Wednesday, June 18, 2014

Retirement Account Beneficiaries: An Often Overlooked Aspect of Estate Planning

By Bryce Crawford

The beneficiary designation on 401(k) and IRA accounts is the most commonly overlooked, and one of the most important aspects of estate planning and wealth management.  By recent estimates, Americans currently have $5.9 trillion invested in 401(k) plans and another $6.5 trillion in IRAs.  For the most part, the distribution of the assets in your retirement accounts upon your death is not governed by your will or trust, but rather the beneficiary designation on the account itself and the federal Employee Retirement Income Security Act (ERISA).  

The importance of updating your beneficiary designations on your retirement accounts following changes in your life cannot be understated.  Many times, these designations were jotted down quickly years ago as you filled out pre-employment paperwork.  In order to ensure that your hard earned assets pass according to your intent upon your death, you should update you beneficiary designations any time you get married, divorced, have children or undergo any other major life changes. 

Here are some key rules governing retirement accounts to help you make the right designations as your family grows and changes.

Rules for Your 401(k)

No. 1: If you are married, upon your death your spouse is automatically entitled to 50 percent of your account regardless of whether someone else is the named beneficiary.  If another person is the named beneficiary, your spouse will receive 50 percent of the assets and the named beneficiary will receive the other 50 percent.  Your spouse can sign a waiver of his or her right to 50 percent of the account.  However, this cannot be done by prenuptial agreement.  Only a spouse can waive this right, not a fiancĂ©.    

No. 2: If you are single when you die, your 401(k) assets pass to the designated beneficiary on the account no matter what your will states.  If you get divorced and your ex-spouse does not receive rights to any part of your 401(k), you MUST update your beneficiary form with the name of your new beneficiary.  If you die single leaving your ex-spouse named as the beneficiary of your 401(k), he or she will receive the account even if your will designates that all of your assets go to your children.

Rules for Your IRA

No. 3: Unlike 401(k) plans which are governed by federal law, IRA accounts are governed by state law and afford you much more freedom in designating a beneficiary.  Generally, you may designate anyone you like as the beneficiary of your IRA without your spouse’s consent and your spouse will have no interest in that account upon your death if he or she is not the beneficiary.  Also unlike 401(k) plans, if you name your spouse as the beneficiary of your IRA and later divorce, that designation is null and void upon your death under most state laws.  In that instance, your account would pass according to the default plan laid out in your IRA document.

Recent statistics show that 401(k)s and IRAs make up approximately 60 percent of the assets of U.S. households investing at least $100,000.  Assuring that these assets pass according to your intent upon your death can become complicated with both federal and state laws controlling those accounts, especially when the owner of the accounts divorces, remarries, or has subsequent children.  The help and knowledge of experienced estate planning attorneys is often necessary and invaluable to ensure that you make the proper beneficiary designations.   For more information contact the experienced estate planning attorneys at the Williams Law Group.

                                                                                    The Williams Law Group, PLC
                                                                                    4201 W. New Hope Rd., Suite 202
                                                                                    Rogers, AR 72758
                                                                                    Phone: (479) 633-8421
                                                                                    Fax:     (479) 633-8058

Monday, August 26, 2013

Unemployed New Jersey Man Jailed for Failure to Pay $78,000 Per Year in Alimony - Could This Happen in Arkansas?

        A New Jersey man is so used to being sent to jail for failure to pay $78,000 a year in alimony to his ex-wife that he has a routine for notifying friends and family and making arrangements to be in jail.

        The man once earned over $1 million a year as a portfolio manager and was ordered by a New Jersey court to pay over $100,000 per year to his ex-wife, about $78,000 of which is alimony.  However, due to the weak economy, the man became unemployed after his divorce.  Under New Jersey law, he was still required to pay the $78,000 a year in alimony or face being held in contempt of court regardless of the fact that he had no job or resources.  The man has since been held in jail at least eight times over the past two years for failure to make his alimony payment.

        Divorce and alimony laws can differ significantly among states.  Could such a scenario happen here in Arkansas?

        An ex-spouse who fails to make alimony or child support payments can be held in contempt of court and jailed in Arkansas.  However, under Arkansas Code Annotated 9-12-312, both the person paying alimony and the person receiving alimony can petition the court for a review, modification or both of the court's alimony order at any time when there is a significant and material change of circumstances.  In other words, when a person who is ordered to pay alimony has a significant reduction in income, he or she may ask the court to reduce the alimony amount.  On the other hand, a person ordered to receive alimony can ask the court to increase the alimony amount upon a significant increase in income of the spouse ordered to pay alimony.  

