1) Make sure your estate plan is up-to-date. If you don’t have an estate plan, make a quick call to your lawyer to at least establish the basics. Even an established estate plan needs updating periodically, however. Executors may change, the delineation of heirs may need to be modified, and in the case of a revocable trust it is likely that additional assets need to be properly funded. Make sure you have the basics covered; whether that be a will, trust, or basic power of attorney documents.
2) If there have been major changes in your life circumstances in 2013, it is very likely that you need to take steps to protect yourself legally. For instance, it is very common in divorces for spouses to forget to change their payable upon death or transferable upon death beneficiaries for bank accounts, life insurance policies, and other investment vehicles. Obviously, divorce or the death of a loved one also has major consequences on the current state of your will or other estate planning documentation.
3) The beginning of the year is a great time to ensure that the non-legal specific items in your life are also properly accounted for in the event of your death. For instance, most people need to consider writing a letter to their Family members providing basic information such as computer passwords, subscription information, and the “little things” heirs need to know in order to properly handle your affairs if you were to die unexpectedly. For more information see the sample letter provided on my blog.
4) If you’re doing business for yourself, or with a partner or partners, make sure that you are doing it right. There is almost no reason why anyone should be in business as a sole-proprietor or unincorporated partnership. Arkansas has several options for the formation of a corporate entity, and it is important to consult with an attorney to determine which option is best for you.
The corporate formalities associated with the various entity types are difficult to maneuver through. If you or someone you know decided to “save money” by using an online corporate formation service, it is important to consult with an attorney to make sure the particularities of Arkansas law have been addressed.
5) Remember some of the most common misconceptions in the legal arena. For instance, almost weekly I have to inform someone that a will does not avoid Probate. A will only is a “map” for the Courts to follow in the event of your death. A properly funded Revocable Trust may be the best option to ensure immediate transfers of assets upon death outside of Probate Court. Another example involves the misconception that a LLC or Corporation protects your business assets from liability associated with your personal actions. The opposite is true – a properly constructed entity protects your personal assets from business activity.
6) Make plans to take care of aging parents. Nursing home costs can easily cause a financial crisis for a family. Many people are interested in pursuing Medicaid options, and wish to distribute their assets in order to qualify. It is important to remember that Arkansas has a five-year “look back” period for such transfers. Families with aging loved ones should also consider the tax implications of providing care, as well as ensuring that Power of Attorney and Living Will (Advance Directive) documentation is in order.
7) Review your insurance needs. Long-term Care Insurance may prevent the need to spend-down the assets of an aging loved one seeking to qualify for Medicaid. If you had minimum policy coverage on your automobile and home while younger – it is often necessary to expand coverage once you have acquired additional wealth. An umbrella policy is an attractive option for business owners. And “key-man” policies allow for buy-out flexibility in partnership agreements.
8) Avoid litigation. The truth is, usually only the lawyers win. The Courts are not efficient, and the time and expense of litigation is rarely worth the dispute. Unfortunately, the Arbitration system is frequently even worse. The best option in most cases is reasoned settlement with the guidance of experienced legal counsel. In cases involving a contract, written or oral, Arkansas Courts routinely award attorneys’ fees to the prevailing party, so litigating even a relatively small contractual breach could mean risking a huge judgment should the Judge disagree with your position.
9) Have the right team in place to protect your interests. Real Estate Investors need a great agent, title company, accountant, lending institution, insurance agent and financial advisor. Business owners need many of the same professionals at their disposal, as do most families. Which leads us to:
10) Attorneys. Everyone need a relationship with a good lawyer. Specifically, the right lawyer. If you have a friend that is a criminal lawyer, that is great, but you should also have her or him refer you to a business and/or estate lawyer. Make sure you have a relationship that you trust.
Happy New Year !!!
