You Don’t Automatically Need a Trust
In Arkansas, to avoid probate, you don’t necessarily need to create a trust. In Arkansas we have other methods available to avoid probate other than a Revocable Trust.
Estate planning isn’t a one size fits all, force fit everybody into a trust, thing.
First, a Warning
Don’t add your children to your deeds or accounts trying to avoid probate. It creates a whole host of issues when you do that most people don’t even think about when they do it.
For example, if they are in an auto accident and their insurance won’t cover the damages, then your property and money your accounts can be used to pay for their lawsuit settlement.
It is much safer to use a durable power of attorney to give them the power write checks, pay bills, and manage your real estate. But that isn’t what we are talking about today.
I bring this up because too many people put children on the accounts and deeds thinking they’ve done estate planning. However, they haven’t thought through the consequences of it.
Lawsuits aren’t the only issue. Because if you need Medicaid within 5 years of putting a child on the deed it will count against you as a gift or a transfer penalty.
Transfer on Death to Avoid Probate
Avoid probate in Arkansas by setting your real estate, retirement accounts, bank accounts, and vehicles (under certain conditions) to transfer on death. All of these would then avoid probate and transfer by operation law. You can do all of this without putting your children on the deeds or your accounts.
Create a Trust to Avoid Probate in Arkansas
For some people, a trust will be better than using the beneficiary method.
Think about these when deciding to use a trust:
- Children under 18
- Children with addictions
- Children with credit issues
- Children with bad marriages
- Children who spend money as fast as they get it
- Children with special needs
- Spouses that will need Medicaid or long term care
If you meet any of the above, then a trust is probably better for you to protect your spouse, children, and their inheritance.