How do trusts avoid probate?
A trust is a legal document between an individual creating a trust (known as the settlor or grantor) and a person or financial institution that holds the trust’s assets (known as the trustee). In Arkansas, trusts are often created to avoid probate, which is the court-supervised process of collecting a deceased person’s assets, paying their debts and taxes, and distributing their remaining assets to their heirs. Trusts can be used to bypass probate for several reasons. First, trusts are private documents; when an estate goes through probate, it becomes part of the public record. By contrast, the terms of a trust remain confidential, which is why a trust is often called a “will substitute.” Second, trusts are less expensive than probate. When assets are placed in a trust, the settlor can decide who will be the trustee and who will receive the trust’s assets upon the settlor’s death. Thus, the assets of the trust are transferred quickly and efficiently, without the need for a court to oversee the process. Finally, trusts can be very flexible when it comes to transferring assets. A trust can provide for gradual distributions of assets over time, which is particularly helpful if the settlor has minor children who will receive the trust’s assets when they reach a certain age. Overall, trusts are a popular estate planning tool in Arkansas for people who wish to avoid probate and securely transfer their assets to their heirs.
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