How to Create a Family Trust in Arkansas
Establishing a family trust is a way of transferring the legal ownership of your assets to members of your family in order to protect them. The trust allows you to maintain control of the assets, though you are not the legal owner. This means the assets cannot be seized by creditors. In addition, a family trust protects the assets from probate and helps reduce estate and inheritance taxes. If you are faced with the prospect of entering a nursing home sometime in the future, creating a family trust early can be the ideal way to save your hard-earned assets in Arkansas.
Other People Are Reading
Instructions
-
-
1
Inventory your assets. You must determine which assets you would like to protect. You can include bank accounts, real estate, motor vehicles, valuable artwork, household items and company shares. Arkansas does not limit the amount of assets you can place in a family trust.
-
2
Determine the value of the assets. You will need to determine the fair market value or expert appraisal of any assets put in the family trust.
-
-
3
Name the members of the trust. A family trust include settlers, trustees and beneficiaries. The settler is the person who sets up the trust. This is also the person who currently holds the assets that will be transferred to the trust. You will need to name yourself, your spouse, or both as the settler or settlers. The trustees carry out the wishes stated in the family trust. This can also be a beneficiary. The beneficiaries are the family members who will inherit the assets in the trust. You can include as many family members and even future family members.
-
4
Draft the trust deed. You can visit a local Arkansas title company or attorney to have them draft the deed. It specifies all assets and identifies the members of the trust and their roles. The trust deed specifies how you want the assets distributed. Set operation rules for any bank accounts and investments. The trust deed must be signed and notarized. Establish the family trust with a small monetary amount.
-
5
Add assets to the family trust. Sell your assets to the family trust. You will need to make an Agreement for Sale and Purchase of the assets to the trust. Because you are the seller, the trust must pay you the value of the assets. If you create the trust with the small monetary amount, the trust will not be able to pay for the assets. The seller lends the trust the money in an interest-free loan. You do not need to borrow any actual money. This is just a paper transaction. The trustees acknowledge the debt by creating a Deed of Acknowledgment of Debt.
-
6
Forgive the debt. This is done gradually. The forgiveness process usually takes several years. By forgiving the debt slowly, you avoid any gift taxes. Each time a gift is made, it must be documented.
-
1
References
Resources
- Photo Credit Wallet image by yan1981 from Fotolia.com
