Estate planning is a vast area of modern-day law, and there are more ways to plan for your passing than just having a living will. Trusts are a more popular approach to estate planning, as they do not require processing in probate court and require much less time and effort to handle. There are a variety of family trusts that many Cabot, AR residents have used to plan for their loved ones’ futures, but the two main types of trusts are revocable and irrevocable. Within these two categories, you can set up a living trust, a life insurance trust, or a minor’s trust. You will need an experienced trust lawyer, though, to ensure that your trust is legally binding and written with the utmost degree of detail and conscientious effort. This can ensure that it will hold up throughout the years.
The legal team of Kevin Lemley Law Partners has more than 50 years of combined legal experience in estate planning law and trust law. Our approach to estate planning is straightforward and transparent, allowing us to help you understand the right trust solution for your unique needs.
The difference between an irrevocable and a revocable trust is simple. A revocable trust is one that can be revoked or rescinded, rewritten, or amended. An irrevocable trust, however, is one that cannot be rescinded after it is legally processed and set up. It also cannot be reversed or amended in any way by law. There are situations in which an irrevocable trust can be modified or terminated, but these conditions set forth by law must be met:
Similar to a will, a living trust has written instructions that delineate where your assets will go following your passing. A living trust is a revocable trust, meaning that it can be amended. The sole purpose of the living trust is to avoid probate court.
A marital trust, also referred to as an “A” trust, simply passes assets on to one of two married spouses after one passes away. The trust can then be passed on to further beneficiaries following the death of the second spouse. This is a long-term way to disperse assets according to the grantors’ wishes without having multiple trusts or wills. More importantly, it also avoids probate court.
For tax purposes, in many cases, it is not recommended that you include your life insurance policy as part of your estate. However, a life insurance trust is designed to legally prevent the IRS from taking taxes on the death benefits of a life insurance policy.
A minor’s trust is typically a trust set up within a living trust. It is useful for parents or grandparents who have minor beneficiaries. A minor’s trust will name a trustee, someone who will be in charge of the assets, and delineate at what age minor beneficiaries can receive assets and for what purposes money from the trust can be used. In Little Rock, the youngest age a person can be to be considered a minor in a minor’s trust is 18 years old. The most common age most people select for beneficiaries in a minor’s trust is 25. In this case, until the beneficiary turns 25, the trustee would be in charge of assets and how they could be used according to the instructions in the trust. Then, at 25 years of age, the trust would be turned over to the beneficiary.
When estate planning, most people use a minor’s trust to prevent their beneficiaries from spending the money in the trust too quickly or too frivolously. By allowing the beneficiary to mature, the intention is for the assets to last longer and be spent more wisely rather than spent hastily before the value of money is established with experience and age.
To set up a trust online, the cost is around a few hundred dollars, though this type of trust is not recommended, as it doesn’t take into account the individual’s unique circumstances like a personal attorney could. Hiring an estate planning attorney to establish a trust will likely cost more, depending on the attorney’s fees and the complexity of the trust. However, they can ensure that there are no loopholes and that it won’t contradict the individual’s wishes in a way that isn’t clearly represented within the legal terms of the trust.
A trust in Arkansas takes legal control of the assets of the individual who establishes it while still allowing for their use while they are still alive. Following their passing, the assets are passed on to the beneficiaries of the trust. The main benefit of a trust is that it is not subject to probate court.
A family trust that is solid and leaves no room for error or question is ideally established with the help of a qualified estate planning attorney who understands the complicated state laws that surround these types of documents. An experienced attorney can set up a family trust that has little chance of being challenged.
In Arkansas, a trust essentially serves the same purpose, but there is one fundamental difference between the two: a will is subject to processing through probate court, while a trust is not. Upon the passing of an individual who has a will, their will could be held up in probate for as long as one year or more in some cases. While the deceased’s estate may still have to go through probate, the trust does not. This allows for assets to pass to the beneficiaries automatically in a timely manner, unseen by the eyes of the probate court.
If you need legal estate planning assistance with setting up a trust, contact Kevin Lemley Law Partners to speak with one of the members of our legal team. We are well-versed in Arkansas estate planning law and can answer your questions about trust establishment.