trust to be distributed at certain ages, is a more effective way to set up your children’s inheritance. The reasons for this are as follows. First, by having your children’s money distributed over a period of years, they learn to make lifestyle adjustments over time rather than all at once. Also they learn how to deal with money a little at a time rather than in a large lump sum. Many children may make mistakes with their initial distributions but they are given the chance to redeem themselves with future distributions by making more wise choices with how they spend their inheritance. Additionally, by having the distributions paid out over a period of time, it provides a sense of legacy in the child’s mind and instills in them the importance of a family inheritance for the benefit of future generations. Trusts can be drafted to meet a family’s unique needs and goals.

There are many ways to structure a child’s inheritance so as to provide a lasting benefit. Too many parents assume that once they are gone, they have no power of how the funds are spent. More thought should be put into the process to make sure that your family’s long term needs are being met by the inheritance you leave them. Provisions can be included in your Will or Revocable Living Trust to help manage the inheritance for the benefit of your family. These provisions can benefit your children as well as your grandchildren, so as to allow the inheritance to have a lasting impact on future generations. Helping to assist with educational needs of grandchildren can be accomplished through continuation of trust provisions as well as many other worthwhile goals. When setting up your Will or Trust estate plan, you should give careful consideration to these issues to make sure that the legacy and inheritance you leave behind will have a lasting and meaningful impact on your family.

Charitable Giving Through Estate Planning

Mon, 01 Mar 2021 18:47:47 GMT

Historically, charitable giving was a popular technique in estate planning in order to minimize or eliminate estate taxes. However, since the federal estate tax exemption is currently $11.4 million per individual, it is not needed in many cases.

However, philanthropy is very important for many seniors and their families. Many families wish to leave legacy gifts to their church, college, or favorite non-profit organizations. So what is the best way to make lifetime gifts or include charitable giving in your estate plan?

One way to include charitable giving in your estate plan, is to leave a specific gift to a charitable organization in your will or trust. You can elect to leave a specific dollar amount, or a percentage of your total assets. It is oftentimes better to leave a percentage instead of a specific dollar amount so that the amount fluctuates with what your total estate and trust assets are at the time of your death. By leaving a specific gift, you can decide whether you want the gift to be restricted or unrestricted.

If you are over age 70 ½, you are required to take required minimum distributions (RMDs) from your tax-deferred retirement accounts, which is considered taxable income. To reduce or eliminate the income tax burden, philanthropically minded individuals might consider making a qualified charitable distribution. This is a transfer of funds from your retirement account directly to a qualified charity and the amount of the distribution is excluded from your taxable income. You can also name a qualified charity as beneficiary of your retirement accounts to reduce or eliminate potential estate taxes.

Other options for charitable giving can include donor-advised funds, establishing a private foundation, or charitable trusts. Charitable trusts can benefit both a charity and you or your family, by potentially providing income to you for your lifetime with the remainder going to the charity upon your death (in a charitable remainder trust).

If you are considering making lifetime gifts to charities or including a charity in your estate plan, be sure to talk with a qualified tax advisor and estate planning attorney.

UNDERSTANDING COMPLEX RULES FOR RETIREMENT ACCOUNTS- NEW LAW CHANGES

Wed, 16 Dec 2020 21:13:56 GMT

Beginning in 2020, the SECURE ACT (Setting Every Community Up for Retirement Enhancement) makes significant changes to contributions and distributions from retirement accounts (such as IRAs and 401Ks). Retirement accounts are an excellent way to achieve tax deferred growth. However, as is commonly known, when funds are withdrawn from most retirement accounts, taxes must be paid based on your income tax rate at time of withdrawal. This rule applies to the IRA account owner as well as the beneficiaries upon the death of the IRA owner.

The first change in the new law eliminates the age limitation for contributions to an IRA. Prior law limited the age to 70½ and the new law has no age limit provided you have earned income. Secondly, the new law increases the age for required minimum distributions (RMD) from 70½ to 72. These changes are very positive and will allow retirements accounts to grow in popularity.

There are some negative results from the SECURE ACT as it relates to beneficiaries of retirement accounts. Under prior law, spouses, children and other non-spouse beneficiaries could spread withdrawals over their lifetime and stretch out taxes on the funds. For a spouse this was known as a Rollover IRA and for others it is commonly known as an Inherited IRA. Under the SECURE ACT, spouses will continue to enjoy the benefits of a Rollover IRA. However, there was a major change as it relates to Inherited IRAs. Under the new law, a non-spouse beneficiary will generally be required to withdraw money from the IRA within 10 years of the death of the IRA owner. This is a significant change that will substantially reduce tax deferral benefits of an Inherited IRA.

The SECURE ACT went into effect on January 1, 2020 and will not impact Inherited IRAs set up prior to 2020. As with most tax law changes, there are complex rules to be aware of. This article is intended to be a general summary of the new law and you are encouraged to seek specific advice from your CPA or other tax advisor on your situation.

Adam is the managing Member of Farrar & Williams, PLLC and can be reached at (501)525-4401 or at adam@farrarwilliams.com.

Planning During a Crisis

Wed, 06 May 2020 00:00:00 GMT

With words like social distancing, quarantine, and pandemic now in our vocabulary, it felt only appropriate to write about estate planning in the midst of the COVID-19 pandemic.

Perhaps the biggest piece of advice I have at this time is to make sure your documents are current and appropriately reflect your wishes. Have there been any major life changes since the execution of your estate planning documents? Are the individuals named in your documents willing to serve? Do you know where your original documents are located?

Healthcare advance directives are critical during a health crisis. I have received more questions directly related to advance directives in the past month than in my entire career! You should review your living will and healthcare power of attorney or advance directive to ensure that they appropriately reflect your wishes. You also want to have copies of these to give to your physicians or healthcare providers, family or other agents named in the documents. Make sure that you discuss your health care wishes with your agents so that, if necessary, they can appropriately make decisions that enforce your wishes.

A power of attorney is another critical document during this time. A Power of Attorney is a legal document by which you appoint a child or other trusted person to act for you. Usually, the Agent is authorized to act in the event of the disability of the Principal. In the event you were hospitalized, a power of attorney allows (among other things) for bills to be paid, taxes to be filed and even assets to be sold if needed.

If you have never set up an estate plan, now is the perfect time! While it can be challenging to make decisions during stressful times, we never know when we might need our estate plans. Focus on completing your plan to the best of your ability now. You can always revise the documents at a later date if needed. Creating a plan can provide peace of mind to you and your family.

Governor Hutchinson recently signed an executive order that allows for witnessing and notarizing of legal documents to be done using video conferencing technology during this current state of emergency (with certain limitations). This allows you to execute or amend your estate planning documents without ever leaving your house or potentially compromising your health.

Farrar & Williams, PLLC would like to say “thank you” to all of the healthcare workers, first responders and essential workers on the front lines. We appreciate your dedication to the health and safety of our community. We are offering a 25% discount off all estate planning services for new clients working the front lines through June 1, 2020.

