The Engagement Letter

This is the first post in a series aimed at explaining a bit about the process of hiring and working with an attorney or law firm.  For those of you who have had an attorney on retainer since you were a child, feel free to move along.  Otherwise, lets get started.

Before your new attorney begins work on your case/document/issue they will likely present you with an Engagement Letter to sign and return.  This letter becomes the contract outlining the rights and responsibilities of each side of the agreement.

A typical engagement letter will include provision such as:

1. what case or work-product the attorney is being engaged
1. are you hiring him to draft a simple will or to draft a complex multi-generational estate plan?
2. are you hiring him to represent you at a probable cause hearing only or for the entire case including appeal if necessary?
2. the fee arrangement
1. contingent - he gets paid when he wins your case (not allowed in criminal cases)
2. hourly - Price per hour?  At what intervals will you be invoiced?  At what intervals will time be kept (you don't want an attorney rounding up a 4 minute phone call to .5 hour, do you?)?  
3. Retainer Maintenance Requirements
3. expectations of communication
1. How often should you expect to hear from the attorney
2. how quickly can the attorney expect you to provide him with needed documents or data?
4. Who is the Client?
1. You as an individual?
2. A corporate entity you own?
3. Your minor child despite you paying the bills?
5. Who you are hiring
1. A particular attorney?
2. The law firm as a whole?
6. Other issues specific to particular types of legal engagements.  

When presented with an Engagement Letter, be sure to review it and ensure it agrees with your understanding of your rights and responsibilities for the representation.  Discuss any uncertainties prior to entering into the Attorney-Client relationship.

Homeschooling in Arkansas

For my readers that are planning to homeschool your kids during the upcoming school year, the deadline for notifying your superintendent of your plans is quickly approaching.

The Arkansas government has a form available online designed for making this notification.  This can be accessed here.

Please note that if this is your first time electing to homeschool your child, the notification must be delivered to your superintendent in person.

If you have questions about the legality and requirements to homeschool in the state of Arkansas, HSLDA has put together a fantastic overview which can be accessed here.  If you have questions, feel free to contact your local attorney for guidance.

Bar Exam Prayers

Today, thousands of recent and not-so-recent law school graduates begin to sit for the Bar Exam.


Some have prepared under ideal circumstances, studying the recommended 12 or so hours per day for the past two months in uninterrupted peace.

BarBri

Others have balanced children and spouses and jobs while making time to prepare late into the night as best they are able.  

Honestly, a few others haven't taken this season of preparation seriously.  

All covet your prayers as they are facing a grueling 2-3 days of examination.  Please join me and pray that the candidates will be successful in maintaining focus this week and having recall over the materials they have studied. 

And so it begins for nervous future world-changers!

Further, pray that God continues to raise up scholars and practitioners that will see to use their education and capabilities to honor him and "Speak up and judge fairly; defend the rights of the poor and needy."  (Proverbs 31:9)  May they use their training to advocate for the least of these!  

Pat Robertson, founder of Regent University School of Law ~ 

Special/Supplemental Needs Trust

Individuals living with a disability often need to avail themselves to public assistance at some point in time.  In order to qualify for this assistance, guidelines require that the individual first be impoverished. The threshold at which someone no longer qualifies for assistance is around $2K-$3K.

Unfortunately, while public assistance may provide certain necessities, it does not allow for the quality of life many of us would like our loved-ones or ourselves to enjoy.  A Special or Supplemental Needs trust can help bridge that gap.

See below a sample of items which could be purchased by a trustee with assets held in trust:

1. medial equipment or treatment not covered by Medicaid
2. Adaptive equipment not covered by Medicaid
3. cell phone and service
4. Hobby supplies and fees
5. tuition and school supplies if no other funding source exists
6. prepaid funeral expenses
7. computer equipment
8. personal care items
9. vacations
10. pet/pet supplies

Things the trustee cannot purchase with trust assets:

1. gift for people that are not the beneficiary
2. Beneficiary’s basic needs, such as food, shelter, clothing and medical care.
3. cash payments directly to the beneficiary

This type of trust can either be self-funded or funded by someone else.  If it is self funded, it is called a Special Needs Trust and if it is funded by someone else, a Supplemental Needs Trust.  The primary difference is that at death, any funds left in a Special Needs trust go to the state or agency to reimburse for care provided.  In a supplemental needs trust, any excess goes to a remainder-man beneficiary defined by the grantor.

Step Parent Adoption

Many clients choose to purse a Step-Parent Adoption to legally confirm the family unit that is already operating in the home.

