Estate Planning

Murphy Law Firm can assist in designing a customized estate planning solution to meet your desired goals and needs. From probate avoidance, asset protection, taxes, to incapacity planning, Murphy Law Firm will help you mitigate unintended consequences. 

Is a Will Right for You?

A will is a legal document outlining how an individual's assets will be distributed after death. For individuals with a net worth under $500,000 or just wanting to put a basic estate plan in place, a will can be a simple and effective way to ensure that their assets are distributed according to their wishes.

Benefits of a Will

Designation of Beneficiaries

The individual can specify who they want to receive their assets.

Specific Bequests

The individual can make specific gifts of specific items or amounts of money to specific individuals.

Guardianship

The individual can also use the will to appoint a guardian for minor children or dependents.

Is a Trust Right for You?

A trust is a legal entity that holds assets for the benefit of one or more beneficiaries. For individuals with a net worth over $500,000 or needing some more sophisticated planning solutions, a trust can effectively protect their assets and ensure that they are distributed according to their wishes.

Benefits of a Trust

Probate Avoidance

Assets held in a trust do not go through the probate process, which can save time and money.

Asset Protection for Beneficiaries

A trust can be used to protect assets from legal issues such as lawsuits, creditors, bankruptcy and divorce.

Tax Benefits

A trust can be used to minimize or eliminate estate, gift and income taxes.

Wills and Living Trusts Comparison

When planning for the future, it's essential to understand the difference between a will and a trust. Both a will and a trust can play a crucial role in ensuring your assets are correctly distributed, but the two have fundamental differences. Compare the features of a will and a trust with our comprehensive charts to help determine which option is right for you & your loved ones.

Will Features

Living Trust Features

What is it? A will is a straightforward tool that directs to whom one would like to leave their assets upon death. A will also names a personal representative, or PR (aka executor) who will do the administrative work of winding-up the deceased person’s
affairs through a court process called probate.

What is it? A trust is an alternative tool, which, like a will, directs to whom one would like to leave their assets upon death. A trust names a trustee, who plays an equivalent role to that of the will’s PR in winding-up the deceased person’s affairs through a private administrative process, which does not involve a probate court process.

Lower maintenance during life. After signing a will, it can be put in a safe place and checked off the to-do list. We suggest a review of your will every few years and also upon major life changes.

Slightly higher maintenance during life. It is essential that a trust be “funded” during lifetime in order to avoid probate. This may necessitate updating beneficiary designations on retirement accounts, life insurance policies, bank accounts and other investment accounts.. If you choose to have a trust prepared, it is our preference to assist with the “funding” of your assets into the trust to ensure probate avoidance. We will also give you written instructions of how we would suggest you “fund” your trust for any assets acquired in the future.

Probate is required. In Arkansas, if someone dies as the sole owner of at least $100,000 (in 2023) in assets at the time of their death, a probate court case will be required to permit the transfer of those assets to the beneficiaries named in the will. A separate probate case would be required in each state that one owns real estate upon their death. Life insurance policies and retirement accounts that name beneficiaries do not require probate to transfer to beneficiaries.

Avoids probate. Some people strongly prefer the use of a trust because trusts avoid probate court if used in accordance with our simple instructions. For those with real estate in multiple states, many prefer to use a trust because this eliminates the need for probate in each state where real estate is owned.

Distributions take longer. The PR must wait to distribute the assets until the court permits distributions to be made. Typically, it takes at least six months until beneficiaries can receive an inheritance assuming there is no contest of the will or other time consuming issue for the court to resolve.

Distributions happen faster. Distributions can be made more quickly with a trust. Upon death, and generally with minimal delay, the trustee may distribute inheritances
per the instructions of the trust without the oversight of the probate court.

Guardianship for minor children. A will permits the appointment of a legal guardian(s) for your minor children.

No Guardianship for minor children. A trust does not permit the appointment of a legal guardian(s) for your minor children; rather, a trust allows for the appointment of a trustee who will generally manage trust assets on behalf of legal guardian for the benefit of your minor children.

No Asset Protection. A will offers no asset protection to an individual during lifetime; however, a testamentary trust created through a properly probated will can offer asset protection to your beneficiaries upon death.

Asset Protection. A living trust (aka revocable trust) offers no asset protection to an individual during their lifetime but can afford substantial asset protection for your beneficiaries upon death.