Tiffany Tucker is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com. She can answer any questions you have about this subject. Call today to schedule a phone or video conference.

HOW TO PAY FOR NURSING HOME COSTS

Wed, 27 Mar 2019 13:17:23 GMT

An increasingly important concern for people setting up their estate plans is how to plan for the cost of long term care, including nursing home costs. Long term care insurance is by far the preferred option, since it offers the possibility of keeping people out of nursing homes by paying for care in the home or in assisted living facilities. However, most people do not purchase long term care insurance and are forced to rely on other alternatives to pay for long term care costs. Unfortunately, the other alternatives often do not include care in the home and instead require the long term care to be in a nursing home or other approved facility.

Absent a good long term care insurance policy, there are two primary options for the payment of nursing home costs. First, a person may have sufficient income and assets to pay for such costs on a private pay basis. However, since such costs average in excess of $6,000 per month, the private pay option is not viable for most people. The second option is the Long Term Care Medicaid Program. Since this is a government benefit program, there are strict asset and income requirements to be met in order to qualify. The rules differ depending on if you are single or married. As a result of the rigorous eligibility determination process, many clients structure their estate plans in a way to enhance their eligibility in the event such costs become necessary. The remainder of this article will focus on one of the more popular estate planning tools used to enhance Medicaid eligibility for long term care costs.

A Medicaid Asset Protection Trust (MAPT), often referred to as an Irrevocable Trust, has become a popular planning tool for people trying to protect assets from the costs of nursing home care. It is important to note that many people have set up trusts, however, the most common trusts are revocable trusts, which offer no protection from nursing home costs. In order to gain eligibility, one must either give away assets or structure assets in a MAPT. As a general rule, gifting assets to your children is inadvisable, since those assets then become exposed to the children’s debts and liabilities, divorces, etc. In addition, some children may spend the money, refuse to give it back when needed, or pass away before the parent and pass those gifted assets on to their heirs. For these reasons, the MAPT may be a preferred option.

As with most asset transfers, the creation and transfer of assets to a MAPT is subject to a Medicaid “look back” period of five years. This means the Trust should be created and funded at least five years prior to applying for any Medicaid benefits. It is important to note that most clients who set up a MAPT elect to keep a sufficient amount of assets out of the trust so they will have full access and control to a comfortable level of assets for their lifestyle and enjoyment. IRA’s and other retirement plans are usually left out of a MAPT, as it is generally not advisable to put such assets into a trust in the first place. In many cases people have an immediate need for nursing home care and cannot wait the 5 year look back period. For such immediate need cases there are options available including a “gift plan”. The goal of a gift plan is to protect 50-60% of the remaining assets. A Medicaid gift plan is a complex planning strategy that may be suitable for certain situations where an immediate need is present.

In summary, planning for the cost of long term care is an important issue that many people need to consider when setting up their estate plan. In the event long term care insurance is not an option, a person should consider other estate planning tools, such as a MAPT, that will enhance their ability to obtain government benefits, while at the same time offering some level of protection for their support and maintenance in the future. For people who have an immediate need, there are other options available such as a gift plan to protect some assets for single persons requiring nursing home care. This type of planning is very specialized and should only be implemented with the help of an experienced elder law attorney.

Adam is the managing Member of Farrar & Williams, PLLC and can be reached at (501)525-4401 or at adam@farrarwilliams.com .

Should I Have My Estate Plan From Another State Reviewed And Updated?

Wed, 30 Jan 2019 22:27:44 GMT

If you recently retired or moved to Arkansas, it is a good idea to have your estate plan reviewed by an attorney. The complications of moving from state to state are not difficult; however, there are still legal issues to be concerned with. It is important to be knowledgeable about the tax and legal issues that can differ from state to state.

For example, if you sold your home in another state, you likely do not owe any capital gains tax on the sale (based on the sale of homestead tax exemption), but you usually do need to file a final state income tax return for that state. The good news is that you will probably not owe any tax on the sale if your profit was less than $500,000 (this exemption may vary from state to state, but the federal exemption for a married couple is up to $500,000 in profit on sale of the principal residence or up to $250,000 if you are single).

What about your estate planning documents, including your Last Will and Testament, Durable Power of Attorney, and medical directives? While these documents may be effective in Arkansas, a durable power of attorney and healthcare directives typically need to be updated to include the statutes of the state where you reside. The Will or Trust may also need some updates as your situation may have changed, so it is a good idea to review all of the documents with an Arkansas attorney.

I often get asked about the estate or inheritance tax (politicians refer to it as the “death tax”). Fortunately, Arkansas has eliminated its state estate tax, so that is not a problem. The federal estate tax still applies to estates in excess of $11,200,000 (per person) for 2018, and there are even larger estate tax exemptions for married couples. Many estate plans for married couples have special provisions to maximize the exemption from estate taxes; however, those provisions need to be reviewed in light of the much larger exemptions in place as of 2018.

Do you still own real estate in another state? For example, many families own vacation condominiums in other states. If so, you will want to plan for that to avoid “ancillary probate” (a probate court proceeding in another state.) This can be an expensive and time consuming legal problem for your surviving spouse or children. Setting up a Trust if often the best way to avoid probate, including ancillary probates.

Adam is the managing Member of Farrar & Williams, PLLC and can be reached at (501)525-4401 or at adam@farrarwilliams.com.

Planning for Children with Disabilities

Tue, 27 Nov 2018 14:02:57 GMT

Adam is the managing Member of Farrar & Williams, PLLC and can be reached at (501)525-4401 or at adam@farrarwilliams.com.

Estate Planning Doesn’t Have to be Scary

Tue, 30 Oct 2018 15:34:53 GMT

While estate planning isn’t always a fun topic of conversation, that doesn’t mean it has to be scary or spooky, like the haunted houses or horror movies that are around this time of year. It is definitely a lot scarier to become incapacitated or die without a comprehensive estate plan in place!

When you pass away without a Last Will and Testament, the laws of the state specify who is to inherit your estate upon your death. The thought of having your estate pass to someone you did not designate is frightening! One of the crucial components of the estate plan is designating where you want your estate to pass upon your death. Further, you can appropriately plan for the inheritance, including specifying guidelines for minor children or children with personal problems. Planning provides you with peace of mind that your assets will be distributed according to your wishes upon your death.

Probate is considered a scary word! Probate is a court supervised proceeding where a person’s Last Will and Testament is enforced and administered at the time of death. Probate is required for a person who dies without a Last Will and Testament. Since it is a court supervised process, it can be quite expensive (up to 6% of the estate value in Arkansas) and time consuming (minimum of 6 months in Arkansas). For these reasons, probate should be avoided if possible. A good estate plan often focuses on probate avoidance.

The thought of attorneys’ fees might be something that spooks you this Halloween. However, attorneys’ fees upon your death are typically much less expensive when a good plan is in place. The best probate avoidance plan is the use of a Revocable Living Trust. Trusts are the most popular estate planning document primarily because they avoid probate while at the same time thoroughly addressing all issues that can come up in administering an estate at death. A Trust is simply an agreement that controls your assets while you are alive (with you serving as your own Trustee and remaining in full control), but also controls the distribution of your assets at death (much like your Will would). Trusts are often called Will substitutes as they replace the function of a typical Will.