Arkansas makes the process of adopting your step child a bit easier than a non-biological adoption.  This type of case is initiated by filing a petition with your county court and then awaiting a hearing before the judge.  Your petition must detail certain jurisdictional and substantive requirements and essentially tells the judge what you want (the adoption, perhaps a name change for the child) and why you think he is the one that should grant these things.

With all legal proceedings involving children, the decision will be made by the judge as to what is in the "Best Interest of the Child".  This standard is, however, quite vague and numerous statutes as well as cases interpret and provide color which can assist your attorney is best presenting your case as in your child's best interest.

There are two basic types of Step Parent Adoption -

• Contested - where the non-custodial natural parent does not consent
• Uncontested - where the non-custodial natural parent consents.

The former will take a bit more time and cost you more money in lawyer fees as well as costs.  You must prove to the court either that the presumed natural father is not in fact the legal father of the child per your state's laws or that non-custodial parent's rights should be terminated. There are a number of causes which a court could rely upon in choosing to terminate a parents rights and grant the adoption petition.  Your adoption attorney can discuss your situation and if any are applicable.  

Medicaid Planning

My goal is to live independently until I die.

I never hope to need long-term care in a nursing home or assisted living facility.  Unfortunately, few people are able to care for themselves through their older years.  Many are faced with the need for assistance and many caught off guard by the expense that may be necessary to obtain the assistance needed.

Medicaid is often used to provide a source of funding to ensure that you receive the care needed.

Did you know that applicants to Medicaid are only allowed to have approximately $2,000 in non-qualified assets?

Further, any gifts you make within 5 years of applying for Medicaid are subject to a look-back provision which can make them count against your asset allowance!

Your Medicaid planning attorney can help you plan such that you can protect your assets while best qualifying for benefits.

Estate Tax Planning

Last week we looked at a few benefits of Revocable Living Trusts that are applicable to individuals or couples of most any net worth.

Today's post is directed to individuals whose net estate is anticipated to be above ~$5.3M as of 2014.  This number is known as the estate tax exemption and is available for any given year on the IRS's website.  In the past 10 years, this exemption has been as low as $1.5M, so depending on what decisions congress makes in upcoming sessions, the need for estate tax planning may increasingly apply to individuals or couples with mid-range estates.

There are a variety of irrevocable trust documents which can be used to plan one's estate to legally minimize estate tax liability.  The basic goal is to systematically remove assets from your taxable estate prior to death while not inhibiting your ability to provide for needs and quality of life in the mean time.

• By making use of the annual gift exclusion ($14,000 per donor per recipient in 2014), you may be able to shift ownership of assets without incurring gift or estate taxation on the transfer.  A married couple with 2 married children and 4 grand children would be able to gift a total of $168,000 per year tax free. 

• With enough advance planning, wise transfers of assets that are likely to appreciate in value into a GRAT or Granter Retained Annuity Trust can shield your estate from the inclusion of the appreciated value.

• If you have a particular interest in leaving a portion of your estate to one or more charitable organizations, unique trust instruments such as the CRAT (charitable remainder annuity trust) or the CRUT (charitable remainder unitrust) make doing so tax advantageous.  

An experienced Estate Tax attorney can help you analyze which assets you have that might be best suited for inclusion in an irrevocable living trust as well as what trust instruments might help serve your individual interests.

Will/Trust Considerations

So you've made an appointment to meet with your attorney regarding your Estate Plan?  Here are a few things to consider when determining your desired distributions....

1. What do you own?
1. This can include real estate, investments, cash, jewelry, guns, artwork, life insurance policies, the family business, and an almost unlimited list of other assets.
2. How do you own these items?
1. Joint Tenancy
2. Tenants in Common
3. Tenancy by the Entirety
4. Marital Property
5. Separate (non-marital property)
3. Do you have minor children?
1. If so, who would care for them in your absence?
2. Do you feel comfortable with them (or any other beneficiary) receiving the full payout of inherited money when they turn 18?  
4. Who should get each of your assets in #1 above?
5. What happens if a desired beneficiary 
1. is dependent on governmental need-based benefits and will be disqualified by an inheritance?
2. has proven irresponsible with money and would not have the skills or sophistication to manage an inheritance?
3. Is indebted and would loose any inheritance to debtors?
4. Is a minor whose caregiver you would not trust with the assets? 
6. When should beneficiaries receive their inheritance?
1. When they turn 18?
2. 25?
3. Graduate College?
4. Get Married?
5. Some other point in time?
7. Do you anticipate relying on Medicaid at some point before your death?  
8. Who do you trust?
1. to care for your minor children (see #3.1)
2. To be responsible for distributing your assets according to your expressed wishes?
3. To manage your assets should you become incapacitated before death (in the case of an RLT)

Feel free to add any additional thoughts in the comments! 