Incapacity. A will becomes effective upon one’s death and thus has no effect upon physical or mental incapacity. During one’s lifetime, a general durable (financial) power of attorney can be utilized to enable access to one’s assets during a variety of emergency situations.

Incapacity. Upon physical or mental incapacity, a successor trustee is typically named in the trust immediately permitting an appointed individual to act on your behalf with respect to assets owned by the trust.

Income taxes. A will has no effect on one’s income taxes.

Income taxes. A trust generally has no effect on one’s income taxes. Although it is technically an entity, a trust is ignored for income tax purposes and is not treated as a separate taxable entity; thus it is not required to file a separate income tax return. As a result, income, expenses and deductions associated with a trust are reported on one’s individual return.

Estate taxes. Whether one dies with a will or a trust, the tax implications are the same. Most Americans are not charged a death tax (or estate tax) upon death. For Americans that die in 2023, taxes will not be assessed for those with total assets under $12,920,000 for a single person (or $25,840,000 for a married couple).

Estate taxes. Whether one dies with a will or a trust, the tax implications are the same. Most Americans are not charged a death tax (or estate tax) upon death. For Americans that die in 2023, taxes will not be assessed for those with total assets under $12,920,000 for a single person (or $25,840,000 for a married couple).

Privacy. Upon death, a will becomes public record at the courthouse. This means that anyone curious can easily learn who is scheduled to inherit the assets of someone once they have died.

Privacy. Arkansas trusts do not need to be recorded with the court or government, so one’s trust can be insulated from public view, sheltered from scrutiny of heirs of one’s estate and concealed from other beneficiaries of the trust. This privacy interest may be useful for those who want to divide assets disproportionately or if there are individuals who you would prefer not to know the details of who is to inherit what.

Flexibility. A will can be written to achieve a variety of goals and can be amended later in life if circumstances change.

Flexibility. A trust can be written to achieve a variety of goals and can be amended later in life if circumstances change.

Cost. A will-based estate plan tends to be a lower-cost tool to create but can be more expensive to administer upon death.

Cost. Trusts are more costly to create but tend to be more economical and cost efficient to administer upon death.

Will Breakdown

Living Trust Breakdown

Estate Tax Planning

Estate Tax Planning

Income Tax Planning: Limited and often not included

Income Tax Planning

Names Someone to Handle Your Affairs When You Die

Names Someone to Handle Your Affairs When You Die

Names Who You Want to Receive Your Accounts and Property

Names Who You Want to Receive Your Accounts and Property

Names Someone to Handle Your Affairs if You Are Unable 

Names Someone to Handle Your Affairs if You Are Unable

Asset Protection for Heirs / Beneficiaries: Possible but often not included

Asset Protection for Heirs / Beneficiaries

Avoids “Living” Probate

Avoids “Living” Probate

Avoids Probate

Avoids Probate

Private Access 

Private Access

What happens if you don't have an Estate Plan?

If you don’t have a valid estate plan in place upon your death the State of Arkansas has one for you generally leading to many unintended consequences. Below is the order of succession for estates belonging to those individuals who die without a will or living trust:

Those who die with descendants, but no spouse, leave everything to their descendants.

Those who have a spouse of at least three (3) years and no descendants leave everything to their spouse.

Those who have a spouse for less than three (3) years with no descendants leave half (50%) to their spouse and half (50%) to their parents. If the parents are no longer living, then the order of inheritance goes to siblings, then nieces and nephews, and then other relatives (e.g. surviving grandparents, aunts and uncles then to surviving great-grandparents, surviving great-aunts, surviving great-uncles, etc.

Those who have a spouse of at least three (3) years and descendants leave one-third (33.33%) of their personal property and a one-third (33.33%) of real property in the form of a life estate to their spouse and two-thirds (66.66%) of personal property and two-thirds (66.66%) of real property in the estate goes to their descendants.

Ultimately, you need an estate plan because the probate court’s administration of your estate is not subjective and is strictly subject to the State inheritance laws outlined above.

At a minimum, everyone should have a basic last will and testament expressly outlining their wishes upon death.

For those who are seeking a cost-effective estate planning option, SimpleWill is the perfect solution. With our user-friendly platform, you can easily draft a last will and testament (and other important medical legal documents) to be finalized by an attorney without the need for expensive legal services.

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Not sure if you need a Will or Trust?

Schedule a free consultation with Murphy Law Firm and let us guide you through the process.