One way to make estate planning less scary, is to have a trusted advisor to discuss it with. It is much easier to discuss difficult (or scary!) topics with someone you feel you can trust. I always recommend having trusted advisors in your corner, including attorneys, financial advisors and CPAs. These advisors can appropriately guide you to what type of planning might be best for you and your family.

Planning Options for Nursing Home Costs

Thu, 27 Sep 2018 13:47:28 GMT

Protection of assets from the high cost of nursing home care is the primary concern of many seniors. The high costs of healthcare, and in particular long term care expenses, results in a tremendous loss of assets for many seniors. Long term care expenses can take the form of care givers in the home, assisted living care in facilities, and in many cases full time care including nursing home care. As you might imagine, the costs for long-term care can rapidly deplete a person’s estate. Nursing home costs in Garland County can easily exceed $6,000.00 per month, with home based care even more expensive. My law practice, often referred to as elder law, focuses on helping people plan for such costs.

The best planning option for future long term care expenses, whether it be assisted living, home based care or long-term care is the purchase of an appropriate long-term care insurance policy. A properly structured long-term care policy will include services for home care, assisted living care as well as nursing home care. These policies are the best option and should be looked into as part of your estate plan.

I have found that a small percentage of my clients have long-term care insurance, which forces them to look for other alternatives to pay for their care. In the case of assisted living care, which may be provided for in the home or in an assisted living facility, my first inquiry is whether or not my client or their spouse was a wartime veteran. If they were a wartime veteran, then they have an opportunity to seek a special pension benefit available through the Veteran’s Administration, known as Aid and Attendance Benefits. While this pension benefit will not cover the full cost associated with most care, it does provide a monthly pension (of up to $2,000.00 per month in some cases) which will help supplement the cost of uncovered medical-related care, including assisted living or home-based care. There are numerous eligibility restrictions on the Veteran’s Administration Aid and Attendance program. If you or your spouse were a wartime veteran and you have medical-related expenses that exceed your monthly income, you should inquire as to your eligibility for said pension benefits, as they provide much needed funds to help supplement the cost of your care.

For those clients that need full-time nursing home care, the options remaining for payment of such care are limited. The two main options are private payment (in excess of $6,000.00 per month) or the long-term care Medicaid program. It might surprise you to know that upwards of 70 percent of all people in nursing homes are covered by the long-term care Medicaid program. The cost savings associated with the long-term care Medicaid benefits can be significant. Gaining eligibility for the long-term care Medicaid program is a complex process. Throughout my practice I have gained experience in this area as I have assisted hundreds of people in obtaining long-term care Medicaid eligibility.

If you or a loved one need long term care, I strongly encourage you to seek out competent legal advice regarding your eligibility for the VA Aid and Attendance pension or the long term care Medicaid program as these programs can provide much-needed funds to pay for the high costs associated with such care. For those healthy enough to purchase long term care insurance I encourage you to talk to your insurance agent about the options available.

Adam is the managing Member of Farrar & Williams, PLLC and can be reached at (501)525-4401 or at adam@farrarwilliams.com.

Estate Planning Provides Peace of Mind

Fri, 09 Feb 2018 17:15:44 GMT

By Attorney Adam WIlliams

It is our experience that one of the main motivations that families have in preparing an estate plan is to ensure that your surviving spouse (and other family members) have minimal difficulties following death. The goals of most families include avoiding probate court, family fights, and taxes. In recent years a common estate planning goal often involves asset protection in the event of a nursing home stay. I find that many of my clients are initially anxious about setting up their estate plans. It is easy to procrastinate about such matters. What I have found in my 25 years plus experience with estate planning is that proper planning, once completed, provides tremendous relief and peace of mind to my clients - a great burden has been lifted!

Adam Williams is the managing partner at Farrar & Williams, PLLC , a law firm limiting its practice to trusts, estate planning, and elder law, located in the Bear State Bank building, 135 Section Line Road, 2nd Floor, Hot Springs, Arkansas.

How to Plan for Long Term Care Costs

Fri, 08 Dec 2017 20:01:51 GMT

It is a reality that as we live longer, the need for long term medical care continues to rise. A question I often get asked is, “How do we plan for the cost of long term care, including nursing home costs?” Long Term Care Insurance is by far the preferred option, since it offers the possibility of keeping people out of nursing homes by paying for care in the home or in assisted living facilities. Statistics show that the vast majority of people do not purchase long term care insurance and are forced to rely on other alternatives to pay for long term care costs. Unfortunately, the other alternatives often do not include care in the home and instead require the long term care to be in a nursing home.

Without insurance, there are two primary options for the payment of nursing home costs. First, a person may have sufficient income and assets to pay for such costs on a private pay basis. However, since such costs average in excess of $5,500 per month, the private pay option is not a long term solution for most people. The second option is the Long Term Care Medicaid Program. Since this is a government benefit program, there are asset and income requirements to be met in order to qualify. The rules differ depending on if you are single or married. As a result of the eligibility determination process, many clients structure their estate plans in a way to enhance their eligibility in the event such costs become necessary. The remainder of this article will focus on one of the more popular estate planning tools used to enhance Medicaid eligibility for long term care costs.

A special type of trust often referred to as an “irrevocable trust” is a popular planning option. I prefer to call this trust a Medicaid Asset Protection Trust (MAPT). It is important to note that most Trusts that are set up are Revocable Trusts which offer no protection from nursing home costs. In most cases, in order to gain eligibility, one must either give away assets or structure assets in a MAPT. Gifting assets to your children is usually a poor option, since those assets then become exposed to the children’s debts and liabilities, divorces, etc. For these reasons, the MAPT may be a preferred option as it leaves you in control.

As with most asset transfers the creation of a MAPT is subject to a Medicaid “look back” of five years. This means the Trust should be created and funded at least five years prior to applying for any Medicaid benefits. It is important to note that most clients who set up a MAPT elect to keep a sufficient amount of assets out of the Trust so they will have full access and control to a comfortable level of assets for their lifestyle. IRA’s and other retirement plans are usually left out of a MAPT.

In summary, planning for the cost of long term care is an important issue that many people need to consider when setting up their estate plan. This type of planning is very specialized and should only be implemented with the help of an experienced elder law attorney.

Adam Williams is the managing partner at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located on the 2nd floor of the Bear State Bank building, 135 Section Line Road, Hot Springs, Arkansas, and can be reached at (501) 525-4401 or at adam@farrarwilliams.com. The firm’s website is www.farrarwilliams.com .

