Hyden, Miron & Foster, PLLC Law Blog

Friday, August 29, 2014

Basics of a Comprehensive Estate Plan

Estate planning is something that everyone should consider.  For many, this subject is not comfortable to think about, but what happens to your assets after you die is not just a concern for those that are aging, wealthy, or have children.  These matters should be handled as early as possible to avoid unpleasantness after a disabling event or death.  Every plan is unique, but there are some cornerstone documents that should be present in every well-rounded estate plan.

Will

A Last Will and Testament disposes of all assets that have not passed to your beneficiaries in another way.  For instance, if you do not designate a beneficiary on your life insurance account it will pass according to your Will.  A Will also nominates the person or persons responsible for administering your estate.  You may also use your Will to nominate a guardian for your minor children and make funeral arrangements. In both instances, the local circuit (probate) court will approve the nominations by formal appointment and will supervise the actions taken by these appointees.

Trusts

There are many different types of trusts that can be utilized depending on your situation.  A trust can be used to reduce estate taxes, hold assets for distribution to beneficiaries according to specific terms, and to protect assets.  A trust allows assets to pass to beneficiaries without the formalities and expense of probating the will.  

Beneficiary Forms

Most financial accounts, such as life insurance and retirement accounts, require that you designate a beneficiary to receive the proceeds of the fund upon your death.  If a beneficiary is properly designated, the asset will pass regardless of the provisions of a will. We urge you to review your designees in your policies, as your current designee may no longer be alive or appropriate, such as your former spouse.

Power of Attorney – Financial and Healthcare

These documents allow you to choose a person to handle your financial and healthcare needs if you cannot do so yourself.  They can be customized to give the agents more or less power as you see fit.  

A financial Power of Attorney is an important element of any estate plan.  It enables your attorney-in-fact or agent to handle your business and financial affairs, other than the assets in your trust, if you are unable to handle them yourself.  

The health care Power of Attorney addresses two major concerns in a single document.  First, as a living will, it sets forth your instructions that, if you should have an incurable illness and death is imminent in any event, your life should not be prolonged by artificial means (i.e., life-sustaining procedures are to be withheld or withdrawn if you are permanently unconscious).  Second, as a durable power of attorney for health care, it authorizes your health care agent to make other health care decisions for you should you be unable to do so.  

Other Things to Consider

You may also want to include a list of assets, including digital assets, with your estate plan, as well as instructions as to how your loved ones can access them.  Be sure to leave your loved ones a list of contacts that they may need in the administration of your estate, such as your attorney and financial advisors.  If you are a homeowner you might also want to leave your beneficiaries a list of all of your utility and service providers for use after your death.

By utilizing all of the above documents you can rest assured that you are on your way to creating a comprehensive plan for your loved ones.  If you are considering creating or revising an estate plan call the attorneys at Hyden, Miron & Foster, PLLC at (501) 376-8222 today. We have offices in Little Rock, Conway and Hot Springs, Arkansas.


Friday, August 22, 2014

Is the new IRS Form 1023-EZ really “EZ”?

By: Tiffany Parker Nutt 

The IRS recently announced a new Form 1023-EZ that is available for small organizations seeking tax-exempt status. The new form provides a simplified application process and is expected to reduce application backlog. However, not all organizations seeking tax-exempt status can use Form 1023-EZ. It can only be used by organizations seeing tax exempt status under IRC § 501(c)(3). IRC § 501(c)(3) applies to entities organized exclusively for religious, charitable, scientific, testing for public safety, literary, educational purposes, or for the prevention of cruelty to children or animals. The new form cannot be used by organizations with annual gross receipts exceeding $50,000.00 or with total assets exceeding $250,000.00.

Form 1023-EZ can only be filed electronically at www.pay.gov after you register for an account with that site. The IRS will not accept printed copy submissions of the application. Also, the electronic application will not be processed until the $400 user fee is paid. The user must be paid online also.