        Furthermore, alimony terminates in Arkansas upon the re-marriage of the ex-spouse receiving alimony or when that ex-spouse lives full-time with another person in an intimate relationship.

        If you need help with alimony or child support related issues or any other family law matters, contact the attorneys at The Williams Law Group today for a free consultation.  Call 479-633-8421.

Friday, August 23, 2013

Arkansas Legislature Clears Pathway for Bars in Benton County

          Like it or not, in its latest session the Arkansas General Assembly passed a new law making it much easier to authorize the sale of alcohol for on-premises consumption in Benton County.  Contrary to some public belief, on-premises consumption is still only allowed at "private clubs" in Benton County even after last November's election.  The election last fall only authorized the establishment of liquor stores to sell alcohol for consumption off-premises.  

          Currently, establishments serving alcohol in Benton County typically must be organized as a "private club."   Private clubs have a stricter set of rules than do actual bars.  For example, private clubs must buy their alcohol at retail prices rather than wholesale prices.  This means the customer ends up paying a higher end price since the alcohol has effectively been sold at retail prices twice.  Furthermore, private clubs cannot have alcohol delivered to their locations.  Private club owners must drive to the store or distributor to pick up all alcohol.  

          Until now a referendum election was necessary in order to authorize actual bars, rather than private clubs, in Benton County.  However, that changes for Benton County under Act 1008 of 2013 which allows cities and towns to authorize on-premises consumption by ordinance.

          Act 1008, which became effective August 15th, now allows a city or town to authorize on-premises consumption by ordinance, rather than referendum election.  This is a much easier process for authorizing bars than the previous law.  It appears as if Act 1008 was tailored specifically for Benton County.  Act 1008 states as requirements that the county in which on-premises consumption is to be authorized must have authorized the sale of intoxicating liquor after November 1, 2012, and must have at least one hundred Alcoholic Beverage Control Division permits at the time the city or town chooses to authorize on-premises consumption.  Benton County is the only county statewide we know of that fits these requirements.  

          The laws governing the sale of alcoholic beverages in Benton County have undergone a lot of changes recently.  Act 1008 is the latest development on this front and may be the subject of much debate in the near future.

           Go here to read the full text of Act 1008.    

Tuesday, August 20, 2013

Flo Rida Served with Australian Lawsuit Via Facebook, Would This Work in Arkansas?

        Recently, pop musician Flo Rida was served with a breach of contract lawsuit in Australia via Facebook.  Mr. Rida (his real name is Tramar Dillard) failed to show at his court date.  An Australian appeals judge eventually ruled that the trial court lacked jurisdiction to allow service via Facebook.  This unusual scenario raises the question: "Would this be a proper form of service of a lawsuit in Arkansas?"  The simple answer to that question is "No."

        Rule 4 of the Arkansas Rules of Civil Procedure governs the service of a lawsuit on the defendant in Arkansas.  In most cases, the defendant must be properly served with the complaint in person by a sheriff or other person authorized by the court to serve a lawsuit.  In some instances, service by United States mail or commercial carrier such as United Parcel Service is allowed.  However, as of right now, service via Facebook or other forms of social media is not permitted in Arkansas courts.

        If you have been served with a lawsuit and need legal assistance, call the attorneys at The Williams Law Group at 479-633-8421 today to receive immediate help and guidance.