Arkansas Probate

Let's start with a definition or two .....

Probate is the process by which the court looks at a will, accepts evidence that it is valid, and then oversee's the distribution of the decedent's assets and payment of decedent's debts according to that will.

Probate can also refer to the process where a court obtains evidence as to the assets and debts of an individual who has died intestate (without a will) and then oversee's the distribution of those assets and payment of those debts according to various state statutes.

Ok, so who needs to go through the probate process?

1. The short answer is anyone who dies while owning assets.  
2. Exception - Estates with a total net-worth under $100K do not require full probate, but do require filing certain paperwork with the court.  

How to avoid probate - 

1. Use Joint Tenancy or Tenancy By the Entirety to automatically transfer title to jointly owned property to the other owner upon one death.
2. POD (Payable on Death) Accounts - You may be able to designate your bank or stock accounts as payable on death to a particular beneficiary.  
3. Inter-vivos (living) gifts - anything you give away during your life will not be part of your probate estate.
4. Living Trusts - transferring title of assets to a trust removes the need to probate these assets.  

Look for an upcoming post outlining the Probate Process in Arkansas.  

Intestate Succession

If you die without a will or without transferring ownership of your assets into a trust then state statute will define who now owns your assets.  This generally means the following with certain exceptions (the marital home etc):

1. Your "legitimate" children get everything.  (love your step-children as your own?  Doesn't matter to the court, if you die intestate they don't take ... until perhaps #8)
2. Your spouse of greater than three years gets everything.  Your spouse of less than 3 years gets 50% of your estate
3. Your parents get everything (or the remaining 50%)
4. Your brothers and sisters get everything that would have gone to your parents were they living (and their descendants).
5. Your surviving grandparents, uncles, and aunts (and their descendants).
6. Your surviving great-grandparents, great-uncles and great-aunts (and their descendants).
7. Your spouse of less than three years - the other half they don't receive under #2 
8. The heirs of your last previous spouse that predeceased you
9. Lastly - if none of the above exist, your estate goes to the county in which you live.  

Sound confusing!?  It IS!  So, if you like this plan - no need for a will .... except that also, your estate will likely be required to put up a "bond" to protect against an executor of your estate absconding with the assets.  This increases the cost of probating an intestate estate.  Most wills include a provision to waive the requirement of bond.  

Holographic?

No, Holographic Wills are not holograms ... at least not yet!

Perhaps at some point in the technological future, we'll be able to video a hologram of ourselves detailing how we desire our property to be distributed upon death and the legal system will accept it.  Perhaps not!

Holographic is the legal term for a Will that is entirely handwritten and signed by the individual who is trying to plan for their death. Arkansas does recognize these as valid in § 28-25-104 of the Arkansas State Code.  

The problem with Holographic wills arrises in that they are exceptionally difficult to prove valid.  

For example, in my own family, a great uncle died years ago leaving only a holographic (handwritten) will detailing his wishes.  This instrument was challenged in court (LEGAL FEES!) (FILING FEES) (TIME) and eventually ruled as invalid.  As a result, my uncle's estate was divided according to the laws of intestacy.  

Now, I was quite young when this happened, so I hold no opinion on the validity of the holographic will in question, but presuming it WAS valid .... my uncle's wishes were not carried out.  Not only did his intended beneficiaries not receive their full inheritance, but the family members that did take through probate had to share the estate with their lawyer!  

Conclusion:  

If you're stuck in your basement/car/boat and a natural disaster/criminal/other prevents you from executing a will with witnesses and a notary and a Proof of Will at your local lawyers office .......

by all means write one up and sign it.  But know, your desired beneficiaries may very well have to overcome a hurdle or two to prove that you really did so!

Assuming you aren't facing imminent death in an extenuating circumstance, its probably worth the effort to go through the formalities of planning your estate with your local attorney.  

Introduction

Good morning or afternoon! Thank you for visiting my corner of the web.

I don't come from a family with a long history of legal employment. In fact, like many of you, I come from a lineage that often wonders if clients can really trust their Legal counsel.

You've probably heard the jokes ....

How do you know when a lawyer is lying?
His lips are moving.

Well I am not THAT lawyer.

This blog is intended as a place for honest analysis and insight into the legal world as it relates to YOU, the everyday client.


DISCLAIMER:
Every set of facts is different. Please be advised that the commentary offered on this blog does not constitute legal advice that you should rely upon when pursuing a claim, defending a claim, or otherwise conducting your business, life, or affairs.