What You Need to Know About the Estate Tax

Wed, 18 Oct 2017 18:13:16 GMT

One of the most unpopular taxes that exist is the estate or inheritance tax (commonly called the death tax!) The tax is based on the assets a person owns at the time of death. All citizens have an exemption from said taxes. The federal estate tax exemption is now $5,450,000 per person ($10,900,000 for a married couple!) Any assets owned above the exemption are subject to the tax, which starts at thirty-five percent. In addition, certain states such as New Jersey also have a state estate tax. Nineteen states and the District of Columbia still levy a tax at death. Fortunately, Arkansas does not have a state estate tax.

Given the large exemptions that are in place, most people do not have to be concerned with estate taxes.

If you have a larger estate (over $5,450,000) you still need to plan for the federal estate tax, which can tax at a bracket of thirty-five percent on amounts over the exemption. There are many estate planning options that can be used to reduce or eliminate estate taxes. Trusts, limited partnerships, and gifting are a few of the more commons options to consider. In the event you are married, the options are even greater as you want to make sure both the husband and wife’s exemptions are utilized. Proper planning is essential for larger estates.

Adam Williams is the managing partner at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located on the 2nd floor of the Bear State Bank building, 135 Section Line Road, Hot Springs, Arkansas, and can be reached at (501)525-4401 or at adam@farrarwilliams.com . The firm’s website is www.farrarwilliams.com .

What Estate Planning Documents Do Your Young Adult Children Need?

ttiffany@farrarwilliams.com (Tiffany Tucker) — Thu, 07 Sep 2017 15:53:45 GMT

No eighteen year-old wants to think about a living will or a durable power of attorney when they are heading off to college. Likewise, no parent wants to think that their eighteen year-old child needs documents like this. But the reality is, there are a few bare-bones estate planning basics that even the college freshman could benefit from and that become even more important for young adults in their 20s or 30s.

If something happens to your child while they are off at college, you as the parent have no right to see their medical records because of the “HIPAA” rules. Legally, parents are not able to make health care decisions without a signed healthcare directive naming them as agents authorized to act on the child’s behalf while they are incapacitated or unable to speak for themselves.

A durable power of attorney is a document that your young adult children could also benefit from. Powers of attorney name an agent to act on their behalf if they are unable to take manage for their financial affairs. If you, as the parent, are named as the power of attorney for your young adult child, you would be able to pay their bills or handle their financial affairs as needed in an emergency situation.

While most college students do not have substantial assets, a simple will might be needed to designate who should receive his or her assets and belongings in the event of death (even if it is just a baseball card collection). Wills become especially important once young adults have their own children, as this is the document that will name guardians for their minor children.

These simple estate planning documents will give you, and your young adult children, peace of mind in knowing that a plan is in place in case a tragedy occurs.

Tiffany can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com . She can answer any questions you have about this subject.

Who Should Be Named As My Executor and Trustee?

Tue, 01 Aug 2017 16:38:03 GMT

By Adam Williams, Elder Law Attorney

One of the critical decisions a person has to make when setting up their estate plan is who to name as their agent to carry out their wishes and manage their assets in the event of death or disability. There are several agent functions to be concerned with, including: Executor of your Will; Successor Trustee of your Trust; Agent under your Durable Power of Attorney; and Agent under your Healthcare Directives.

In most cases your agents are set up as your spouse being the first nominee and some combination of your children as secondary nominee(s). Much thought must be given to the appointment of your agent as they will be in charge of your affairs. Selecting people with good business judgment is important as well as selecting people with good temperaments. Since the agent will be called upon to serve during a time of crisis (usually at death or disability), you must make sure the person you name can handle the pressures that such situations bring about. The last thing you want to happen is to create a situation where your family is in conflict regarding your wishes. For this reason many people elect to name non family members as their agents.

Some of my clients do not have suitable family members to name as their agents. In such cases, you can look to corporate agents such as trust departments or private trust companies. In my experience these companies are a good choice as they administer your wishes according to your documents and without the emotional attachment that comes with naming a family member. The downside to corporate agents is they charge a fee for their service. Generally speaking, the fees are around 1% per year for the assets under management. Close friends or your attorney or accountant can also be given consideration, although in my experience, corporate agents are a better option.

There are many important decisions to make when setting up your estate plan. Perhaps the single most important decision is who to name as you agent. For this reason you should spend a lot of time considering the options so as to protect your wishes as well as to facilitate family harmony.

Adam Williams is the managing partner at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located on the 2nd floor of the Bear State Bank building, 135 Section Line Road, Hot Springs, Arkansas, and can be reached at (501)525-4401 or at adam@farrarwilliams.com . The firm’s website is www.farrarwilliams.com .

Out of State Estate Planning

Mon, 10 Jul 2017 15:26:50 GMT

Written by Tiffany Tucker, an associate attorney at Farrar & Williams, PLLC

Did you recently retire to Arkansas from another state? The legal complications of moving from state to state are not as difficult as they were in past years. But you still need to be knowledgeable about the tax and legal issues that can differ from state to state.

For example, if you sold your home in another state recently, you probably do not owe any capital gains tax on the sale, but you usually do need to file a final state income tax return for that state. The good news is that you will probably not owe any tax on the sale if your profit was less than $500,000 (this exemption may vary from state to state, but the federal exemption for a married couple is up to $500,000 in profit on sale of the principal residence).

What about your estate planning documents, including your Last Will and Testament, Durable Power of Attorney, and advance directives? Are these documents effective in Arkansas? As a general rule, the answer is yes. A legal document properly executed in another state is effective in Arkansas. However, a durable power of attorney and healthcare advance directives typically need to be updated to include the statutes of the state where you currently reside.

But then the legal system always has exceptions to consider. Do you have children that you are not providing for under your Last Will and Testament? Arkansas has a law, known as the “pretermitted heir law” that requires your will to at least mention the child, even if you do not wish to give that child anything under your will. Likewise, if you have a deceased child leaving children, you need to mention those grandchildren’s names in your will. Failure to mention the child or grandchild can result in that person you wished to disinherit instead receiving a portion of your estate, despite the terms in your Last Will and Testament.

What about Arkansas estate tax? Fortunately, Arkansas has eliminated its state estate tax, so that is not a problem. The federal estate tax still applies to estates in excess of $5,490,000 for 2017, and there are even larger estate tax exemptions for married couples.

Do you still own real estate in another state? For example, many families own vacation condominiums in other states? If so, you will want to plan for that to avoid “ancillary probate” (a probate court proceeding in another state.) This can be an expensive and time consuming legal problem for your surviving spouse or children.

In summary, if you have moved here from another state, the laws are usually not significantly different from state to state. However, we typically advise that you have an attorney review your out of state documents, and possibly make updates to your documents in accordance with the laws of the state where you currently reside. Further, an experienced estate planning attorney can advise you on any other issues that might affect your estate plan now that you are a resident of Arkansas.

Tiffany is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com . She can answer any questions you have about this subject.

What Should Estate Planning Cost?

