Contrary to popular belief, Arkansas trusts and wills are two very different animals. Discover the key differences between these two legal devices right here, right now. And as usual, our Arkansas Estate Planning Attorneys will break this subject down in plain, old-fashioned English.
Who Needs an Arkansas Trust or Will?
If you have any assets – like a house, car, or bank account – then you have an ‘estate’ and a need an estate plan. By getting your affairs in order, you will ensure your loved ones are taken care of according to your wishes. The most popular way to do this is to create a trust or a will.
What is a Last Will & Testament?
Setting up a Last Will and Testament in Arkansas can accomplish four major items for you:
- It instructs the probate court on how you want your property to be distributed;
- It identifies the people you want to receive and enjoy your property (‘beneficiaries’;
- It allows you to name a person of your choosing to manage the process of finalizing your affairs (‘executor’); and
- For younger families – it allows you to identify the person(s) who will raise your underage kiddos in your absence.
How Does a Last Will Work?
Your will comes into effect after you are gone. It’s job is to make sure your property goes to the right folks and in the right manner.
A will goes into effect after a person dies. The will controls the distribution of any and all property that was owned in your name upon your death. Important to note however is that the will does not control what happens to property that was held in trust or held in joint tenancy.
After a person passes away his or her assets are frozen in his or her name or “estate.” Before your executor can transfer those assets to the beneficiaries named in your will, your loved ones will have to go through a lengthy, public process known as the probate court process.
Simply put probate is the legal process where the court confirms the validity of the will, and ensures that any outstanding debt and taxes are paid, and all assets have been appraised prior to being distributed.
What is a Revocable Living Trust?
Like a will, a living trust also provides instructions about how you want to distribute your property, money and assets upon your death or disability and gives you a place to name beneficiaries of your estate.
Akin to naming an executor in a will, you’ll name a successor trustee who will oversee the distribution of your assets upon your death or incapacity.
Unlike a will that comes into effect after death, a living trust comes into effect immediately upon its execution.
The person creating the trust typically serves as the trustor, trustee and beneficiary while they are living. This allows the creator to keep 100% control over their assets while they are alive and well.
What Are The Key Differences Between a Will and a Trust?
There are a few key differences between a will and living trust. One of the biggest differences that people
are interested in is the pricing.
A will is less expensive on the front-end to setup than a trust. However, one big advantage of creating a living trust is that it allows your family to avoid the probate court process before distributing your estate. This means that a trust will normally save significant time, money and precious energy on the back-end.
As an Arkansas Probate Attorney I can attest that the probate process is very lengthy. Beneficiaries under a will have to wait a minimum of 225 days before they can lay hands on the property that they inherit. And more often than not, probate takes closer to a year or longer to complete.
The cost of probating an estate in Arkansas can be calculated by turning to the statute Arkansas Code Ann. § 28-48 10. Attorneys and executor fees are calculated based on the gross value of the estate, but in general you should expect to pay between 5-10%. In Arkansas, the fees to probate a $250,000 estate can be up to $21,640.
Probate is public and wills can be more easily challenged. Trusts keep you out of the public view and are totally private in nature.
Overlooked Points about Wills and Trusts
Keep in mind, that unless a living trust is properly funded – meaning ownership of your assets is changed to your trust – a trust won’t serve its intended purpose of avoiding probate. While getting it established right on the front end will take some effort on your behalf, it’s imperative to providing your family with the protection they deserve.
When deciding which option is preferable to your situation, the size of your estate is usually the biggest factor and whether you value saving money on the front-end or on the back-end.
For more FREE information about which option is the BEST VALUE for YOUR family, take a moment now to check out www.providencefirm.com/estate-planning/probate-avoidance