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Gary DeWitt

About Gary DeWitt

http://www.dewittlawar.com

Posts by Gary DeWitt:

Living Trust

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Definition of a Living Trust

A living trust is a revocable trust that you create during your lifetime. In estate planning, a living trust can be one of the most important things you can do.

Is a living trust irrevocable?

Only if it is setup to be an irrevocable trust.

Sometimes they are called a revocable living trust (RLT).

Why Have a Living Trust?

One of the advantages of a living trust is that it avoids probate.

Another one of the benefits of a living trust deals with living trusts and taxes. If you have a large estate, it may be possible to delay or reduce your estate tax burden.

Finally, a revocable trust will help maintain your family’s privacy. Living trusts and wills are handled differently. The trusts help maintain privacy. Wills go through probate which is a public process.

Living Trust vs. Wills

These are two completely different estate planning documents, and they have very different purposes. The purpose of a Will is to leave gifts to your possible heirs and make it a public process through the probate courts. The purpose of a trust is to leave gifts, setup sub trusts, protect assets, protect your children from themselves, and do it all privately.

Living Will vs. Living Trust

These two things cannot be compared. A living will deals with your healthcare. A living trust deals with your stuff.

The process (probate) to get a Will handled may take months to years. A trust can be distributed immediately.

Who Needs a Revocable Living Trust?

Anybody that owns a home, owns a business, or has assets they want to protect. The cost for living trust is small in comparison to the amount of money, trouble, and time your heirs will be saved.

Setting Up a Living Trust and How to Get a Living Trust

The absolute best way to setup a living trust is to visit with an estate planning attorney. The attorney can walk you through all of the possibilities that you may have not even considered. With an attorney’s assistance, you will find that creating a living trust is not a hard experience. One of the best things you can do for yourself is setting up living trust documents. It is not suggested to setup a living trust online.

Why Should You Avoid Probate?

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  • To keep your family away from the expense and time of the probate court.

Does a Will avoid probate?

  • No.  A Will is the instrument of probate.

How do you avoid probate?

Discover how to avoid probate by:

  • Naming beneficiaries
  • Using a trust
  • Creating transfer-on-death deeds and accounts
  • And much more

You will have peace of mind and your children will have a better quality of life without delay or probate expenses.

Trusts in Estate Planning

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Trusts in estate planning are one of the best options available.

A properly executed and funded trust will keep your assets out of the long and emotionally draining process of probate. Probate will take many months to years, and assets will not be available to your family immediately.

A trust means that your family gets your property almost immediately and without being in the public eye of probate. Yes, probate records, including the list of property, are public documents and anybody can view them.

A revocable trust means that you can take back the assets at any time before your death. You don’t need to worry about running out of funds, selling a home, or other transactions.

An irrevocable trust locks the assets away pretty firmly. These trusts have to be carefully crafted in order for you to be able to keep any control over the assets.

probate

When Does an Estate Require Probate?

This is not a simple question to answer, and requires that many other probate questions be answered to make a decision.  However, it is possible to provide some general advice.

No Estate

If a person dies with no property or outstanding debts, then there is nothing for the courts to oversee.  You may think this is not common, but to qualify for Medicaid, a person must have under $2,000 of most assets to qualify.  It does not take long for this $2,000 to evaporate leaving nothing in the estate.

There are also cases where everything a person has passes by operation of law at the moment of death and leaves nothing in the probate estate.  Examples of this are:

  • Payable on death accounts
  • Vehicles with transfer on death titles (if allowed in your state)
  • Beneficiary deeds on real estate (if supported in your state)
  • Life insurance (Beware in Arkansas.  A will may be able to change the beneficiary…)
  • Retirement accounts with a personal beneficiary named
  • Stocks and bonds held in a transfer on death account

Small Estates

In some states, you may be able to escape traditional probate if the “probate estate” is small.  The probate estate consists of property that does not pass by operation of law such as life insurance, payable on death accounts, etc.  Small is defined by the state.  If a state has a small estate process, then the dollar value of what is considered small is set by the state.  In Arkansas, small is $100,000.  In Oklahoma, small is $20,000 (as of the last time these numbers were checked.  As with any legal thing, check with a local attorney to find the current numbers.)

The typical process for a small estate is to file a small estate affidavit.  If small amounts of real estate are involved, you will also need to have a special deed prepared to transfer title and keep the “chain of title” intact.

Larger Estates

When a will is involved

When the estate is above the small estate limit, or a will is found, a traditional probate process needs to take place.

When no will is found

When no will is found, you will need to go through the process of intestate succession.  A full description of intestate succession is beyond the scope of this post.

probate

What Does Probate Mean?

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Probate has two major divisions.

The first part is to admit and prove the will for probate.  This consists of petitioning the court, presenting the will, and proving this is a proper will.

Once the will is admitted, and executor or personal representative will be appointed to oversee the rest of the process.  If no executor is named in the will, then another petition to the court will have to be made to appoint an executor.

The second part is to inventory and distribute the estate.

Of course, the executor also has to deal with and satisfy all the creditors.

This is just an overview, and there are many little steps involved that an attorney will make sure are taken care of.