Wed, 07 Jun 2017 18:31:54 GMT

By Adam Williams, Elder Law Attorney at Farrar & Williams, PLLC

One of the first questions I often get asked by prospective clients is how much my services will cost. This is a fair question as fees should always be discussed at the beginning of a business relationship. Under ethical rules, an attorney’s fee should be reasonable and based on the time spent on the matter; the expertise of the attorney; and fees customarily charged for similar services in the community. Most lawyers charge fees on an hourly basis and charge for all time spent on the matter. By contrast, many estate planning lawyers prefer to charge fees on a flat or fixed fee basis. My firm has a published fee schedule available on our website or by calling our office. This fee schedule lists the fees and expenses we normally charge for most routine estate planning services, such as powers of attorney, healthcare directives, Wills and Trusts.

Are fixed fees better than hourly fees? This is a tough question but I have found that my clients prefer to know what the cost will be for the services rendered. The unknown of how much time is being spent can cause client’s anxiety, and in my opinion can have a negative impact on my dealings with my clients. I do not want my clients to feel rushed or in a hurry to get the services done in order to reduce the costs. In estate planning the services are more predictable and routine so fixed fees can be established based on the amount of time spent on the typical case. Our fee schedule is reviewed and updated on an annual basis. Of course you will have cases that take more time and end up being less “profitable” but in the long run fixed fees are the most reasonable way to charge for estate planning services. It must be pointed out that many legal services cannot be charged on a fixed fee basis as there is no way to predict the amount of time the matter will take. This is usually the case with any type of lawsuit.

There are some disturbing trends I have encountered with some attorneys, including some estate planning or elder law attorneys. The first trend involves charging fees based on a percentage of the assets involved or “being protected” with said fees charged while the client is living. While percentage fees on trust and estate settlements (such as in probate) may be somewhat customary, in my opinion, charging a percentage fee to a client based on how much of their assets you are going to “protect” is not reasonable and often results in the client being taken advantage of during a vulnerable time in their life (such as when being admitted to a nursing home). Another disturbing trend involves a so-called “lifetime fee retainer,” where an attorney charges a large fee and agrees to provide for all future legal services (read the fine print as the services are limited). This type of fee arrangement does not pass the ethical requirements in my opinion as there is no way to predict the future needs of a client, and it may be difficult to ensure the attorney or law firm will be around to even provide such services.

In summary, attorney fees are a “necessary evil” as some of my clients put it. I encourage you to discuss the fees at the beginning of the matter and ask questions about other types of fee arrangements. I also encourage you to be wary of percentage fees for protecting your assets, or fees that are based on a lifetime of services.

The firm’s website is www.farrarwilliams.com .

How Are Your Grandchildren Paying for College?

Thu, 27 Apr 2017 15:03:21 GMT

Written by Tiffany Tucker, associate attorney at Farrar & Williams, PLLC.

If you have a grandchild graduating from high school next month, chances are you have been hearing a lot of talk about scholarships, financial aid and the cost of tuition.

The Wall Street Journal recently reported that the cost of college tuition, room and board is averaging about $19,000 a year at public universities and $42,000 at private nonprofit schools. With these costs, it is important for families to know their options regarding paying for college.

According to Sallie Mae, 17% of families relied on relatives to help pay for college. There are many different ways that grandparents (or other relatives) can help their grandchildren pay for college.

If your grandchild is looking to pay for college this year, your options are more limited than if you had planned for this in advance.

One way to help your grandchild immediately would be simply making cash gifts. However, the gift tax exclusion is currently $14,000 per person. This means that grandma can give $14,000 to a single individual and grandpa can give $14,000 per year without having to report the gift on any tax returns. However, these cash gifts could hurt the student’s chances for financial aid. If your grandchild is applying for financial aid you should not pay the money directly to the school because the school will reduce the student’s financial aid.

Another option would be for the grandparent to pay a student’s full tuition directly to the college. When this is done there is no gift tax, but these tuition payments cannot be deducted.

Typically the best option to help your grandchildren pay for college is by planning in advance and contributing to a 529 Plan. A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. Amounts contributed to a designated beneficiary's 529 account are treated as a gift. However, contributions of up to $14,000 can be made for each designated beneficiary without incurring federal gift tax in accordance with the annual exclusion. In addition, there is a special exemption to the gift tax for the purpose of contributing to a 529 Plan, which allows each grandparent to contribute a one-time gift of $70,000 (five years of the gift tax exemption). Arkansas taxpayers can deduct up to $5,000 (up to $10,000 for married couples) of their Arkansas 529 GIFT Plan contributions from their Arkansas adjusted gross income.

Tiffany is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com . She can answer any questions you have about this subject.

How to Avoid Probate

Fri, 14 Apr 2017 13:44:46 GMT

Written by Adam Williams, Managing Partner at Farrar & Williams, PLLC

Probate is considered a dirty word by most seniors. Why is that? Probate can be defined as a court supervised proceeding where a person’s Last Will and Testament is enforced and administered at the time of death. Probate is also required for a person who dies without a Last Will and Testament. Since it is a court supervised process, it can be quite expensive (up to 6% of the estate value in some states) and time consuming (minimum of 6 months in Arkansas). Based on these problems, probate should be avoided if possible. A good estate plan often focuses on probate avoidance. This article will outline some probate avoidance strategies that should be avoided or at least carefully considered, as shortcuts to avoid probate can create more problems than probate itself!

The best probate avoidance plan is the use of a Revocable Living Trust. Trusts are the most popular estate planning document primarily because they avoid probate while at the same time thoroughly addressing all issues that can come up in administering an estate at death. A Trust is simply an agreement that controls your assets while you are alive (with you serving as your own Trustee and remaining in full control), but also controls the distribution of your assets at death (much like your Will would). Trusts are often called Will substitutes as they replace the function of a typical Will.

Rather than using a Trust, many people attempt to avoid probate by other means, most commonly through joint accounts, payable on death (POD) accounts, and transfer on death (TOD) accounts. Joint accounts are when a child or other beneficiary is named as a joint owner. POD accounts designate beneficiary(s) at death and are available for most bank accounts. TOD accounts (much like POD accounts) are allowed for most investment accounts. These forms of ownership do avoid probate; however, they may create other problems. First, they do not plan for the “what if’s” in life, such as the prior death of a named beneficiary or a beneficiary who has financial or personal problems. Next, they also do not require the payment of your final expenses such as funeral expenses, which may leave other relatives paying for your funeral and your named beneficiaries skipping town.

Jointly owned accounts create an additional risk in that the named joint account owner is an owner of your account, thereby subjecting the assets in said account to their creditor and marital claims. If your family needs access to your funds in the event of your incapacity, your estate plan should have a Power of Attorney to allow such access for your benefit. For this reason there is no need to have a joint account owner (other than your spouse) with a proper estate plan.

In my experience, these “short cut” strategies often have poor results and end up costing more in legal fees to clean up the mess left behind. There are often unattended consequences as a result of short cuts in planning and your family may end up in conflict with one another over what your true intentions were.

How to Pay for Assisted Living or Nursing Home Costs

Thu, 06 Apr 2017 16:57:41 GMT

Adam is the managing Member of Farrar & Williams, PLLC and can be reached at (501)525-4401 or at adam@farrarwilliams.com.

