There are a few changes that have recently gone into affect or will be going into affect that can affect an estate plan.  These are all good changes and will make the job of estate planner, whether it is the individual or their attorney, easier.

An owner of any vehicle or boat can now transfer it upon his or her death to a designated beneficiary through the Department of Motor Vehicles (DMV).  What does this mean?  This means the vehicle or boat will avoid probate if you apply for a certificate of title/number and fill out the beneficiary designation form.  It is contractual, so it cannot be revoked by a will.  It can be only be revoked, or changed, by completing a revocation form with the DMV.

Also new to the DMV is the ability for an individual to declare on their driver’s license that he or she has a controlling living will.  This is a great way for medical providers to know that a living will is in place for that individual they are providing care for.  A living will is document that controls end of life decisions of whether or not one would like life-sustaining treatment that only prolongs the process of dying and is not necessary for comfort or to alleviate pain.

There are widespread changes to the durable power of attorney Acts.  A new Act was created and many amendments were made to the existing statutory language.  The Uniform Power of Attorney Act applies to durable powers of attorney (better known as durable financial powers of attorney or durable powers of attorney for business or financial needs) which allows powers of attorney created in Arkansas to be more specific and to fall under uniform application.  I am currently conforming all my existing clients’ durable powers of attorneys to the Uniform Act at no charge.

These changes will allow much more ease and flexibility in estate plans.  Please do not hesitate to contact me if you need help implementing any of these changes or if you would like to speak with me about creating an estate plan for you and your family.

I recently met with clients who brought their estate planning documents to me on their own to ensure they were “up to date” and “said what they wanted them to say”.  These clients are by far in the minority.  Their plans were from the early 90′s and did require updating.  They had one “general power of attorney” that was not durable and gave no specific powers to their attorney-in-fact.  We also updated the distribution portion of their will and trust as they had new grandchildren that were not specifically mentioned.

There is not a bright line rule for when one should review documents.  It’s a good idea to give your documents a yearly review to ensure laws have not changed and to ensure everything and every person listed are still around.  I, as well as most estate planning attorneys, do not charge to sit down with their existing clients on an annual basis to ensure everything is correct. 

I also recommend to revisit your documents whenever a life change occurs-new job, retirement, a move, new children and grandchildren, marriage, divorce and death.  Additionally, do not forget to review your beneficiaries with your life insurance agent and certified financial planner.

I receive lots of questions on a daily basis.  I am the token family attorney so I get lots of questions covering broad areas of law.  I don’t always know these answers, but I can answer most of the questions regarding estate planning.  By and far the most the questions I receive about estate planning are about trusts.  Revocable trusts are the most common and preferred trusts.  I have taken my most frequently asked questions about revocable trusts and answered them here. 

WHAT DOES A REVOCABLE TRUST DO?

A revocable trust, like any trust, holds an asset and determines to whom or where that asset goes, when it goes there and how it goes there. 

ARE REVOCABLE TRUSTS NECESSARY IF I DO NOT HAVE AN ESTATE TAX PROBLEM?

Yes.  Only irrevocable trusts can reduce estate taxes.  Revocable trusts, however, still have the following very important purposes:

• all assets in the trust avoid probate
• trusts help avoid accidental disheritances with second marriages and blended families
• trusts hold and distribtue money for minor children and grandchildren
• the management of assets in the event of a disability

DO I LOSE CONTROL OF MY ASSETS?

No.  You are still in control of your assets so long as you name yourself as trustee and are competent.  You can also determine who the trustee will be in the event of incompetency or death.

ARE THERE ANNUAL COSTS OR CHARGES ASSOCIATED WITH A REVOCABLE TRUST?

Not usually.  There are no fees if you are serving as your own trustee.  A corporate trustee does charge a small fee.  Trusts, like all estate planning documents, should be reevaluated every 5-10 years to determine whether or not they are still in accordance with local laws and statutes and to ensure they still do what you want them to.  Additionally, you need to update your documents, including trusts, anytime there are changes in your family’s circumstances.

