Law Office of Margaret Ward, PLLC

Every family has a story, and a lot of them are about the children.  The children may be six months or sixty years old.  They may be biological children or stepchildren.  They may be close, or they may be estranged.  Here are some of the most common questions.

Do I have to leave a dollar to each of my children even if I don’t want to leave them anything at all?

          No, not in Arkansas.   But I strongly prefer that your estate plan states your intentions explicitly.

          If you are using a Will, you must acknowledge that the child exists.  If you don’t, the “forgotten” child can claim the portion of the probate estate that they would have been entitled to if there had been no Will.  This can be a good thing, if Mom and Dad wrote their Wills before the youngest child came along and never updated it.  This is not so good if Mom and Dad wanted to disinherit one of the children. If you are using a trust, I strongly prefer that you are direct about your intentions.

Will my stepchildren get my property?

          Maybe, if you choose the “do nothing” alternative to estate planning.  Example:  Mom and Dad each had children from a previous marriage.  They didn’t adopt each other’s children, and had no children together.  Mom and Dad have each other named as primary beneficiary on their IRAs and life insurance, and all of their assets – home, cars, bank accounts – are joint.  Dad dies first.  Mom automatically owns the joint property, and collects the life insurance and IRAs.  When Mom dies, everything goes to her children. Dad’s children get nothing.  The moral of the story?  Take time to do an estate plan.

I have raised my stepchildren from the time they were babies.  Will they inherit from me like my own children?

Generally, no, unless your estate plan provides for them.  It doesn’t matter if you’re the only father/mother they have ever known, if you didn’t adopt them, they are not legally considered your children.  Emotionally, yes; legally, no.

Can I make sure my children don’t squander what they inherit?

You can try, but only if you don’t give the children control over the money.  If it is held in trust for them, with a neutral third party in charge as trustee, you can set up some rules for how the money can be used. You’d have a better shot at preventing them from squandering it.  But, if you don’t want to put someone else in charge of it, you really can’t.  Once it’s theirs, it’s theirs to do with what they please.

Can I make my children co-Trustees?

Yes, but I would try to talk you out of it if they don’t get along.  Sometimes I ask clients if, when the kids were young, would you leave three of them alone with two cookies?  If the answer is no, I would advise you against naming siblings as co-Trustees.  If you don’t want to choose one over the other, pick a neutral third party.

My son has stepchildren.  If my son dies before I do, will his stepchildren get any of what would have been my son’s share?

Generally, no, unless you have provided for your son’s stepchildren.

I’ve heard horror stories about family fights after Mom or Dad die.  How can I keep my children from fighting with each other over my money?

The best way I know is to take the reins yourself and leave as few decisions as possible to the children. You have the legal means to specify who gets what and how they get it.  They may not like it, but they’ll all be mad at you, not at each other.

          Not all siblings end up arguing, and I don’t know your family.  Your children may do beautifully sharing both your property and the responsibility.  The hard truth is that it’s hard to predict how people will act when grief and money are combined.  In my experience, siblings who fight about money, or “things”, aren’t really fighting about money.  They are still fighting about getting their share of that cookie.

For all of you folks who have been appointed as Guardians, a quick reminder:  Your guardianship order includes a requirement to file annual reports with the Court.  If you are Guardian of the Person, the report addresses the well-being of the Ward.  If you are Guardian of the Estate, the report is a financial accounting.

VERY IMPORTANT: These annual reports are due within 60 days of the anniversary of your appointment.  If you do not submit these reports, the guardianship can be terminated.  The Court will not remind you every year.  That’s on you.

If you have questions about these reports, I suggest you contact the office of the Court that ordered your guardianship.

Like most topics in the legal world, “trusts” is a large topic. Different trusts are used in different situations to accomplish different objectives. But some general concepts apply to all types of trusts.

Part of my job as your estate planning attorney is making you comfortable with the way your estate plan works. I want you to know what all of the documents are, and what they do. And I want you to be comfortable with the terminology.

Trusts are almost always discussed, at least a little bit, in our first meeting. Unless you have done an estate plan before, or perhaps have experience with someone else’s estate plan, trusts may be a foreign concept. There are a zillion different types of trusts, and each one is different. In estate planning, the most common trust is a living revocable trust.

