You make a living trust in Arkansas by putting the necessary legal documents in place and funding it. People typically fund a living trust with assets, such as homes, bank accounts, and more. As the sole trustee or co-trustee, you will also need to name a successor trustee who can manage the trust if you die or become incapacitated.
The Arkansas estate planning lawyers at Milligan Law Offices can walk you through the seven steps you’ll need to take when making a living trust. Here is a basic outline of what you will need to do.
Step 1: Create an Asset Inventory
An asset inventory is a list of your assets. A living trust only allows you to avoid probate if you place asset ownership into the trust. This list helps you maintain thorough records while looking at your finances from a “big picture” perspective.
Here are some examples of things you should include on your asset inventory list:
- Real estate
- Bonds and stocks
- Business interests
- Insurance policies
- Intellectual property
- Jewelry, precious metals, and gems
- Valuable antiques, artwork, and collectibles
If you leave assets out of your asset inventory list, you risk passing them to an heir via a pour-over will. Not having a pour-over will means that the assets that are not part of your trust are subject to default Arkansas probate laws. That means that you will have no bequeathment authority, which effectively nullifies the purpose of your living trust.
Step 2: List Your Heirs
The next step in making a living trust is listing the names of your heirs and designating bequeathments. Before you create your living trust, it’s important to iron out any inconsistencies. For example, make sure to check that the beneficiaries listed in your living trust are the same people who are joint owners on titles, deeds, life insurance policies, and bank accounts.
You should also notify your attorney of any potential conflicts among the beneficiaries of your living trust. Documenting potential problems ahead of time maximizes the chances of them being dealt with effectively and the living trust process moving along smoothly.
Step 3: Choose a Successor Trustee
Living trusts typically name yourself and your spouse as co-trustees, but you will also need to name someone else to act as a successor trustee if one or both of you pass away or become incapacitated. Adult-aged children and extended family members are good choices for successor trustees, but if they are also named beneficiaries of your living trust, acting as your successor trustee may cause a conflict. For that reason, many people make their successor trustee an attorney or another independent advisor.
Step 4: Set Up a Consultation with an Estate Planning Lawyer
The most legally sound way to create a living trust is with the help of an estate planning lawyer from an experienced and reputable law firm. Most estate planning attorneys offer initial consultations, so it’s a good idea to schedule one before writing your living trust.
Step 5: Review the First Draft and Mark for Finalization
After you hire an attorney, they will begin to work on your estate plan. They will ask you some questions before starting the drafting process so they can customize your documents with minimal disruption.
You will be able to review the first draft before finalizing the agreement. Carefully review it to make sure that it’s accurate and true to the best of your knowledge. If everything looks correct, send the draft back to your lawyer for finalization.
Step 6: Attend the Signing of Your Living Trust
After finalization and printing, your estate planning attorney will set up a living trust signing. You do not need to bring witnesses with you because the law firm will typically provide paralegals or other lawyers to act as witnesses to the signing.
Once your living trust is signed, the law firm will scan your documents and make copies for your living trust binder. They will also email or transfer a digital copy of your documents for future reference.
Step 7: Update Your Living Trust as Needed
It’s essential to think of your trust as a responsive document. Your financial or tax situation will likely change over time, which means that you’ll need to update your trust accordingly through amendments and restatements. Estate planning lawyers will generally check in with you at least every two years to see if you need to make any changes to your living trust.
Do I Need a Lawyer to Make a Living Trust?
While hiring an attorney to help with your living trust process is not legally required, it is highly recommended. If your trust contains legal mistakes, it may not achieve the intended result and could cause problems down the line.
A common mistake people often make on their own is creating basic trust documents, but never funding the trust. An unfunded trust is not helpful to your successors, and assets that remain outside of the trust will have to go through the probate process, including the payment of taxes.
Keep in mind that a living trust is not the only document you will need. Most people put one in place to protect their estate, family, and finances and also require a pour-over will, advanced directives, and powers of attorney. Estate planning lawyers can put the proper documents in place that fit your unique situation.
Consult with an Arkansas Estate Planning Lawyer
While it offers several advantages, drafting a living trust can leave families with many questions. The estate planning lawyers at Milligan Law Offices can help you better understand the process and ease your concerns.
If you would like to learn more about making a living trust in Arkansas, schedule an initial consultation with us by calling (479) 783-2213 or messaging us online.