The field of estate planning in Fayetteville, Arkansas can be enormously complicated. Many estates can be handled with a simple will. But in some instances, people want to avoid the probate process as much as possible by using specially designated financial accounts. In addition, minor children or a large number of assets sometimes require legal instruments to be created. Two of the most common are revocable trusts and transfer on death (TOD) accounts. These two instruments have their own benefits and challenges to aid in the probate process.
TOD accounts
A TOD account is helpful for anyone who wants to pass on assets to a particular beneficiary. Many financial institutions that offer retirement planning have these accounts available to customers. The account is structured to pass on assets as soon as a person dies to another person. Therefore, those assets do not have to be doled out through the probate process. They are already in the name of another person when the original account holder’s assets go to probate. The TOD account is helpful for reducing the impact of probate. But it leaves the beneficiary open to lawsuits and the legal process in general if there are liabilities or claimants to the estate.
Revocable trusts
A revocable trust is a slightly more complicated and safer structure than a TOD account. This trust is a legal entity that handles assets and potential inheritance outside of the initial creator. A co-trustee can also make decisions if the original creator is incapacitated somehow.
This form of trust can help settle an estate by paying off creditors and handling any expenses. While it does not avoid probate, the revocable trust can greatly aid in processing a complex estate. Revocable trusts are clearly the superior option for anyone wanting greater control over the probate process.