So, let’s see if we can shine some light on trusts. First, some terminology:

Trust
• A trust is a legal entity that can control money and property that are for the use and enjoyment of someone else. A trust is created by a written document that contains all of the rules of the trust.

Trustee
• The Trustee has legal control over the trust assets. They have a duty, called a fiduciary duty, to do what is in the best interests of the beneficiaries.

Grantor
• The Grantor is the person who transfers property to the trust, usually the one who originally sets it up. They can also be called the Settlor.

Beneficiary
• This is the person (or institution) who gets the use and enjoyment of the trust’s money and property


Those are some pretty abstract concepts. I understand better with examples, so let’s try a couple.

Think about a trust as a piggy bank. The piggy bank is the trust – that’s where the money is. When Mom puts Daughter’s allowance in the piggy bank, Mom is the Grantor. She is giving “control” of the money to the piggy bank. But the allowance is for the benefit of Daughter. Daughter is the Beneficiary.

A living revocable trust is a little different. When Mom puts money in this kind of piggy bank, it’s still Mom’s. And Mom decides where the piggy bank and the money stay – maybe on a shelf that only Mom can reach. If Mom wants to spend the money, she can take it out of the piggy bank and do whatever she wants with it. After Mom dies, whatever is in the piggy bank goes to Daughter.

A critical role in a trust belongs to the Trustee. The Trustee is whoever the Trust says is in control of the money and property in the trust. The Trustee can sell property, buy property, invest money, spend money according to the rules of the trust; usually, the Trustee can do whatever they think is best with the money and property – as long as they follow the rules written in the trust.

Think about the usher who passes the collection plate at church. The collection plate is the trust. When it comes to you (you’re the Grantor), you can put in whatever you want. Before you let go of the plate, you can change your mind and take your money out, spend it, give it to someone else, whatever you decide. Until you let go of the plate, you are in control of it. You are the Trustee. Once you pass the plate to the usher, then the usher is in control – they become the Trustee. When the usher gets the plate, that doesn’t mean he or she can take whatever they want out of the collection plate and stuff it in their pockets. The Trustee is responsible for following the rules of the trust – pass it across the aisle, take it to the altar, whatever the instructions are – and he or she is strictly accountable for what happens to the collection plate and the money in it while it is in their hands. They have a duty to follow the instructions.

I hope this helps clear up some of the concepts involved in trusts and makes you more comfortable with the idea. You don’t have to be super rich to need a trust, and you don’t have to be super rich to get one. Talk to an attorney you trust about your situation, and don’t be afraid to ask questions. Knowledge is empowering.

There are a gazillion types of trusts, but let’s look at special needs trusts.

You can establish a special needs trust at any time.  You could execute one today for your family member, if you wanted to, but you would only need to do that if you have money right now that you want to put into the trust.  Special needs trusts are irrevocable, so any money that goes into it can only come out under the terms of the trust.  For example, if my husband and I set one up for Tater today, we could put his part of his future inheritance in it right now.  But if, in the future, it turns out that we need that money to pay for our nursing home care, we are out of luck.  If you only put in what you reasonably expect to spend pretty quickly, it’s not a problem, and the trust could be useful.

One other point about SNTs: There are two types of special needs trusts, first party (or self-settled) and third party.  First party SNTs are funded with money that belongs to the beneficiary.  For example, if Tater inherits a chunk of money from a family member who didn’t know any better, we would have to get a first party trust set up and get the money into it before the 30 day safe harbor period ran out.  Third party SNTs are funded by money that comes from other people.  This is the type that is typically in a parent’s, grandparent’s, etc. estate plan.  So, the source of the money determines which type is needed.  That’s important because of the one difference between 1st party and 3rd party SNTs:  In a 1st party SNT, if there is any money left in the trust at the death of the beneficiary, the state can claim that money up to the amount the state has paid for the beneficiary’s care throughout his or her lifetime.  That does not apply in a 3rd party SNT.  The balance, if there is any, would go to whoever the trust says it goes to.