Once these things are done, the executor can petition to have probate closed.

Can I Probate a Will Without a Lawyer?

That and the related question “Do you need a lawyer to probate a will?” are answered in this short post.

The answer is no, you do not need a lawyer to probate a will.  However, you will need to be familiar with the statutes and case law of your state in order to make sure that all of the steps of probate are taken care of.  Don’t assume that the judge will guide you through the process.

For example, you need to notify the creditors of the death.  But, do you need to write letters, send a fax, advertise in a newspaper, etc.?

Are you familiar with what needs to go into the petition for probate?  There are certain questions the executor needs to answer for the judge in order to be qualified.

Does the property need to be inventoried?  This question alone cannot be answered without asking further questions.  Is it just you and your parent involved?  Are there siblings?  Do all of the siblings agree with your decisions?  Is there a strong chance somebody will sue against the will? And many more questions.

The real answer is yes, you do need a lawyer to probate a will.  There are many little things that can trip up the process and a probate attorney will be familiar with those things and how to work the issues.

probate

What to Do When Someone Dies Without a Will?

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Intestate Succession

When a person passes without a will, they are said to have died “intestate”, that is, without a will (or trust).  Each state has different rules for how the situation is handled, but generically, the steps in the different states are a lot the same.

When a person dies intestate you may have to “probate” the estate.  This type of probate is called intestate succession.  It starts by petitioning the probate court to start administration of the estate.  Once the petition is granted, the process is very similar to a traditional probate.  The estate is inventoried and distributed.  The main difference is the court will oversee the process and has to give permission for the plans.  In traditional probate, the will is the plan.

Of course, there are some assets that are not passed in a will that will be outside the scope of succession.  These assets may include (typically things with a survivor clause):

  • Retirement accounts with a beneficiary
  • Life insurance
  • Banks accounts with a payable on death rider
  • Stocks in a transfer on death account
  • Vehicles (if allowed in your state) with a transfer on death title
  • Land that has a beneficiary deed filed
  • Land that is held as joint tenancy with right of survivorship or as a tenancy by the entirety

There are many questions to be answered, beyond the scope of this post, to decide if an estate needs to be taken through intestate succession.

If no will, who is executor?

In the administration proceeding, you will ask the court to appoint an executor of an estate without a will.  This person is usually called the administrator.

This is usually done in the petition for administration.  The person appointed needs to be:

  1. Willing to do the job
  2. Prepared to pay for a bond
  3. Familiar with the estate, or willing to dig in and learn the estate
  4. Ready to distribute the estate
  5. Willing to settle all of the family squabbles that may arise
  6. Prepared to litigate the estate if the administration is challenged

Conclusion

Probate without a will is typically not any more difficult that probate with a will.  You just need to make sure that all of the steps are taken, the i’s dotted, and the t’s crossed.

3 Biggest Estate Planning Mistakes

3 BIGGEST Common Estate Planning Mistakes (Video)

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What are 3 mistakes that can cost a LOT of money and take away control?

I’m going to cover the 3 big mistakes that can cost a lot of money and take away control. Then I’ll tell you how to fix them.

Hi. I’m Gary the owner of DeWitt Law. You know you need a plan. Its time to start. Schedule your free meeting at DeWitt dot law.

The #3 mistake is not having durable powers of attorney.

Without a durable power of attorney, your family is powerless to help you if you are injured, sick, or develop dementia. They will have to go to court to get permission to manage your affairs and sign your name.

If you are unable to manage your affairs and do not have a Power of Attorney, a judge may have to appoint someone to act for you in a legal proceeding called a Guardianship. A Guardianship is very expensive, and your personal and financial information become public. In a Guardianship, the Judge takes control away from you and gives it to somebody else. They now have the legal authority to make your decisions and manage your money and property for you.

A guardianship costs $3,000 or more.

You can’t “get” a power of attorney over somebody. A power of attorney must be given. You would have to “get” a guardianship from a Judge.

Comprehensive, up-to-date Power of Attorney documents can avoid a costly guardianship trial.

With Powers of Attorney, you get to decide who is in control and how much power they have.

The same for healthcare. Without your written permission, your family is powerless to make healthcare decisions on your behalf.

Even your spouse doesn’t have the power to make your decisions. The law considers an adult to be an individual and in control of their own decisions. You don’t automatically have permission to make your spouse’s decisions because of marriage.

A Durable Power of Attorney lets you decide who will be in control and how much power they have instead of a Judge.

The #2 mistake is trying to plan on your own without understanding the long term consequences.

If you put somebody else on the house or accounts and they drive, everybody else on the road is a potential lawsuit waiting to happen. One accident is all it takes to end up losing your house and money to them. It doesn’t matter how financially responsible the other person you put on the deed or account is. If they have an auto accident, then your house and money are up for grabs in the lawsuit that will follow.

If they end up with huge medical bills due to a medical incident or accident, your house and money are exposed to their medical expenses.

And, to top it all off, if you want ownership back later, it may be difficult to impossible to remove them because they’ll have to sign it back over to you.

The moral of the story is, don’t put children on the deeds or accounts. You have better ways, like a durable power of attorney, to accomplish the same things.

