We have been helping people plan their estates and assisting their families with probate since 1981. We have prepared thousands of wills, powers of attorney, living wills, and trust documents. While all situations are different, they share two common traits. People want: (1) their estates to pass to their beneficiaries smoothly and (2) to minimize taxes and probate costs. We can help. There are very few family situations we have yet to encounter.
When a person loses his ability to think for himself, because of age, illness, or accident, he also loses his ability to make legal decisions. Unless he has planned for this event, a legal guardianship must be established for him. The guardian (usually a relative) is given legal authority by a court to make decisions about his person and his estate. Many such decisions must be approved by the court in advance after notice is given to interested persons and a hearing. For these reasons, guardianships – while necessary if no other option is available – are cumbersome, expensive, and time-consuming. We know this to be true because we have represented many families who had no choice but to ask a court to appoint a guardian for a loved one.
Guardianships can be avoided with proper planning. A Durable Power of Attorney allows you to designate, in advance, whom you want to handle your affairs if you become incapacitated. The person you have designated (called your “agent”) can be given as little or as much authority as you wish to handle your affairs. Your agent can then deal with banks, insurance companies, hospitals, government agencies often without needing to involve lawyers and courts. A “durable” power of attorney is not affected by the fact that you later become incapacitated. A power of attorney can cost a couple hundred dollars. A guardianship can cost thousands of dollars.
Declarations (commonly called “living wills”) are another useful tool to avoid guardianships. With a Declaration, you tell your family and doctors – in writing – how to proceed with your medical care if: (1) You are terminally ill, (2) death is imminent, and (3) you are unable to communicate your decision yourself. Aside from saving money, a Declaration can relieve your family from the burden of making emotionally-draining decisions in a crisis situation.
If you die owning real estate or personal property in your name only, then your real estate or personal property will be distributed according to (1) your last Will or (2) law, if you have no Will. In general terms, the law says that your estate will be distributed to your “heirs.” (Please note that spouses, in-laws, and step-children are not considered heirs.) Many people are satisfied with having their estate distributed according to law. If, however, you want to control to whom your estate is distributed, in what amounts, and when it is distributed, then you should consider having a Will. A Will is a written declaration describing to whom you want your estate distributed. Wills are not effective, however, until (1) after your death and (2) they have been admitted to probate. Probate is the legal procedure for transferring ownership of property you own in your name only at the time of your death to beneficiaries designated either by the law or by your Will after your debts have been paid. Like guardianships, probate can be expensive and cumbersome. In very broad terms, probate fees and costs will approximate three to six percent of the gross value of your probate estate (again, property you own in your name at the time of your death).
Probate can be eliminated or minimized with a Trust. In simplest terms, a trust is a legal contract between you and your “successor” trustee to the effect that assets owned by the trust will be distributed according to the terms of the trust document upon your death. We write “successor” trustee because you usually serve as the trustee until such time as you can no longer serve or until such time as you no longer want to serve as trustee. A person (usually a relative) or a corporate entity (usually a bank or trust company) who you have designated as your “successor” then steps in your shoes as trustee to carry out your wishes.
Assets that you own are transferred into the name of the trust during your lifetime. When you die, you own nothing in your name – and probate is avoided. You have complete use of the assets owned by the trust during your lifetime. You can change the terms of your trust agreement anytime you like.
Many clients appreciate the privacy offered by trusts. Wills admitted to probate and probate proceedings are public documents that can be viewed by anyone. Trust documents generally do not become public documents and are shared only with people on a “need to know” basis.
While trusts are not perfect in all instances, they have allowed many, many of our clients to pass substantial assets on to their families at a lesser cost than probate. Trusts range in cost from a few hundred dollars to several thousand dollars depending on the complexity of the trust agreement.
Beneficiary Deeds are often an inexpensive way to transfer ownership of real estate to your family upon your passing without involving probate or the cost of establishing a trust.
There are no inheritance taxes in Arkansas. An estate tax (which is different from an “inheritance” tax) is due to the State of Arkansas only if an estate tax is due to the federal government. The value of estates that are exempt from estate taxes has grown to the point that very few estates are subject to estate tax. If, however, you are one of the “lucky” few who have this problem, we can help you devise a strategy to minimize your estate tax obligation.
Regardless of the value of your estate, we can help you design an estate plan to avoid or minimize probate costs and to insure that your estate is distributed to whom you want it distributed, in the amount you want it distributed, and when you want it distributed.