The IRS states that the new “EZ” form (3 pages) is shorter than the full Form 1023 (12 pages). However, instructions for Form 1023-EZ require that applicants must complete a seven page Eligibility Worksheet first. Applicants do not have to submit the Eligibility Worksheet with the Form 1023-EZ applications, but need to keep a copy for their records.

Form 1023-EZ only contains four parts. Part I is general information about the organization. Part II is a series of “check the box” items attesting that the organization document meets certain requirements. Part III relates to the organization’s specific activities. Part IV is a series of questions to determine whether or not the organization is a private foundation or public charity.

Even though the Form 1023-EZ is easier than the full Form 1023, the application limitations and questions are still very complicated. Contact the attorneys at Hyden, Miron & Foster, PLLC to assist with your tax-exempt status application and organization formation.


Friday, August 8, 2014

IRS Audits

The Internal Revenue Service (IRS) conducts audits to ensure that taxpayers are complying with the tax code.  Audits are not random.  In order to decide who to audit, the IRS (or their computers) look for red flags (items that are suspicious or abnormal).  

If you are chosen for an audit, the IRS will send you a letter to notify you.  If you receive an audit letter, you should contact an experienced tax professional such as an accountant, attorney, CPA or enrolled agent as soon as possible to schedule a consultation.  Audits can have serious financial consequences and the representation of a qualified attorney can reduce the chances that you will face these penalties.  A tax attorney can represent you before the IRS and assist in demystifying the process in the initial consultation.  This will minimize the stress and apprehension that often comes along with being audited. 

After you schedule a consultation, you should thoroughly review your tax return(s) for the years selected for audit.  Look for anything that might be a red flag and make note of it so you can discuss it with you attorney.  You should then begin gathering any and all documents you have relating to your tax return.  You want to be able to prove that the deductions and credits on your return by having sufficient documentation.  Gather documents relating to everything on your tax return, not just red flags, and make copies for your attorney.   If you do not have these documents, do not panic.  Your attorney may be able to assist you in gathering the required evidence from other sources.  Do not contact the IRS or send them any information.  It is best to allow the attorney to handle these correspondences.  

If you have received an audit letter from the IRS, the experienced tax attorneys at Hyden, Miron & Foster, PLLC can help you.  Call us at (501)376-8222 to schedule a consultation.


Thursday, July 31, 2014

Common Estate Planning Mistakes

Most people would like to believe that once they pass everything will go as planned.  The truth is, no matter how well you are prepared, you cannot plan for every contingency.  However, you can reduce the risk that things will go off track by avoiding some common estate planning mistakes.

Often times, individuals choose the wrong people to manage their estates.  Picking the wrong executor or trustee can wreak havoc on your plan.  Remember, you do not have to settle for the default picks (such as a spouse or child). You should pick someone you can trust.  You should put a lot of thought into these selections and consider individuals who understand what you want and who are most likely to fulfill your wishes.  You can also pick multiple people, if you think that will work best.  But, be aware this could backfire and cause more harm than good.

In many instances, people do not consider the assets they possess that may pass outside their Will or Trust.  Assets such as retirement funds and life insurance policies will pass according to the beneficiaries you designate on these accounts.  You should think carefully about these designations and review them often.

Many do not consider the possibility that something might happen to the beneficiary they have chosen.  This risk is a real one and you should therefore designate secondary beneficiaries when possible.  Not designating secondary beneficiaries could cause this bequest to fall into the residuary estate and pass to someone you did not intend to benefit in such a way.  Choosing a secondary beneficiary or adding a contingency provision to your Will or Trust can help avoid your assets passing to someone to which you did not intend them to pass. 

Another common mistake is being secretive about your estate plan.  Talking openly and generally about your estate plan with your loved ones will eliminate surprises that could cause conflicts.  