And the #1 mistake is having the do nothing plan. If you do nothing, the state will be in charge of your decisions and estate.

People who do nothing still have a plan, because if they don’t write their own plan, then the state has written one for them. The state legislature has passed laws that dictate what happens to you and your stuff.

You and your family don’t get a say in how your estate is divided.

Your loved ones end up in probate court to get everything settled. And, during probate, your personal and financial affairs are made public in a process that can take many months or years.

It’s time to plan. Schedule your free meeting at DeWitt dot law.

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How Do I Protect my Assets From Medicaid? (Video)

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One of the most common questions I am asked is how do I protect my assets against Medicaid?

Hi, I’m Gary, the owner of Dewitt law firm and we’re with you every step of the way.

Protecting your assets against Medicaid is at the best difficult.

Medicaid has stacked the deck in their favor, but if you have some time to plan, we can protect your assets against Medicaid.

How do I Protect My Assets?

The way you protect assets against Medicaid is literally to give them away. But we do that in a controlled way so that you maintain some income and control over the money possible of course.

One way is to give the money away as a gift. You can give away up to $15,000 per person per year without having to file a tax return. Even if you give away more than that the gift tax this year starts at 12 million dollars, but you can give away up to 12 million dollars without paying a penny in estate or gift tax.

However, if you do give away more than $15,000 to a person, you will have to file a gift tax return.

Once money is given away. It’s out of your control and Medicaid Cannot recover against it.

The second way is to use an irrevocable trust. Once the money or property is put into the trust it can’t come out. The only caveat to this is you or your spouse cannot be the trustee. A trustee can be a child and they can be instructed to use the money for your benefit if you do have to go into a nursing home.

The Catch

The catch to all of these methods is the Medicaid gifting penalty.

You need 5 years to make any of this work. If you do it within the 5 year period of time, then Medicaid will calculate a penalty based on the amount of the gift given and make you pay for that many months of nursing home care out of pocket.

Emergency Planning

As we get closer and closer to what we call emergency Medicaid planning, we can protect some assets by turning them into loans or annuities or otherwise turning assets into income.

That’s a very advanced topic and I’m not going to get into a lot of details here.

But if you find yourself in the position of a loved one needing nursing home care within say the next 90 days, it’s better to come in and plan out even if they end up recovering and going home because it does. Take some time to get all of this done.

I’m Gary Dewitt with the Dewitt law firm and we’re with you every step of the way.

What is a Trust? (Video)

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What is a Trust?

Mark needed to qualify for Medicaid.  Fortunately, one of the rules he put in his trust was the power to makes gifts of trust assets during his lifetime.  (Gifting is a powerful Medicaid qualification technique.)  Without that power, it would have been much more difficult for Mark to qualify.  This is an example of asset management and distribution during Mark’s lifetime.

After he passed, Mark’s trust then distributed the remainder of the property in it quickly and without the need for probate.

I’ve read maybe 100 different definitions for a trust, and this is the best one I can come up with:  A trust is a way to arrange for the management and distribution of your money and other property by you or a third party during your lifetime and beyond.

The benefits of a trust are that a trust avoids probate (because it is a contract); it provides for that management during your lifetime if you are unable to manage the money in it; afterwards the trust can distribute the money outright or hold it in further trust for the people it goes to.

Who is involved in a trust?  There are three people or parties involved.

The first is the grantor.  That is the person or people placing property into the trust.

The second is the trustee.  This is the person, people, or institution that will manage the property in the trust for the benefit of somebody.

The third is the beneficiary.  This is the person who gets the benefit from the property in the trust.

A trust is a contract between the grantor and trustee for the benefit of a third party, the beneficiary.

Because it is a contract, the grantor can specify the rules and conditions by which property is managed or distributed.  This management and distribution can occur during lifetime or beyond.  Because of IRS regulations and the need to define a lot of terms it becomes rather long and looks really complicated.

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Northwest Arkansas Estate Planning Attorney Gary DeWitt helps individuals with estate and life planning for living, protecting, and passing by providing solid representation. Gary offers multiple services to accomplish your goals including: corporate services and support for businesses; estate planning, wills, trusts, power of attorney, medical power of attorney for individuals and families; general small business law; long term care, nursing home, Medicaid, charitable planning; charitable giving; special needs planning; disability planning; Medicaid emergency planning; probate; intestate succession; and general asset protection.

Address – Office in Springdale

DeWitt Law Firm, PLLC
986 Elmwood Street
Suite D,
Springdale, AR72762
Phone: 479-717-6300
Fax: 479-717-6307

When you need assistance in making your estate plan, or you need your plan checked over in the Northwest Arkansas area, estate planning attorney Gary DeWitt can help you out.  Planning for Peace of Mind and Quality of Life.

Give us a call now at 479-717-6300

We help families and businesses throughout all of Northwest Arkansas, Benton County, Washington County including Bella Vista, Bentonville, Rogers, Lowell, Springdale, Centerton, Gravette, Avoca, Cave Springs, Fayetteville Arkansas, & Farmington with Estate Planning, Probate, and Business.

Use of this site or website does constitute legal advice and is for education only.