With advances in health care, statistics show that people are living longer. With advanced age, many people require assisted living or nursing home care during the later stages of life. The costs of such care can be very expensive and unfortunately the options for payment of the care are limited. If forced to private pay for such care, the costs for long-term care can rapidly deplete a person’s estate. Nursing home costs in Garland County can easily exceed $5,000.00 per month, with home based care being even more expensive. My law practice focuses on helping people plan for such costs.

The best planning option for long term care expenses, whether it be assisted living, home based care or long-term care, is an appropriate long-term care insurance policy. A properly structured long-term care policy will include services for home care, assisted living care as well as nursing home care. These policies provide the best choices for such care and should be included in your estate plan. I am often told by my clients that they do not purchase the long-term care insurance based on the high premiums. Despite these concerns, I always encourage my clients to seek out information about long-term care insurance as it remains the best option to cover such costs.

Surprisingly, a small percentage of seniors actually have long-term care insurance, which forces them to look for other alternatives to pay for such care. For this reason other options must be evaluated. In the case of assisted living care or home based care, my first inquiry is whether or not my client or their spouse was a wartime veteran. If they were a wartime veteran, then they have an opportunity to seek a special pension benefit available through the Veteran’s Administration, known as Aid and Attendance Benefits. While this pension benefit will not cover the full cost associated with most care, it does provide a monthly pension (of over $2,000.00 per month in some cases) which will help supplement the cost of uncovered medical-related care, including assisted living or home-based care. There are numerous eligibility restrictions on the Veteran’s Administration Aid and Attendance program. If you or your spouse were a wartime veteran and you have medical-related expenses that exceed your monthly income, you should inquire as to your eligibility for said pension benefits, as they provide much needed funds to help supplement the cost of your care.

For those clients that need full-time nursing home care, the payment options are limited. The two main options are private payment (in excess of $5,000.00 per month) and the long-term care Medicaid program. The Medicaid program is a large government funded program that pays for up to 70 percent of all people in nursing homes. The cost savings associated with the long-term care Medicaid benefits can be significant. Gaining eligibility for the long-term care Medicaid program is a complex process. Throughout my practice I have gained experience in this area as I have assisted hundreds of people in obtaining long-term care Medicaid eligibility. Early planning is the key so I encourage you to explore your options sooner rather than at the time of a crisis.

Planning for the increasingly high cost of long term care is an essential part of your estate planning. This type of planning is complex and requires the services of an attorney who deals with elder law issues.

Tips on Titling your Car for Seniors

Mon, 06 Mar 2017 16:42:43 GMT

Writer: Tiffany Tucker,  associate attorney at Farrar & Williams, PLLC

If you are retired, what is the best way for you to title your vehicle, so that your surviving spouse and children do not have any problems following your death?

If you are in a first marriage, and your spouse is still alive, you would usually want to hold the title in to both you and your spouse’s name. I recommend that you title your car with an “or” between your names on the car title (for example, “Joe Smith or Sue Smith.”) In this manner, either you or your spouse can sell the vehicle at a later date without both of you having to sign the paperwork. Following your death, your surviving spouse would have sole ownership of the vehicle without having to obtain an updated title.

What if you are in a second marriage? If it’s a long-standing second marriage, you would typically want your surviving spouse to inherit your car. You would simply follow the same procedure outlined above for a first marriage. But if you are in a recent second marriage and instead desire your vehicle to pass to your children, you would accomplish this either by a provision in your will or alternatively by adding your children’s names on the car title through a ”TOD” designation (transfer on death”). This TOD can be handled through the local Department of Motor Vehicles office for a small title transfer fee.

How should you handle your car title if you are a single person? If you want all of your children to inherit your car following your death, then all your children have to do is take the car title to the Department of Motor Vehicles following your death, and fill out an affidavit of inheritance. This would place the vehicle in all of the children’s name. This procedure assumes the children get along with each other, and that your children will cooperate in filling out the paperwork.

If you’re single, and you want just one of your children to inherit your car, then you should follow the transfer on death procedure explained above, or specifically designate that in your estate plan.

In summary, the transfer of your car following your death usually does not require involvement of lawyers or probate court. But it is helpful to your family for you to leave clear instructions, and fill out paperwork in a manner that avoids problems for your survivors.

Tiffany Tucker is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com.

Estate Planning for Time Shares

lr-clientservices@wehco.com (Master Account) — Wed, 25 Jan 2017 15:32:09 GMT

Many seniors have purchased time shares. These vacation properties give the senior the right to vacation one week or more each year at a condominium that can be located anywhere from Florida, to Hawaii, to foreign countries. The time share market has changed dramatically over the past 10 years. Rather than owning a specific week in a specific property, owners’ have points that allow them to utilize many different properties.

How should you handle your time share property as a part of your estate plan? You will want to take steps to ensure your time share is not subject to probate in the state in which your time share is located. This problem can occur because, the title (or deed) of the time share property is governed by the probate laws in the state in which the property is located. Your family could be faced with having to hire a probate attorney in that state, at considerable expense (sometimes as much as $1,500 or more in legal fees). Most property owners want to save their children the cost and delays of Probate proceedings. Probate is the court process to determine the new owners of property after an owner’s death. A Last Will and Testament does not avoid probate court! Rather a Will only directs the probate court as to how to distribute your assets .

How can you avoid the expense of probate court on your timeshare? You may want to create a Joint Tenancy with Right of Survivorship for your time share with your children so that the property passes automatically to your children at your death. Alternatively you might consider transferring title to your living trust to avoid probate court. If you have already created a trust, you will want to make sure that you deed your time share into your trust.

In most states including Arkansas, if a husband and wife own the timeshare as “Joint Tenants” or as “Tenants by the Entirety,” probate is avoided when one owner dies because the co-owner has automatic “rights of survivorship” and becomes the sole owner. However, when the surviving co-owner dies, probate then becomes necessary if you do not take steps to avoid it. Finally, if you own a time share in a community property state (Texas, California, Arizona, and six other states), the joint tenancy or tenancy by entirely rules may not apply and there may even be probate at the death of the first spouse. That can create expense and worry for the surviving spouse and you will want to try to fix that.

In summary, if you own real estate located out of state (including time shares, farm property, or vacation homes), this real estate can be subject to expensive and time consuming out-of-state probate procedures. You will want to consider taking steps to avoid this to save your children both money and time.

Adam Williams is the Managing Member of Farrar & Williams, PLLC, and can be reached at the law offices of Farrar & Williams, PLLC at the First National Bank Building, Section Line Road, Hot Springs, Arkansas; Phone: 501-525-4401.

Estate Planning for Families without Children

Mon, 14 Nov 2016 21:20:39 GMT

Individuals oftentimes become motivated to create an estate plan for their family once they have children, to name a guardian for their minor children and to ensure their minor children are cared for.

Sometimes the motivation is not there to create an estate plan for those without children. However, an estate plan is just as important for those without children, as it is for those with.

