How Property Can Be Transferred Outside of Probate in Arkansas

Probate is the court-supervised process of distributing a deceased person’s assets according to their will or otherwise by state law. Probate can be time-consuming, expensive and even contentious. Many Arkansas families wish to avoid it so their property can pass smoothly and privately to loved ones. 

Fortunately, Arkansas law recognizes several tools that allow property to transfer directly to heirs, bypassing probate altogether. The following are the most common:

• Joint tenancy with right of survivorship — When property is jointly owned, it may pass to the surviving co-owner(s) upon one owner’s death without court intervention. However, it’s critical that the property deed is titled as “joint tenants with right of survivorship.” Otherwise, the property may end up in probate even if that was not the owners’ intent. 
• Transfer on death (TOD) deed or beneficiary deed — This allows an owner of real property to name a beneficiary who will receive the property upon the owner’s death. The owner keeps full control during his or her lifetime. The deed must be signed, notarized and properly recorded with the county before the owner’s death. Otherwise, the property could be subject to probate.
• Payable on death (POD) and transfer on death (TOD) — These designations are available for bank accounts, certificates of deposit and certain securities and brokerage accounts (depending on the institution).. The accounts can transfer directly to the designated person upon the owner’s passing. These designations should be updated regularly and after major life events.
• Retirement accounts — Pensions, IRAs, 401(k)s and other retirement assets pass directly to the people listed as beneficiaries. These accounts are not affected by the terms of a will. Failing to review and update these designations can result in unexpected probate involvement, such as when a beneficiary predeceases the account holder and no alternate is named.
• Insurance policies — Because the beneficiaries are named in the policy, the proceeds never become part of the probate estate. There are exceptions, such as when all named beneficiaries have died or a beneficiary is a minor, for whom the court may need to appoint a guardian.
• Living trust. — By conveying property to a revocable trust, the owner retains control during his or her life. Upon death, the property transfers privately according to the trust’s terms. Trusts are beneficial for people with complex holdings and definite plans for transferring them. However, all intended assets must be assigned to the trust. Unassigned assets will be subject to probate.
• Small estate affidavit — Arkansas has a procedure called Collection of Small Estates by Distributee, available when the total value of an estate is under $100,000 (excluding the homestead and certain statutory property). This is a streamlined method for heirs to settle modest estates without the appointment of an estate personal representative.

Despite these tools, mistakes can result in assets falling back into probate. These errors can include failing to record beneficiary deeds, leaving beneficiary designations outdated, incorrect titling (such as tenants in common instead of joint tenancy) or neglecting to fully fund a trust. Working with an Arkansas estate planning attorney experienced in probate avoidance is the best way to ensure your property passes according to your wishes and your plan works as intended.

Schnipper, Britton & Stobaugh creates comprehensive estate plans for Arkansas residents, including wills, trusts and other essential documents. To schedule an appointment with a dedicated attorney, call us at 501-762-0887 or contact our office online.