This is the very basic information.  If you think you may need a special needs trust, consult an attorney who is knowledgeable in the area.  You can call me at (501) 295-5248 to schedule a consultation, and we’ll talk about your specific situation.  There’s never a charge for the consultation. 

Almost every client comes into our first conversation with a question. I am going to make a series of blog posts addressing some of the questions that I hear most often.  This one is a frequent topic of conversation:

What’s the difference between a power of attorney and a guardianship?

A power of attorney gives authority to someone else – the Agent – to sign your name for you.  In order to sign a power of attorney, you have to be over eighteen and legally competent.  If you sign a power of attorney, you are still able to make your own decisions and conduct whatever business you choose. The Agent can act in addition to the person.

A guardianship gives someone – the Guardian – legal authority over the incompetent person, called the Ward.  If a person is not competent to make their own decisions, or is young, a judge may appoint someone – the Guardian – to have legal responsibility for the incompetent person (called the “Ward”).  The Guardian acts instead of the Ward.

A common misunderstanding about what a “power of attorney” is, and what it is not, is often because of the name.  People will sometimes mistakenly think that if their family member signs a power of attorney, then the Agent has the “power” to make the family member do what the Agent says.  Or that the Agent can prevent the person from taking a specific action. That is not at all true.

A Guardian has the legal authority to make decisions for the Ward, but unfortunately, there is no piece of paper that will bend someone’s will.  Any of us who have raised children know that, even though we have legal authority over that child, they most certainly do not do whatever we say.  But the Guardian may have great authority over where the Ward lives, what the Ward does, and how the Ward’s money is managed.

This information is just an overview.  There are different types of power of attorney and guardianship.  Each situation is different, so it takes careful consideration before choosing to pursue either a power of attorney or guardianship, and what type is appropriate.

If you want to discuss which course of action is best for your situation, call me at (501) 295-5248 and schedule a consultation.  I don’t charge for initial consultations.  Knowledge is power.

I have gotten several questions lately about ABLE accounts.  This isn’t, strictly speaking, a legal issue, but it is an important tool for people with disabilities who are on programs like SSI and Medicaid.

ABLE stands for Achieving a Better Life Experience.  It allows people like Tater to save money for qualified disability expenses WITHOUT jeopardizing their eligibility for their benefits.

The website below has all the information you need to set up an ABLE account:

https://savewithable.com/ar/home.html

ABLE accounts don’t take the place of a special needs trust, but these accounts can be a great tool for our families.  The primary considerations when choosing between a special needs trust and an ABLE account are the amount of money involved, and what you want to use the money to purchase.  An ABLE account has an annual limit on how much can be deposited.  This year, that limit is $15,000.00.  That’s a limit on the total deposited per year, no matter how many different people contribute.  And there are some differences between the permitted expenditures.

Visit the website if you need more information.  Knowledge is power.

The following article is a good starting point for families looking for information.

Law Office of Margaret Ward, PLLC

Margaret R. Ward, Attorney At Law

Estate Planning for Families of Individuals with Special Needs

My husband and I have two sons, one of whom is a young adult with Autism.  For many reasons, families like ours need to be proactive in planning for our future and our children’s future.  That includes estate planning. 

A big reason for us to be careful with our estate plan is the asset and income limits on programs like SSI and Medicaid.  An individual like our son can’t have more than $2,000 in the bank.  But with good estate planning, we can make sure there is money available to enrich his life after we are gone without losing his healthcare and benefits.

What is “estate planning”?

Estate planning is an umbrella term that covers many legal steps you can take to plan for your incapacity, and for after your death.

The most commonly used documents are:

• Trusts:  A trust is a legal entity created by a written document that says what the money in the trust is to be used for, and who is in charge of it.  There are many different types of trusts.  The most common trust for estate planning is the Living Revocable Trust.  This type of trust lets you say who will be in control of your assets if you are incapacitated and who gets your money and property after your death, and avoids probate.  It puts you in charge of major decisions, rather than a judge going by state law.
• Will:  A Will determines who will inherit your money and property after your estate goes through the probate process.  You can also say who you would want to be the Executor of your estate.  A Will does not address periods of incapacity. If you are the parent of a minor child, your Will is where you can nominate the person(s) you would want to be your child’s guardian.  If you are a parent who has been appointed Guardian of an adult child, you also need to nominate your replacement as Guardian in your Will.
• Durable Power of Attorney:  A Durable Power of Attorney lets you say who can sign your name for you.  That person can do almost any financial transaction you can do.  The Durable Power of Attorney stays in effect until your death, even during incapacity.
• Healthcare Proxy (also called Healthcare Power of Attorney):  You can say who you want physicians or other healthcare providers to go to for medical decisions if you are not able to answer questions or make decisions yourself.