Who would receive your estate assets if you passed away today? If you die in Arkansas without a will, intestate succession statutes govern who is to receive your estate. Intestate succession depends on whether you have living children, a spouse, parents and other close relatives.

Therefore, it is important to consider who you wish to be beneficiaries of your estate upon your death. You can make these wishes in your Last Will and Testament, or if you wish to avoid probate upon your death, you should consider creating a revocable living trust.

All of us run the risk of becoming incapacitated by reason of stroke, accident, or advanced age. Therefore, you should also consider executing a durable power of attorney. This is the most basic building block of an estate plan. A power of attorney is a legal document where you appoint a trusted person as your agent to act for you regarding management of your assets in the event of your incapacity. Our firm recommends your power of attorney be durable; this permits a power of attorney to remain effective despite your disability. However, it is necessary that your power of attorney express your intent that the power of attorney be “durable”.

Further, a living will and advance directive is an important document to consider. A Living Will is a document directing that your physician not take extraordinary medical steps to prolong your life in the event you are suffering from a terminal illness or injury from which you have little possibility of recovering. If you feel strongly about avoiding prolonged and expensive medical care in hopeless situations, you may also wish to utilize a Medical Power of Attorney. A Medical Power of Attorney is a document by which you appoint another trusted person to act on your behalf in the event you are unable to act for yourself, with regard to the hard decisions that must be made if you are terminally ill.

Tiffany Tucker is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com.

What Should You Share With Your Family About Your Estate Plan

Mon, 14 Nov 2016 21:18:41 GMT

Communicating with your family about your estate plan is a sensitive but important topic.

Adam Williams is the managing partner at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located in the Bear State Bank building, 135 Section Line Road, Hot Springs, Arkansas.

Tangible Personal Property – “Who Gets All My Stuff?”

Thu, 28 Jul 2016 21:00:50 GMT

Estate planning attorneys and their clients spend a great deal of time drafting a plan that divides the large assets of an estate equally and equitably among their children, grandchildren, or other beneficiaries. However, they sometimes give far less thought to the other stuff, including tangible personal property that may have more sentimental value than monetary value. Oftentimes, it is the decisions about those sentimental items that can cause the most problems in a family upon the death of a loved one.

Arkansas has a statute that allows a written statement, signed and dated, designating how certain items of tangible personal property shall be distributed. This statement allows people to change the division of tangible personal property without having to amend their entire will or trust.

It is a good idea to ask your children or other beneficiaries which of your personal property items they would like to receive upon your death. It is helpful to know which child loves your paintings and which child loves your china. You can equalize values at death with other assets from the estate to ensure fairness, if that is your intention. Families can use an appraiser to determine values of personal property items to ensure fairness, especially if one child is receiving a Rembrandt painting and one child is receiving grandma’s famous casserole dish.

Oftentimes a family will draw lots or take turns in deciding what personal property items they want. This allows each family member to feel they got their fair share.

An extreme approach may be taken if a family cannot decide how to divide the personal property items. This approach is for the executor or trustee to sell everything and divide the proceeds from the sale among the beneficiaries in the will or trust.

Tiffany Tucker is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com.

Estate Planning For Blended Families

Sat, 14 May 2016 19:38:39 GMT

Wills, Probate, and Estate Taxes

Wed, 27 Apr 2016 15:10:12 GMT

There is much confusion about the relationship between wills, probate, and estate taxes. This article will attempt to explain these subjects.

What is the best solution to avoid probate? A living trust avoids probate; with none of the disadvantages of joint ownership (joint ownership assets with your children can be subject to their IRS liens, lawsuits or divorce claims). Living trusts have become increasingly popular as the costs to establish a trust are quite reasonable, especially when you factor in the savings you get from avoiding probate. At our firm, a typical living trust estate plan costs approximately $1,350.00 (for a single person), whereas a basic Will plan costs approximately $500.00. So even though the trust costs more on the front end, your family saves a lot of time and money by avoiding probate.

What is the best solution to avoid estate taxes? First, only families with assets in excess of $5,450,000.00 (as of 2016) are subject to federal and state estate taxes. Secondly, if your family has a larger estate, and you are married, proper use of “A-B Trusts” can double your exemptions to $10,900,000.00, since both spouses have an exemption.

How to Keep Your Heirs from Wasting Their Inheritance

Wed, 02 Mar 2016 19:54:28 GMT

There is an old Chinese proverb that states, “Wealth does not pass three generations.” This proverb shows that the first generation works hard to create a fortune; the second generation lives high; and the third generation squanders what is left. We all know of situations where the grandparents left large estates that were completely wasted by their children and grandchildren. How do you keep your children and grandchildren from squandering the wealth that you worked hard to accumulate?

One good solution is to educate your children and grandchildren about how they preserve their inheritance. This includes teaching your children about investments, learning about family values, and how to live off the income of the inheritance, without spending down the principal. One easy way to educate your children and grandchildren about investments as they get older is to open them an investment account as a birthday gift or a Christmas present. This will allow them to make investment decisions, with your advice and counsel.

Another good solution to protect your estate from being squandered is the use of a continuing trust or lifetime trust share. This type of trust minimizes the ability of the adult child or grandchild to get their hands on the big money and spend it all. Instead, the child or grandchild is given an allowance, but the principal is professionally managed. The trustee of this trust share would have the discretion in how much the beneficiary needs for their health, education, maintenance and support.

In summary, it is tragic to see a financially successful family lose all their investments, within just a few decades after the passing of the grandparents. There are steps you can take to minimize these risks.

Probate Avoidance Strategies

Tue, 09 Feb 2016 16:45:16 GMT

Probate is a court supervised proceeding where a person’s Last Will and Testament is enforced and administered at the time of death. Since it is a court supervised process, it can be quite expensive (up to 6% of the estate value) and time consuming (minimum of 6 months in Arkansas). Based on these issues, most seniors attempt to avoid having their estate pass through probate. Estate planning often focuses on probate avoidance. This article will focus on some probate avoidance strategies that should be avoided or at least carefully considered.

Before addressing strategies to avoid probate that are undesirable, I would like to provide a brief explanation on the best probate avoidance planning, which is the use of a Revocable Living Trust. Trusts are the most popular estate planning document primarily because they avoid probate while at the same time thoroughly addressing all issues that can come up in administering an estate at death. A Trust is simply an agreement that not only controls your assets while you are alive (with you serving as your own Trustee and remaining in full control), but also controls the disposition of your assets at death (much like your Will would).

Based on the perceived high cost of setting up a Trust, many people attempt to avoid probate by other means, most commonly through joint accounts, payable on death (POD) accounts, and transfer on death (TOD) accounts. Joint accounts are when a child or other beneficiary is named as a joint owner. POD accounts designate a beneficiary(s) at death and are available for most bank accounts. TOD accounts (much like POD accounts) are allowed for most investment accounts. The problem with these planning strategies, is that they do not plan for the “what if’s” in life, such as the prior death of a named beneficiary or a beneficiary who has financial or personal problems. They also do not require the payment of your final expenses such as funeral expenses. POD and TOD accounts simply distribute the funds outright to the named beneficiary with no other contingency plans. Joint accounts create an additional risk in that the named joint account owner is an owner of your account, thereby subjecting the assets in said account to their creditor and marital claims. This author strongly discourages the use of joint accounts. If your family needs access to your funds in the event of your incapacity, your estate plan will have a Power of Attorney to allow such access for your benefit. For this reason there is no need to have a joint account owner (other than your spouse) with a proper estate plan.

