Estate planning can help you avoid probate and ensure a successful transfer of assets from yourself to your beneficiaries. Probate can take a lengthy amount of time and cost your beneficiaries money if you don’t take steps to protect your estate. Here are four common ways you can avoid probate in Arkansas. For hands-on estate planning advice, consider working with a financial advisor.
Understanding the Probate Process in Arkansas
Probate is a court-supervised process that validates a deceased person’s will and oversees the distribution of their estate.
In Arkansas, this process is governed by the Arkansas Probate Code, located within Title 28. The process validates a deceased person’s will, inventories their assets and guarantees that beneficiaries receive what they are lawfully entitled to, after settling outstanding debts and taxes.
Probate can be lengthy and expensive, involving extensive paperwork, legal fees and other costs. Additionally, this process is public, which means that details of a deceased person’s assets, debts and beneficiaries become part of the public record.
Ways to Avoid Probate in Arkansas
Here are three general strategies to help you avoid probate in Arkansas:
1. Living Trusts
A living trust is a legal framework in which an individual’s property is placed into a trust during their lifetime. The person who creates the trust acts as the trustee and, upon their death, a successor trustee is responsible for transferring the property to the designated beneficiaries. This transition occurs outside of probate, ensuring a more private and expedited distribution of assets.
2. Joint Ownership With Rights of Survivorship
Property owned jointly with rights of survivorship automatically passes to the surviving owner when the other dies. This method is commonly used for assets such as real estate and bank accounts and can be a straightforward way to ensure that these assets are not caught up in the probate process.
3. Payable-on-Death and Transfer-on-Death Designations
Payable-on-death (POD) accounts allow beneficiaries to access funds in the account without going through probate. Similarly, transfer-on-death (TOD) designations can be used for specific assets like securities and real estate, enabling the direct transfer of these assets to a named beneficiary upon the owner’s death.
Collection of Small Estates in Arkansas
In Arkansas, there’s a simplified probate process for small estates. When an individual’s personal property is valued at less than $100,000, excluding any real estate, and there are no demands for a formal probate, their estate may be settled as a small estate if at least 45 days have elapsed since their passing.
An interested party, such as a family member or beneficiary, can file a small estate affidavit. This simplified process can wrap up in a shorter interval than probate for larger estates.
Estate Planning Tips
Estate planning involves the careful consideration and management of assets to ensure that they are distributed according to one’s wishes after death. One of the common goals of an estate plan is to avoid the probate process.
Establishing a will is one of the first steps in creating an estate plan. This could help you ensure the orderly distribution of assets, appoint guardians for minor children, and reduce potential disputes among beneficiaries after death.
However, while a properly executed will can streamline the probate process, it does not eliminate it entirely. A will still needs to be validated and assets may need to go through probate for distribution.
Additionally, you may consider establishing a trust to help bypass probate. This could provide a more private and efficient way to distribute assets and potentially reduce costs and delays associated with the probate process.
In setting up a trust, you should first understand the differences. A revocable living trust, for example, allows for changes during the grantor’s lifetime. Whereas an irrevocable trust is fixed and often used for asset protection or tax advantages.
Selecting your beneficiaries is also another important step when setting up an estate plan. This decision should be made with a clear understanding of potential tax implications and the goals of the estate plan.
Finally, make sure you keep your estate plan documents updated. Failing to do so could exclude beneficiaries like grandchildren who were born after you created your estate plan, and may not reflect the reality of your assets at the moment of your death. Creating a checklist with action points could help you keep your plan current and aligned with your wishes.
Bottom Line
The probate process in Arkansas, with its intricacies and legal mandates, is a vital procedure to understand for anyone concerned with how their assets will be managed posthumously. From appointing an executor to the distribution of assets, the process is designed to ensure a lawful and orderly transfer of one’s estate. However, the probate process can be lengthy and costly, prompting many to explore alternatives such as living trusts, joint ownership, and POD/TOD designations, which can offer a more efficient and private means of asset distribution.
Estate Planning Tips
- A financial advisor can help you create an estate plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Before trying to complete your estate planning on your own, make sure you’re well-versed in the potential dangers of doing your own estate planning.
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