• Living Will:  Your Living Will is your chance, in calm waters, to let your family know what your wishes are for end-of-life care.

How can we take care of our children without costing them their benefits?

One of the best options is to use a “special needs trust” for any loved ones who are on benefits programs with asset limitations.  A special needs trust can provide money and property to help a person on these programs by providing for goods and services that benefits programs do not provide.  Examples are things like haircuts, personal care that the benefits program does not provide, recreational travel, entertainment, furnishing and clothing, among others.  There are different types of special needs trusts, and which one you should use depends on your family’s specific situation.

Many families plan instead to leave everything to someone – perhaps a sibling or other relative or friend – with the understanding that the money will be used for your loved one.  This is a risky plan. Once the money is in that person’s hands, it is theirs.  They could do everything you expect, or they could have to use the money for their own needs.

None of us lives forever.  One of the best gifts you can give your family is making the tough decisions for them now, while you have a clear head.  Knowing what your wishes are and having the legal tools they need to carry out those wishes will let your family focus on taking care of you, and each other.

As an attorney, I can help families like mine with our most common legal needs such as estate planning and guardianships. I have been on both sides – I’ve been the parent looking for help, and I’ve been the attorney helping families identify their options and choose what’s best.  I would be honored to help your family.

Margaret R. Ward, Attorney

(Margaret and her husband are the proud parents of two sons – “Tater”, who is a young adult with Autism, and “Spud”, who is a student at UA-Fayetteville.)

Not every family has someone like Tater, but many families have someone who needs a little – or a lot – of protection from themselves or others when it comes to money.  And none of us have a crystal ball.  The future we expect may not be the future we get.

Your estate plan can decide who is in charge, who gets what, and how soon they get it.  Since we don’t have that crystal ball, your estate plan can take many possible situations into account and plan accordingly.

None of us live forever.  One of the best gifts you can give your family is making the tough decisions for them, now, while you have a clear head.  Knowing what your wishes are and having the legal tools they need to carry out those wishes will let your family focus on taking care of you, and each other.

A lot of people are content with a Will or letting state law determine what happens to their money and property after their death.  A lot of those same people have not thought about what could happen if they can’t take care of themselves any more.  The Will they have doesn’t do anything for you until your dead. 

What if you’re incompetent?  State law has an answer for that.  A judge can decide, based on what he or she sees in a public hearing, that you can’t make your own decisions anymore.  The judge will decide who can make decisions for you.  And it may not be the person you would have chosen yourself.

You have the power, if you act ahead of time, to decide for yourself who can make financial and health decisions for you.  I have the utmost respect for our judges.  But they don’t know my family like I do.  Take that step to make your wishes known and legally recognized.

(Margaret and her husband are the proud parents of two sons – “Tater”, who is a young adult with Autism, and “Spud”, who is a student at UA-Fayetteville.)

Some benefits programs for individuals with disabilities also look at the individual’s assets and income to determine eligibility. SSI and Medicaid are two of the most common programs that people like Tater rely on.

Those programs are what allow him to live in his own place with the support he needs. If we don’t plan properly, Tater could lose those benefits by inheriting directly from us.

The most common plan for families like mine includes a Special Needs Trust. This type of trust allows us to leave money to enhance Tater’s life without jeopardizing those benefits programs. The best plan for your family will depend on a lot of factors.  It is my job to identify your options and the pluses and minuses of each, and help you choose the best one for you.

The first step is to call or email me to schedule a consultation by phone or videoconference. There is no charge at all for the consultation. From there, you decide what’s best for your family. Call me at 501-295-5248 or email me at mwardlawoffice@gmail.com.

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