A revocable living trust is a potent estate planning instrument that can help condition inheritances and keep assets safe from the rigors of Arkansas probate. However, forming and executing a trust without the right assistance is a risk-filled undertaking that could leave grantors exposed and their heirs empty-handed.
Five Mistakes to Avoid When Establishing a Living Trust
A living trust needs to be properly drafted, executed, and managed. Before establishing a trust and leaving your legacy to fate, check your estate plan for the following mistakes.
1. Failing to Draft Your Trust According to Arkansas State Law
A revocable living trust is a legal entity capable of receiving, acquiring, and managing assets. In estate planning, revocable living trusts are often used to condition inheritances and negate the need for probate—the formal process of dissolving an estate and distributing inheritances to heirs.
While revocable living trusts offer their grantors significant advantages, a trust must still be drafted in accordance with state law. If you fail to use the precise legal language required by the natural state’s probate courts, or don’t adequately detail the trust’s purpose and objectives, your entire estate plan could collapse when you’re no longer around to make any necessary adjustments.
2. Improperly Transferring Assets to Your Trust
A trust can receive and manage assets. However, an asset only becomes a trust asset if and when properly transferred to the trust. Often, an asset—such as a home, commercial property, or motor vehicle—must be re-titled to the trust. In other cases, the trust must be named as a beneficiary to the account.
If you’re unsure how to re-title or transfer assets to a trust, contact an experienced Arkansas trust attorney as soon as possible.
3. Forgetting to Nominate a Qualified Successor Trustee
A revocable living trust is a flexible instrument that allows its creator—known as a trustor or grantor—the right to amend, update, or revoke the trust so long as they’re still alive. Under most circumstances, a grantor can also serve as a trustee. However, a revocable living trust only serves its long-term purpose if the grantor nominates a successor trustee responsible for administering the trust after the original grantor passes away.
4. Leaving Your Entire Legacy to a Trust
While living trusts are time-tested tools offering many advantages, a comprehensive estate plan cannot simply be the trust. Your estate plan should include other essential elements including but not limited to:
- A last will and testament
- An advance health care directive
- The durable powers of attorney
- Beneficiary designations reviewed regularly
5. Not Getting a Professional’s Input
If you plan to create a trust-centered estate plan, you may need a professional’s assistance. Arkansas state law allows most adults to decide how their assets should be divided after their death. However, all estate planning instruments—including wills, testaments, and living trusts—are only valid if executed in accordance with legal statutes.
While many websites offer “free trust templates,” they’re not always fully customizable and may fail to accommodate all of your individual needs. Furthermore, any adjustment to the template—even a minor alteration or addition—could render a revocable living trust invalid at the time of the trustor’s death. If the trust held significant assets, or was the deceased person’s primary means of disbursing inheritances, heirs could lose their rights to a mandatory, court-administered intestate succession.
Contact an Arkansas Estate Planning and Asset Protection Attorney Today
Quraishi Law & Wealth is a community-oriented firm committed to helping Arkansans of all backgrounds establish the legacies they and their loved ones deserve. Please send us a message online or call us at 870-275-4304 to speak to an estate planning professional and begin exploring your options for a trust-based estate plan.