In my experience, these “short cut” strategies often have poor results and end up costing more in legal fees to clean up. Further, based on unattended consequences as a result from such strategies, your family may end up in conflict with one another over what your true intentions were. If you or a loved are interested in avoiding probate, I encourage you to discuss the pros and cons of the various strategies with an estate planning attorney.

Adam Williams is the managing partner at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located in the Bear State Bank building, 135 Section Line Road, Hot Springs, Arkansas.

Use of Real Estate Trusts for Your Home

Tue, 01 Dec 2015 20:31:55 GMT

Many seniors remarry following the death of a spouse. Often, after remarriage, the seniors move into either the husband’s home or the wife’s home with the other spouse selling their home.

This is a major life change and raises the question of how the home should be managed in the event of the disability or death of the spouse who owns the home?

One solution is to make provisions in your will or trust that allow the non-owner spouse to maintain certain rights in the home for some period of time following the death or disability of the owner. Additionally, you might consider giving the non-owner spouse the first option to purchase the home in the event of the death of the owner spouse. Finally, some families establish a special trust, which I call a “real estate trust” to hold title to the home. The real estate trust has custom provisions for each unique situation and often allows the surviving spouse to have use of the home until the surviving spouse’s death or disability. Then the home reverts to the children of the spouse who owns the home (who predeceased). In some cases the home may be co-owned by the spouses (when they decide to buy a house together) and in those instances the real estate trust is far and away the best solution as it protects the interests of the spouses as well as their respective children.

By comparison, if the husband and wife purchased the home in their joint names, the law would create a right of survivorship in which the first spouse to die and their family would lose all interest in the home. Most families desire to avoid this unintended result so please be wary of jointly owned homes in these situations.

Next, there is the issue of who pays the expenses associated with the home. During the joint lives of the couple on the second marriage, most couples usually split the expenses including utilities, mortgage payments, taxes, insurance and basic maintenance, etc. But what about expenses associated with the house following the death or disability of the owner spouse? Most real estate trusts provide that the surviving spouse pays the basic home expenses including utilities, insurance, taxes and basic maintenance. However, large repairs like a new roof on the home or a new central air conditioning system would normally be paid for by the trust or from the owner spouse’s funds. It is essential to have clear rules as to what the surviving spouse pays and what the estate/trust of the predeceased spouse pays.

In summary, many seniors remarry following the death of their first spouse. They often move into one of their existing homes, but in many cases they elect to have a fresh start by buying a new home. The use of a real estate trust is often the proper thing to consider. Resolving ownership rights in the home that the remarried spouses live in takes careful planning so as to avoid controversy at a later date.

Adam Williams is the managing partner at Farrar & Williams, PLLC, a law firm limiting its practice to trusts, estate planning, and elder law, located in the First National Bank building, 135 Section Line Road, Hot Springs, Arkansas. For more information about how our firm can assist you, contact us today at 501-226-4942.

Daughters- & Sons-in-Law

Tue, 10 Nov 2015 20:48:35 GMT

From the Sentinel Record's October 2015 Senior Scene

Many of my senior clients report to me that they are having conflicts with their daughter-in-law or son-in-law.

While none of us like to discuss tensions in our families, the fact still remains that in many families, you may not have a close relationship with the spouse of your adult child. Indeed, sometimes these relationships are quite unpleasant and even hostile.

Many seniors wish to take steps to ensure that any inheritance received by their adult child does not ultimately pass to the in-law with which the senior has a bad relationship. Rather, many seniors would rather that their child’s inheritance, instead, ultimately pass to their grandchildren (either in the event that the adult child should predecease, or alternatively in the event the adult child receives the inheritance).

If you wish to prevent your daughter-in-law or your son-in-law from receiving a part of your estate, how do you do this? First you need to be clear in your estate planning documents that if your adult child should predecease you, their share passes to your grandchildren. Further, you can also include a direction that the adult child’s inheritance continues in a trust that ultimately reverts to the grandchildren and not to the in-law. This can give your adult child generous access to his or her inheritance, but eliminate rights of the in-law of whom you are not fond.

Eliminating the possible inheritance rights of your son-in-law or daughter-in-law is not difficult to implement as part of your overall estate plan. It can be a good solution for the many seniors who just cannot abide the thought that an in-law, who has a bad relationship with the senior, might receive a large portion of the seniors’ estate.

Tiffany Tucker is an associate attorney at Farrar & Williams, PLLC and can be contacted at 501-525-4401 or by email at tiffany@farrarwilliams.com . She can answer any questions you have about this subject.

October Senior Scene Article

Thu, 01 Oct 2015 00:00:00 GMT

Structuring Your Children's Inheritance Through A Trust

By Adam Williams

Many of my clients indicate that their adult children are having a difficult time, especially from a financial standpoint. Many are experiencing difficulty holding jobs, keeping marriages together, and in some instances suffering from substance abuse. This is a difficult topic to discuss as parents often blame themselves for their children’s problems. This type of problem has become somewhat of an epidemic which makes estate planning vital to protect for the long term welfare of families.

While living, a parent can control their financial involvement with their children. But what happens following your death? What is the best way to prevent your children from wasting their inheritance? The establishment of a well thought out trust is the best solution. A trust can minimize the ability of the child to lose their entire inheritance through bad decision making or reckless behavior or through a divorce. Also, certain types of trusts (often called spendthrift trusts) can protect the inheritance from the claims of creditors. If you have a child with creditor or marital problems you should consider structuring their inheritance so as to protect against these very common risks.

These continuing trust funds are often called “dynasty” trusts or “legacy” trust as they are designed to shelter assets for children as well as grandchildren so that the inheritance can serve as a family legacy. The trusts are normally created in the parent’s revocable living trust as a continuing trust share. In essence the revocable trust of the parent is divided into continuing trust shares for the children with each trust drafted to meet the needs of each respective child. Typically the goal of such trusts is to insure the comfortable and long term security of your family, not to allow the purchase of luxury items. However, your trust provisions can be drafted as you desire and tailor made for your unique family situations.

As stated above, this kind of trust can ultimately protect your grandchildren. The trust can provide college money for your grandchild and further increase the possibility of an inheritance passing to your grandchild following the death of your child. In order to learn more about the benefits of structuring your family’s inheritance, please consult with an experienced estate planning attorney. The peace of mind that comes from a well thought out estate plan is worth its weight in gold!

Adam is the managing Member of Farrar & Williams, PLLC and can be reached at (501)525-4401 or at adam@farrarwilliams.com.