Most estate plans provide protection in the event you become incompetent through the use of a financial and health care power of attorney.  Again, you must be careful when choosing these agents.  They must be aware of your wishes, have the ability to deal with others, and be trustworthy.  You should review your powers of attorney often, especially when relationships change.  

When creating your estate plan, talk with your attorney about all of the above in order to be as prepared as possible for any issues that might arise.  Contact the attorneys at Hyden, Miron & Foster, PLLC, at (501) 376-8222, today to discuss your estate planning matter.


Thursday, July 17, 2014

Wills: What you need to know

Wills, also known as Last Wills and Testaments, have been used for centuries to instruct how property will be distributed after death.  Wills are formal legal documents that are subject to specific requirements in order to be valid.

One of the most important things to know about Wills is that it is absolutely necessary to fulfill all of the requirements for validity set out by law.  The requirements have not changed in centuries and may seem a little outdated, but they are necessary nonetheless.  Wills cannot be electronic.  There is no app to create a valid Will.  It must be on paper.  Most of the time, they also must be signed by the person making the Will and witnessed by a number of individuals. These requirements vary by state and the circumstances under which the will was made can also have an effect.  What you need to know is that no matter what the requirements are in your specific situation, they must be complied with or your will won’t be valid.

Another important thing to know is that Wills may be updated automatically.  If you don’t bother to update your Will after you get married, divorced, or have another child, state law may update it for you.  Wills also have purposes other than to instruct how to distribute your property after you die.   For example, young parents use Wills to appoint a guardian for the care of their minor children. Others include burial instructions in their Wills.  

Finally, Wills are no longer the final say in estate planning matters.  These days, most people want to avoid probate (the court process for validating a Will).  This can be done by using a variety of techniques.  For example, it is possible to name beneficiaries on most financial accounts.  Your Will does not effect on how these assets will be distributed.  In the present day, Wills might only be used as a precautionary measure to cover assets not distributed by other means.

Whether you would like to discuss creating an estate plan or have specific questions about an estate planning matter, contact the attorneys at Hyden, Miron & Foster, PLLC, at (501) 376-8222, for a consultation today. 


Thursday, July 17, 2014

Arkansas Nonprofits Obtain Needed Funds in 2013

In December, Little Rock-based newspaper Arkansas Times released its list of high-value grants received by Arkansas non-profits from Arkansas foundations for 2013. Numerous nonprofits that were able both to identify the need for funds and to demonstrate the ability to successfully utilize funds received, in many instances, six, seven and even eight-figure grants from such foundations as Walton Family Foundation, Walton Charitable Support Foundation, The Windgate Charitable Trust, The Care Foundation of Springdale, The Endeavor Foundation, The Schmeiding Foundation and The Donald W. Reynolds Foundation. Recipients included:

• The Arkansas Community Foundation, $21.4 million
• Food Bank of Northwest Arkansas, $7.1 million
• Jones Center for Families, $500,000
• Teach for America-Arkansas, $1.9 million 
• Nature Conservancy of Arkansas, $500,000
• Arkansas Children's Hospital, $400,000

In all, Arkansas foundations contributed over $200 million in grants to nonprofits throughout Arkansas in 2013.

If you represent an Arkansas charitable organization or other nonprofit organization such as a high school, university, church, hospital or museum, or if you represent a foundation located in Arkansas or another state, obtain qualified legal help by contacting the law firm of Hyden, Miron & Foster with offices in Little Rock, Conway and Hot Springs Village. Our charitable and non-profit clients include both small private family foundations and national charities. We provide a broad range of legal services related to charitable work, including:

• Incorporation
• The preparation and filing of documents and application for tax-exempt status
• Administration issues 
• The termination of organizations
• Mergers with other organizations
• Organizational strategy and planning

In addition to working with organizations, we work with individuals and families who wish to incorporate charitable giving into their estate planning. We handle trusts including charitable remainder annuity trusts, charitable remainder unitrusts and charitable lead trust, and can provide legal assistance on matters ranging from beneficiary designations to selecting the timing and type of charitable gifts, so that both our client and the charitable organization obtain maximum benefit.

