Living Trust in Arkansas: Protecting Your Family’s Legacy

Imagine that you are the captain of a ship, and your loved ones are your crew. You have spent years carefully navigating through stormy seas, ensuring your ship and crew are safe and secure. But as you approach the harbor of old age, you begin to worry about what will happen to your ship and crew after you're gone. Will they be able to navigate the seas without you? Will they be safe and secure?

This is where a living trust comes in. Just like a ship captain who creates a detailed plan for their crew's future, a living trust allows you to plan for the future of your loved ones after you're gone. In Arkansas, a living trust can be essential to protect assets, ensure that your wishes are carried out, and provide for your family.

This article will explore the basics of living trusts in Arkansas, including what they are, how they work, and the benefits they provide.

What is a living trust?

A living trust, also comprehended as a revocable trust or inter vivos trust, is a legal arrangement in which an individual (the grantor or settlor) places assets such as property, investments, and bank accounts into a trust managed by a trustee. The grantor retains control over the assets and can change or revoke the trust anytime during their lifetime.

How Can You Make a Living Trust in Arkansas?

Creating a living trust might seem intimidating, but knowing the proper steps and the help of an estate planning attorney for your estate plan can be done quite easily. Here are steps for making a living trust in Arkansas –

Determine which kind of trust is best for you

Your specific situation determines the type of trust you should choose. For example, if you are single, you will most likely require an individual living trust. If you are married, you should consider establishing a joint trust in which you and your spouse can place your individually and jointly held assets.

When one spouse dies, in this case, the surviving spouse is usually designated as the sole remaining beneficiary and is usually named the surviving trustee. When the surviving spouse dies, the property passes to the named heirs.

Establish the trust's terms

Create trust instructions that outline how you want the assets in your trust managed during your lifetime and after you die.

Select a successor trustee and beneficiaries

Choose a successor trustee to manage your trust and ensure that your assets are distributed properly to your beneficiaries after you die. Then, decide who will receive the trust property, also known as the trust's beneficiaries.

Establish trust

You can create the trust document on your own or with the assistance of an attorney.

Sign the trust agreement

After completing the trust, you must sign it in front of a notary public.

Donate to the trust

After you've established the trust, you'll need to transfer the assets you want to it. However, remember that you cannot transfer all of your assets to your living trust. For example, individual retirement accounts (IRAs) cannot be placed in a trust.

Advantages of a Living Trust in Arkansas

Some of the benefits of having a living trust in Arkansas include:

• Avoiding probate: Assets held in a living trust avoid probate court, saving time and money. Arkansas has not adopted the Uniform Probate Code, so its state procedures are not simplified.
• Incapacity provision: A living trust can provide for asset management if the grantor becomes incapacitated.
• Estate tax minimization: Assets held in a living trust may be subject to fewer estate taxes.
• Privacy: A living trust is a private document, as opposed to a Will, which becomes a public record after the grantor's death.

Which Trust Should You Create: Revocable or Irrevocable?

The two most common types of trust are revocable living trusts and irrevocable living trusts.

Revocable living trusts are popular because they can be changed anytime as long as you are mentally competent. A revocable living trust is a popular choice for those who want the flexibility to change their living trusts to reflect changing goals and preferences throughout their lives.

An irrevocable trust cannot be changed once it has been established. Once the documents become active, you no longer have the same legal rights to the assets you placed in them. People are usually intimidated by it, so they prefer revocable trusts.

How Can I Make Changes in My Living Trust in Arkansas?

In Arkansas, there are several ways to modify a revocable trust. Among the most common methods are:

Amendment to the Trust

This is the simplest way to modify a living trust. If you only want to make minor changes to your living trust, a trust amendment may be your best option.

It is critical to be specific about what you are changing to execute the trust on time. Also, avoid making too many changes to your trust over time, as this may confuse the language of the trust.

Restatement may be a better option if you must make multiple changes to your living trust.

Reaffirming a Trust

When you restate a trust, you are essentially redoing the entire trust. The living trust is still in place, but the new document modifies its provisions.

This is a good option if you're making a lot of changes to the trust. When completing the restatement form, you must include the original document's date, restate the provisions, and incorporate the changes you're making.

Revocation of Trust

Trust revocation is a drastic measure that should only be used as a last resort. A trust revocation achieves similar results to a restatement, but some distinctions exist.

All property held in trust is returned to the original owner with a revocation. You must transfer your assets to a new trust if you revoke your trust. Assets can be forgotten during the process, so be cautious if you choose this option.

Furthermore, remember that legally removing the property from your living trust may result in unintended tax consequences.

What Occurs If You Pass Away Without a Living Trust in Arkansas?

In Arkansas, if you die without a trust, your assets are distributed according to your Will. If you die without a Will, your property will be distributed according to Arkansas intestate succession laws.

ntestacy laws seek to distribute your assets among your closest living relatives, beginning with your spouse, children, etc.

Without a trust, any assets you've been "keeping to yourself" or want to keep private at the time of your death may become public records. Everything will almost certainly be subject to a probate process, which could take months.

Furthermore, you will have no say over how or when your assets are distributed to your beneficiaries.

If I Have a Trust, Do I Need a Will in Arkansas?

Yes, even if you have a living trust, you will still need a Will in Arkansas because a Will serves as a backup plan for any assets you do not place in your trust or forget to place in your trust.

For example, if you purchase a property but do not have the opportunity to add it to your trust before you die, it will pass through your Will if it is included there.

Does a Living Trust Reduce Arkansas Federal Estate Tax?

Arkansas is one of the few states that do not impose a state-level estate tax or inheritance tax. As such, creating a living trust in Arkansas does not avoid estate taxes because there are none in Arkansas.

However, if you own property in other states that impose an estate or inheritance tax, creating a living trust may help reduce your overall tax liability.

In this case, it's important to consult with an experienced estate planning attorney who can advise you on the specific tax laws of each state and help you create a comprehensive estate plan that considers all relevant tax implications.