WHAT OTHER DOCUMENTS USUALLY ARE PREPARED WITH A REVOCABLE TRUST?

• documents transferring your property into your trust
• a pour-over will
• durable financial power of attorney
• durable medical power of attorney
• living will

IS A POUR-OVER WILL NECESSARY IF I HAVE A REVOCABLE TRUST?

Yes.  A pour-over will directs that any assets not placed in your trust should be distributed into the trust upon your death.  The pour-over will is a safety net.  This safety net ensures that all assets get into trust.  Sometimes assets are forgotten and not transferred into the trust or an asset in the trust (such as a home) is replaced and new asset does not get transferred.

1! Ha, ha, ha...

I give out a lot of advice and pointers on what to plan for and what to include in your estate plan.  I wanted to change it up a little and help families avoid the mistakes that can lead to disasters in the future.  There is nothing worse than thinking you have your planning in place which takes care of everyone you love and then realizing it is worthless.

#1.  The Total Package

The number one mistake planners make is having a will only and thinking that is all they need.  A will is only one part of a complete estate plan.  Trusts, power of attorneys, living wills and memorial plans round out a complete estate plan. 

#2.  The Do-It-Yourself Kit

I have re-written numerous estate plans for families after they paid money for a do-it-yourself kit bought off of the internet or at a bookstore only to realize it did not take care of their needs.  Every state has different laws and these kits will not always create documents that will stand up to attack in your state.  Furthermore, they are designed only to handle the simplest of estates.  I have yet to see one take care of a situation in a blended family where both parents are divorced, have children together and children from a previous marriage.

#3.  Hiring The Wrong Professional

You would not hire an electrician to handle your plumbing problems.  Be sure you do your research and hire an attorney who focuses in estate planning.  Estate planning laws are fluid.  Bankruptcy laws are as well.  You would NOT want to hire me as your bankruptcy attorney.

#4.  One Trust Fits All

Trusts are very important estate planning tools.  However, trusts are not appropriate for all families and situations.  Avoid the estate planner who suggests a trust every time.  Also, avoid the estate planner who charges a flat rate for trusts.  Some trusts take an hour to create while others can take many, many hours. 

#5.  Trusts for Minor Children

Trusts are very appropriate for families with minor children and minor grandchildren.  Minors cannot legally own anything.  The guardian of the minor ends up “owning” the property and money.  This can lead to problems in and of itself.  Also, most families do not want to ”dump” a large amount of money on an 18 year old.  I know I probably would not have saved much of it when I was 18 if several hundred thousand dollars fell into my lap.  I would have driven a really cool Lamborgini, though.   

#6.  Not Declaring Guardians for Your Children

Most families do not realize that you can declare who you want to take care of your chidren if something were to happen to both parents.  This is one of the most important decisions you will ever make.  Do not exclude it from your planning.

#7.  Designate Your Beneficiaries

All of your accounts (banking, investment, retirement and life insurance) have beneficiary designations that you need to complete.  You state where you want your money to go to.  These accounts will avoid probate if you take care of the beneficiary designations.  You can even designate the money to go to your trust if you are leaving it to a minor child or grandchild.

This list could have been entitled “100 Estate Planning Mistakes You Do Not Want To Make”.  That would have been a tough read, but it hammers the point home that you need to meet with the proper estate planning attorney to ensure that your plan is exactly what you need.

A common question that I receive from clients is “I was told I need to get a guardianship.  What is that?”   

Summertime means vacation.  Lots of vacations involve the children and, also, many times the children get to stay with the grandparents when the parents go on vacation.  Make sure that you have a Power of Attorney drawn up to allow thsoe grandparents to make a medical decision and/or to consent to treatment if one of your children were to need medical attention.  The medical provider would have to track you down (wherever you are at) and receive permission from you in order to treat your child if you do not have a Power of Attorney in place. 

I draft temporary Power of Attorneys for my existing clients at no charge and only charge $50 for new clients.  It is an essential document that ensure needed medical attention is not delayed.  When you are making that vacation checklist this summer:  sunscreen, swimsuit, sunglasses, book… don’t forget Power of Attorney.