What are the Consequences of Not Having an Estate Plan?

What are the consequences of not writing your own estate plan?

Hi. I’m Gary the founder of DeWitt law.

In this video I’m going to share why the State has written a plan for you, what their plan is, and how to replace it.

Sooner or later you or your family will need a plan. Is it your plan, or the generic plan the State Government has written for you?

What I’m about to say will sound a lot like a conspiracy theory, but I promise you it’s not. It’s actually a topic I’m pretty passionate about. Why let the Government tell you who makes your decisions and who gets what, when, and how much?

Why would the state have a default estate plan and decision making plan written for you?

The State Government has a default plan because many people fail to plan on their own. The State needed a way to provide for a smooth transition of property from one generation to the next and make sure final bills are paid.

The State needed a way to appoint people to make your decisions when you can’t.

So, they passed laws that dictate how all that happens if you don’t write your own plan.

Only by creating your own plan can you replace their plan with your own.

I often say if you don’t plan then you are leaving your future in the hands of the Government and Judges. I don’t mean the State is going to come kick your door down and take over, but the State does have a generic default plan in place for you.

Again, I know this sounds like a crazy conspiracy theory. But it’s all written in black in white in Arkansas law. Title 28 of the Arkansas Code Annotated contains the rules and instructions for Probate with and without a Will. Title 28 also has the instructions about what happens when you can’t make your own safe, rational decisions anymore. This is called guardianship in Arkansas.

You can stop the Government’s plan, but only by writing a plan of your own. Your plan then takes the place of their plan.

If you want to pick who’s in charge when you can’t make safe, rational decision during your lifetime, you must plan.

If you want to decide who gets what, when, how, and how much after you’re gone, you must write a plan.

2 Areas

The State has 2 areas that their “estate planning” covers. The first is in managing your personal, legal, financial, and healthcare decisions during your lifetime. The second is in distributing your final estate and paying your final bills.

Guardianship

When you can’t make safe, sane, rational decisions, the law says that anybody can ask the court to take over and appoint somebody to make your decisions, including Adult Protective Services. Adult protective services is a branch of the Department of Human Services, DHS.

When you can’t make safe, sound, rational decisions, assets with your name on them may become effectively “frozen.” If your spouse needs your signature to access money or sell real estate, then they won’t be able to. Unless they go to court to get permission to make your decisions and sign your name.

Section 28-65-205 of the Arkansas law says that “Any person may file a petition for the appointment of himself or herself or some other qualified person as guardian of an incapacitated person.” This means if a neighbor is concerned, calls for a welfare check, and DHS decides they want to, DHS can file for a guardianship. You could find yourself a ward of the state.

The other sections of Title 28 Chapter 65 do set an order of preference for guardian. But if nobody else steps forward, the Judge must consider the person named in the petition.

The appointed guardian takes over making your decisions for personal, legal, and healthcare matters. They get to decide where you live, how your money is invested, what doctors you see, what you own, and more.

Once appointed, a guardianship will continue until either you become competent again and ask for the guardianship to end or until death. I have found it is difficult to fight a guardianship once somebody is appointed. What usually needs to happen is a full examination by a qualified neuropsychologist showing that you have the capability to manage your own affairs. These examinations are typically 4 hours long.

Almost all of this can be stopped by having a durable power of attorney and a healthcare power of attorney. Those two documents name the people you want to make decisions when you can’t.

Probate and Decedent’s Estate Administration

Second, when you pass, if you only have a Will or don’t have a Will, your estate is subject to “decedent’s estate administration.” This process if found in Subtitle four of Title 28 of the Arkansas laws. It consists of 12 chapters and a lot of case law. The last time I printed it, it was hundreds of pages.

If you pass without a Will, then Title 28, subtitle 2 is used to determine who gets your estate. Chapter 9, in particular Section 28-9-214 and Section 28-9-215 tell the Judge who gets your stuff.

The people named in either your Will or by the law will only get what is left after the attorney and creditors are paid. The attorney’s fee is pretty much fixed by law at 3% of the total GROSS estate. Your GROSS estate is the value of everything you own without subtracting debts owed or mortgages.

Your heirs and devisees also have to wait for the legally required notice period of 6 months to pass before they can get their final distribution.

You can stop this by have a plan for the distribution of your estate outside of “estate administration.” Your property, money, and other assets that pass outside of Probate are not subject to “estate administration.” You get to decide who gets what, when, how, and how much instead of leaving it to the State law.

Conclusion

I hope you now realize that this isn’t a conspiracy theory, but is a real thing.

However, you can put your plan in place of the State Government’s plan.