Our established firm has provided estate and business planning legal services to hundreds of families and organizations located throughout Arkansas. To discuss your legal questions and needs with an experienced attorney, call 501.673.8222.

Thursday, July 17, 2014

Reasons to Update Your Estate Plan

Everyone should have an estate plan, regardless of age or socioeconomic status.  But, the unfortunate reality is that only about half of adults have a Last Will and Testament, let alone a comprehensive estate plan. Of the adults who have engaged in estate planning, they all too often allow their plans, and corresponding legal documents to become outdated. As the circumstances in life change over time, so too should your estate plan.   If you already have an estate plan, it is recommended that you take a look at it from time to time to determine if it needs to be updated or changed.

Changes to Your Inner Circle

The addition or subtraction of a family member may impact your existing estate plan.  For example, the birth of a new grandchild or a divorce may change the way you want your assets distributed.  You may also want to add a new beneficiary to your plan or cut someone out.  So, it is important to take a look at your estate plan after these types of life events occur to determine what effect they may have. 

Changes to Executor/ Trustee

Another set of factors that can affect your estate plan are the changing personal characteristics of those you have chosen to be an executor or trustee/ co-Trustee.  Estate plans can exist for a number of years and sometimes the person initially chosen for the position is no longer the best person for the job.  Consider the person’s age, residential location and abilities to determine if they are still a good candidate to serve as executor, trustee/ co-trustee after your passing

Changes to Your Assets and to Existing Tax Laws

Changes in assets can also have a significant impact on your estate plan.  It is crucial to evaluate how your assets have changed and determine if your estate plan is comprehensive enough to cover all of your assets and how they are to be distributed.  Also, tax laws change on what seems like a daily basis.  Therefore, it is also important to speak to an attorney who can advise you as to whether changes in tax laws call for changes to your existing plan.

Changes to Your Perspective

Lastly, have your personal beliefs changed?  If you feel differently now about end of life issues than you did when you first created your estate plan, your advance directives such as your healthcare power of attorney and living will may need to be changed.  Advance directives are critical to a thorough estate plan and should be considered when doing an update.

If you are seeking the representation of an experienced attorney to craft an effective estate plan or to update an existing one, call Hyden, Miron & Foster, PLLC at (501)376-8222.


Wednesday, June 18, 2014

HMF at the Arkansas Bar Association Annual Meeting

Hyden, Miron & Foster, PLLC would like to congratulate Carrie E. Bumgardner for being selected as a recipient of the Golden Gavel Award at the 2014 Arkansas Bar Association Annual Meeting.  Carrie received this award for her service as Co-Chair of the Legal Forms Committee of the Arkansas Bar Association and for her work on ArkBar Docs.

ArkBar Docs is a library of legal documents that have been automated using HotDocs.  More information on ArkBar Docs can be found using the following link:

http://ace.arkbar.com/arkbardocs/home/.

Congratulations Carrie!

HMF would also like to recognize our incoming and outgoing officers.

Carrie E. Bumgardner is the current Co-Chair of the Legal Forms Committee. This is her second consecutive year to serve as Co-Chair of the Legal Forms Committee.

Lori L. Holzwarth is the current Chair of the Probate and Trust Section and the current Secretary of the Elder Law Section.  She is the outgoing chair of the Elder Law Section.

Nicholas Livers is the current Chair-elect of the Probate and Trust Section. He is the outgoing Chair of the Tax Section.

Tiffany Parker Nutt is the current Secretary of the Tax Section.

Shaneen K. Sloan is a member of the House of Delegates and serves on the Board of Governors. She is also the Treasurer of the Arkansas Bar Association.

The Annual Meeting was held in Hot Springs, Arkansas, June 11 through June 14.  We look forward to another exciting year as members of the Arkansas Bar Association.


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