Estate planning is put into place so that people have some control and comfort with what will happen to their assets upon passing away. Together with an estate planning attorney, people will complete documents that ensure people they trust will execute their wishes, whether it be the trustee of a living trust of an executor of a will. They might also create a separate trust or annuity for people in their lives who might have special needs. This allows people to have some say about what happens to their belongings and assets when they are no longer alive.
Is Estate Planning Just For What Happens After I Die Or Can Estate Planning Also Benefit Me During My Lifetime?
Yes, estate planning can benefit you during your lifetime. When a person who has significant assets decides to be proactive and look forward to the future, they might begin Medicare and Medicaid planning for the possibility that they might one day need to go into an assisted living facility or nursing home. They do this planning to ensure that they do not have to lose all their assets and are able to pass on an estate to their loved ones. Essentially, those people plan for any kind of incapacity or inability to take care of themselves, while still being able to pass along their assets to their loved ones.
What Is A Will And Is A Will Enough On Its Own?
A will is a document where the person appoints an executor who will file the will in court upon the death that person’s death. In Arkansas, the court that deals with wills is the circuit court. At that point, a probate case is opened, and the executor asks the court to appoint them as executor pursuant to the terms of the will. The executor then has various powers to disburse the assets to the beneficiaries named in the will.
While just completing the will and doing this way with an executor is a simple straight-forward way, it can be quite costly with $5,000- $10,000 in attorney fees and costs to handle the probate estate administration. Many people do not have a large estate to cover those costs or they do not want to put that burden on the executor. For those people in Arkansas, there is something called an affidavit for the collection of small estate. If the assets are under $100,000 and there is no real estate involved, it is a very simple process that should not cost more than a couple hundred dollars. If the assets are above that amount and there is a will, it must be probated. The minimum retainer for most attorneys in a probate case here in Arkansas is around $2,500. Other costs will likely be added from there.
With a Revocable trust, or living trust, a person is able to convey all assets that are titled into it. In this case, the person creating and funding the trust becomes their own trustee. They can put into and pull out of the trust while they are still alive. When they pass away, a successor trustee then takes over running the trust. This person is usually the same person that one would name the executor of the will. They then have all the powers to administer the trust, sell assets, or distribute the assets the way the deceased wanted. The deceased will usually leave instructions as to the distribution of assets within the trust. In this way, people avoid involving the court system as would be done with just a will. There are no court orders required.
A trust will cost more to set up on the front end for the person setting it up, since lawyer fees will be involved in the initiation and set up of the trust. The person’s heirs, however, will save on attorney and court fees on a probate case. There are many benefits to creating a trust and more complicated issues can be addressed by a trust that cannot be accomplished in a will.