Arkansas Estate Planning

Have you made provisions for your affairs to be managed in the event that you became mentally or physically disabled? Have you made a plan for your property tobe disposed of, in the way you want, upon your death?

There is a natural tendency to put off planning with regard to disability and death. However, failure to plan can result in matter becoming extremely complicated, and expensive, when disability or death occurs. While proper planning does involve up-front effort and expense, it can have the effect of providing peace of mind, knowing that your affairs will be in order when misfortune occurs.

There is a great deal of misunderstanding of how one should go about planning their estate (e.g., "Do I or do I not need a will?" "Should I try to avoid having my estate probated?"). There is no single answer as to what one needs to do or not do. Just becaues a relative or friend planned their affairs in one way does not mean that it is the right way for you. Each person's situation and desires are unique, and this is why professional estate planning can be of such importance in addressing a persons's individual needs.

Some of the factors to be considered in estate planning are as follows:

1. WILLS

A properly executed will in effect allow you to direct, after your death, your desired disposition of your property. In your will you appoint an executor to manage your estate-this obviously should be a person in whom you have the utmost trust. the existence of a will in many caes reduces the cost to probate your estate. "Do-it-yourself" wills are not recommended for at least two reasons--

Since they are not drawn up by a professional, they may not be proper legal documents; and
Even if they are legal, they often fail to cover the many possible happenings which a competent estate planner is trained to include in the will (e.g. what happens if a child mentioned in a will dies first?), thereby often resulting in confusion and additional expense in probating the estate.

2. JOINT BANK ACCOUNTS

Many people rely on joint bank accounts in place of a will. a properly drawn-up joint bank account can result in its funds going to the survivor without the need for a will or probate. while in some situations it will be appropriate, in other cases it will not. At times confusion results. A person might leave a will giving a specified amount of money to one child, yet leave that money in a survivorship joint bank account in the name of another child. Under Arkansas law, the child whose name is on the account would get the money even though the parent may not at all have intended that result. Joint bank accounts, of course, do not address the disposition of your tangible propery (e.g. real estate, furniture, family heirlooms). Read Estate Planning and Bank Accounts and Is Your Estate Plan in Order? for more information on joint bank acounts.

3. PROBATE

Probate is the court procedure whereby, after your death, a person is appointed your administrator to inventory your property, pay your debts, and dispose of your property. If you leave a properly-drawn will, your property will be disposed of according to its terms. If you do not, the law sets out the manner in which your property is distributed (e.g., if a husband dies, under Arkansas law both his wife and his children share in his estate property). Many people speak of the desire to avoid probate. However, probate often is not an undue burden or expense if there is no contest among the heirs.

4. TRUSTS

Trusts are at times used to avoid probate, and for other reasons. Trusts are documents whereby ownership of your property is given to a certain person (or bank) known as the "trustee", who in turn manages it for the benefit of others (e.g., a husband and wife with minor children might provide, that upon their death, one of their adult relatives would hold the couple's property in trust for their children). Typically, the trustee is given considerable discretion as to when to use the trust assets for the beneficiaries, and in what amount.

Trusts can be set up in wills to begin after a person's death, but they can also be created during a persons's lifetime. An example of the latter is the revocable living trust, which has become increasingly popular.The revocable living trust can in effect be a substitute for a will and a means of avoiding probate. While it generally involves substantially more up-front expense than a will, the expense of probating the estate can be avoided if the trust is drafted and carried out properly. If you are interested in a living trust, please read our article entitled Should You Have a Living Trust?

5. LARGE ESTATES

If you are fortunate to have a larger estate (i.e. in the approximate range of $1,000,000 or more) much more specialized estate planning is needed in order to minimize or eliminate the federal estate tax. Estate planning in such situations is considerably more expensive, but the resulting tax savings are well worth the investment. In evaluating whether you meet the $1,000,000 threshold, all your assets should be taken into consideration,including the value of life insurance policies and jooint bank accounts you own.

6. DURABLE POWER OF ATTORNEY

As mentioned in the introduction, estate planning also involves for the management of your affairs while you are alive but are no longer able to do so because of either mental or physical disability. Your willcannot assist with this, since it does not take effect until after your death. In a durable power of attorney you appoint a trusted person to manage your affairs while you are still alive but are unable to do so yourself. A regular power of attorney expires and becomes legally ineffective when you become legally incompetent to manage your affairs, but a durable power of attorney continues in effect. A properly-drawn durable power of attorney can in many cases avoid the cumbersome and expensive process of having a court guardian appointed to manage your affairs.

7. LIVING WILL

A living will is a document which provides for the withholding of certain types of medical care in certain situations. For example, people can often specify that artificial life support systems should not be utilized in the event they are terminally ill. Despite the fact that it is termed a "will", it is more like a durable power of attorney than a will, since it is effective during your lifetime, not after your death. For more information, please read our article entitled Living Wills in Arkansas

8. NURSING HOME CONSIDERATIONS

Many people have concerns about the financial considerations involved should they need long-term nursing care. People often want to know how much of their property they will be required to use in paying for such care, and whether there is any means to protect their property. The law in this area is quite complex. The proper advice in any situation can be given only after a careful review of the family's fincancial and health situation and the current laws and regulations.

WE WOULD LIKE TO HELP YOU

If you live in Arkansas, our office would like to help you with your estate planning. We recommend an initial detailed consultation, followed by preparation of any documents needed. In the event you live far from our office, our work can be accomplished without your actually visiting our office. For an appointment, please call 479-968- 4747 (Russellville area) or 888-295- 4741 (state-wide toll-free).

ARKANSAS ESTATE PLANNING CONSIDERATIONS