The Basics of an LLC

       A number of our clients often ask what the characteristics and benefits of a Limited Liability Company or "LLC" are.   Here are a few of the basic principles and characteristics of an LLC:
  • In general: An LLC is a hybrid between a sole proprietorship or partnership and a corporation. It combines the income tax “pass-through” treatment of a sole proprietorship or partnership with the limited liability protection accorded to corporate shareholders.
  • One Member Required:  An LLC can have as few as one Member (owner).
  • Separate Legal Entity:  Like corporations, an LLC is recognized as a separate legal entity from its “Members.”
  • Limited Liability:  Only the LLC is responsible for the company’s debts. This shields Members from individual liability for the acts and debts of the LLC.
  • Management and Control:  Management and control of an LLC is vested with its Members unless the Articles of Organization provides otherwise.
  • Voting Interest:  Ordinarily, voting interest directly corresponds to interest in profits, unless the Articles of Organization or operating agreement provide otherwise.  The interest of the Members must add up to 100%.
  • Transferability:  No one can become a Member of an LLC without the consent of Members having a majority in interest (excluding the person acquiring the membership interest) unless the Articles of Organization provide otherwise.
  • Formalities:  The existence of an LLC begins upon the filing of the Articles of Organization with the Secretary of State.  The Articles must be on the form prescribed by the Secretary of State.  To validly complete the formation of the LLC, members must enter into an Operating Agreement.  This Operating Agreement may come into existence either before or after the filing of the Articles of Organization.
The Williams Law Group can have your LLC up and running in less than a week.  Our attorneys will take care of registering your LLC with the Arkansas Secretary of State, preparing the Articles of Organization, drafting the Operating Agreement and obtaining a federal tax number for the LLC.  If you would like more information about forming a corporate entity just call us at 479-633-8421.

Do's and Don'ts of Starting and Operating a Business

       Many small business owners set up their business under the umbrella of a corporation or limited liability company to protect their personal property from risk or exposure.  However there are some things that must be done to maintain this shield of protection in using such entities.  The following are some things that should not be done and some things that should be done in maintaining this shield of protection from personal liability:

DO limit your liability to your investment in your company by incorporating your business in a corporation or organizing it as a limited liability company or corporation.
DO follow the "corporate formalities" to which you must adhere in order to preserve the limited liability afforded to you by virtue of having incorporated your business (annual meeting with minutes, maintaining a separate corporate account, signing contracts properly, etc.).
DO have a written buy-sell agreement with your business partners setting forth what will happen if one of you die or want to sellout.
DO have a written employee handbook and written employment agreements containing confidentiality and non-competition obligations if necessary.
DO apply for a federal tax identification number for your business as soon as your business has been incorporated.
DO set up a bank account in the name of this corporation or LLC and run all of the business revenues through this account (no intermingling of personal funds in the account).
DON'T ask or permit your employees to breach confidentiality or non-competition agreements with their previous employers.
DON'T sign company contracts in your individual capacity. Rather, sign them on behalf of the company as an officer of the company.
            DON'T put off buying insurance.

       The Williams Law Group can assist you in setting up your corporation or LLC properly and we can advise you on what needs to be done in order maintain this protection as you operate your business, such as preparing minutes and corporate resolutions.  Just give us a call at 479-633-8421 to speak with an attorney today. 

Prospective Employment and Arkansas’ New Social Media Privacy Law

          A growing trend in recent years has been for employers to require prospective employees to turn over the login information to their Facebook profiles and other social media accounts so that employers can examine them prior to making a hiring decision.  This has caused many workers to feel that their personal privacy has been violated.  Employers on the other hand feel that information contained on prospective employees’ social media accounts is vital information to have before investing time and money into a new employee.

          However, the Arkansas General Assembly recently addressed this issue in this year’s legislative session.  Act 1480 of 2013, codified as Arkansas Code Annotated § 11-2-124 and set to take affect later this year now prohibits an employer from requiring, requesting, suggesting, or causing a current or prospective employee to disclose his or her username and password to the current or prospective employee’s social media account.  Furthermore, the employer cannot require the employee, current or prospective, to change the privacy settings on a social media account, thereby making his or her profile available to the public.  Also noteworthy under Act 1480 is that an employer cannot require an employee to add another employee, supervisor or administrator as a “friend” or contact on any social media account. 

           Under this act an employer cannot fail or refuse to hire a prospective employee for exercising his or her rights under the act, and an employer cannot discipline, take action against, or threaten a current employee for exercising his or her rights under the act.

          However, an employer may still request an employee to disclose his or her login information for the purpose of accessing a social media account when the employee’s social media account is reasonably believed to be relevant to a formal investigation or proceeding by the employer relating to the employee’s violation of state or federal laws and regulations or the employer’s written policies.

          Act 1480 of 2013 gives Arkansas workers a new privacy right they didn’t previously possess.  However, an employer’s right to access its employees’ social media accounts is not completely extinguished.  When an employer needs access to a social media account for the purpose of an ongoing investigation, the employer can still request the employee to disclose his or her login information.

          The attorneys at The Williams Law Group have experience dealing with employment law matters.  Just give us a call at 479-633-8421 or visit our website at to schedule a free consultation with one of our attorneys today.