Most people do not have a will or plan for their estate, though it should be a priority.
This is the experience of Dan Young, a lawyer with Rose Law Firm in Little Rock and a parishioner of Our Lady of the Holy Souls, who focuses on estate planning and trust and estate administration.
Cost is sometimes an issue, as a generic estate plan can cost from $1,700 to $2,000. While it is an investment, it can save many headaches and expenses, including attorney fees, in the future.
While most assets owned by spouses are typically owned jointly with survivorship, “sometimes not all their assets are jointly held and someone is going to be the second to die,” Young said. Marriage does not automatically mean all assets go to the spouse. In most states, the spouse is the primary beneficiary. But in Arkansas, the deceased person’s children, not the spouse, are the primary beneficiaries. This means that if a married person dies and owns a property solely in his name without a beneficiary named, the property will be distributed to his children.
For many people, two large assets they have are life insurance and a retirement account. At death, these accounts or policies are frequently distributed to a named beneficiary. A beneficiary designation takes precedence over a will. Therefore, if an ex-spouse is listed and the beneficiary designation was never updated, the asset goes to the ex-husband or ex-wife. And, “if you don’t designate a beneficiary, it’s an asset of your estate subject to your creditors,” Young said.
The most basic reason for a will is making sure the correct people receive the deceased person’s assets. It is also beneficial to have a personal representative named to handle your wishes.
“If you die and have three kids, nobody may want to do it or step on toes,” Young said.
Beyond money, land and personal property, a will can designate a beneficiary for “digital assets,” such as airline miles -- depending on the company -- to be transferred to a specific person upon death.
“I’ve seen all sorts of property. Some people might list their jewelry and furnishings. Arkansas law allows for a pet trust,” Young said, which allows for a person to designate who gets their pet and set aside money for care.
“If somebody has minor children, a will is the appropriate document to appoint a guardian,” he added.
However, Young does not recommend having burial plans in a will, as the will may not be opened until after a funeral.
“I think everybody ought to leave something to their church,” Young said.
If it’s a large gift intended for a specific purpose, program or ministry of a charity or parish, it’s important to discuss the potential gift with the organization or church before death in order to determine whether the donor’s purpose for making the gift may be fulfilled. Young said a lawyer can also call on the client’s behalf to discuss specifics and can keep the potential donor anonymous.
If a person is incapacitated and unable to make health decisions on their own, the person’s health care proxy may step in and make the decisions on the person’s behalf. Many people also have and need a durable power of attorney, but that is only applicable to property-based transactions and not health care.
“The main reason for a health care proxy is if somebody doesn’t sign a health care proxy, especially if they are single, you may have to have a guardian appointed to make medical decisions for you. That’s court involved, that’s an expense,” Young said.
A physician would listen to the patient, if the patient is of sound mind, before a health proxy. However, Young said if a person, for example, develops dementia and has not designated a health care proxy and the family petitions the court for guardianship, it will take at least 20 days for approval. In Arkansas, there are emergency guardianship procedures. For example, if someone is on life support, a guardianship petition can be filed and a hearing must be held within three days, but must include medical proof “to protect the rights of the perceived ward.”
“We don’t want people going around the state filing guardianship petitions for people that don’t need it,” Young said.
Guardianship petitions can cost about $2,500. In contrast, health care proxy paperwork, labeled a “health care agent form” can be downloaded for free at the Arkansas Health Department website, healthy.arkansas.gov.
After an individual signs a will or estate planning documents, it matters where the documents are stored. Young recommends the original will be stored in a safe deposit box or fireproof container. The client should tell his or her representative where the will is. For the health care proxy or durable power of attorney, Young recommends the person appointed in the documents be given a copy. If these documents are in a safe deposit box and are needed on the weekend, the documents likely cannot be used.
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