When a person passes away, there’s a specific legal process, known as probate, that handles the distribution of their belongings. Probate involves the court overseeing the inventorying of assets, ensuring any debts are paid, and distributing what remains according to the deceased’s will (if they had one). If there’s no will, Arkansas state law dictates how the assets are divided.
While probate serves a vital purpose, it has some potential drawbacks. In Arkansas, the process can stretch out over a significant period, potentially lengthening the time it takes for heirs and beneficiaries to receive their inheritance.
Probate proceedings also involve fees—including court costs, attorney fees, and more—which can diminish the value of the estate. In addition, probate filings are a matter of public record, meaning that details about a person’s estate become accessible to anyone.
Proactive estate planning is essential for ensuring the efficient transfer of your assets. A well-crafted estate plan can potentially help your loved ones avoid the probate process altogether—or, at the very least, minimize the time and expenses associated with it.
Key Strategies for Avoiding Probate
Estate planning goes much deeper than just the will. If trying to make sense of the possible delays, expenses, and public nature of probate sounds unappealing, there are strategic ways you can set up your assets to potentially avoid going through the probate process entirely.
Here are some of the most commonly used methods:
Living Trusts
A living trust is a powerful estate planning tool that offers both flexibility and privacy. Think of it as a legal structure you set up while you’re alive. Keep in mind, however, that setting up a living trust generally involves some upfront costs.
With a living trust, you transfer ownership of certain assets (real estate, investments, etc.) into the trust’s name. You initially act as the trustee, maintaining complete control. Upon your death, a successor trustee you’ve named takes over and distributes those assets to your chosen beneficiaries—all without the need for court involvement. This bypasses probate completely for the assets held within the trust.
Joint Ownership with Right of Survivorship
When property is held in joint tenancy with right of survivorship, it means that, upon the death of one owner, their ownership interest automatically passes to the surviving owner or owners. This commonly applies to real estate, bank accounts, and other titled assets.
With this ownership setup, probate is avoided, providing a direct and streamlined transfer. However, you relinquish some degree of individual control over the asset(s) while you’re alive.
Payable-on-Death & Transfer-on-Death Designations
These designations are essentially instructions you add to specific accounts or assets.
- With a payable-on-death (POD) designation for your bank account, your named beneficiary can directly claim the funds upon your death, bypassing the probate process.
- Transfer-on-death (TOD) designations function similarly to POD designations, but are applicable to assets like investment accounts or even certain types of real property.
Which is Right for You?
It’s important to remember that not all assets are suitable for these probate avoidance strategies. Deciding which method best fits your specific circumstances is where working with an experienced estate planning attorney can be invaluable. They can help you carefully weigh the advantages and potential limitations of each approach, ensuring your plan aligns with your overall wishes and priorities.
Small Estates in Arkansas
Arkansas offers a streamlined probate process for estates falling below a specific value threshold. Currently, if a person’s estate has a gross value of less than $100,000 (excluding any real estate), it may qualify as a small estate.
However, there are some additional conditions:
- All debts, claims, and judgments against the estate must have been paid in full.
- There can’t be a Personal Representative already appointed for the estate.
- No one can have filed a petition requesting the appointment of a Personal Representative.
- At least 45 days must have passed since the date of the person’s death.
If all conditions are met, an interested party, such as a family member or beneficiary, can file a Small Estate Affidavit with the probate court. This document essentially verifies the eligibility of the estate and details the assets involved. After the affidavit is filed, and provided there are no objections, the assets can then be distributed directly to the heirs or beneficiaries.
Is It Right for You?
While the small estate probate process can be significantly faster and less costly than full probate, it’s not a universal solution. Even with a small estate, unexpected circumstances like a will contest or outstanding debt issues might require shifting to the full probate process.
Additionally, keep in mind that the small estate threshold in Arkansas is subject to change. If your estate’s value is close to the current limit, it’s smart to periodically check for any adjustments to the law.
If you have questions about whether your estate would qualify for the simplified process or if you have concerns about potential complications with a small estate, it’s always a good idea to consult with an experienced probate attorney. They can provide guidance tailored to your specific situation and help you determine the most appropriate way to proceed.
Estate Planning Tips to Consider
Even with probate avoidance strategies, a well-drafted will is essential. It expresses your wishes for asset distribution, names guardians for minor children, and potentially reduces family conflict.
Different types of trusts (revocable vs. irrevocable) offer further options. These trusts can provide probate avoidance, varying degrees of asset protection, and even potential tax benefits.
Finally, take time to select your beneficiaries carefully, and remember to keep your designations up to date. Life changes, and your estate plan should reflect those changes.
Connect with a Probate Attorney in Arkansas Today
Estate planning isn’t a one-time task. Understanding probate and its potential complications provides a solid foundation for crafting a plan to protect your assets and ensure they pass smoothly to your intended beneficiaries.
With a range of strategies available, it’s wise to seek guidance from an experienced estate planning attorney in Arkansas. If you’d like help exploring options or tailoring a plan to your unique needs, don’t hesitate to contact the team at Milligan Law Offices by calling (479) 783-2213 or by filling out our secure online form.
Milligan Law Offices