One bad method used to avoid probate!

I have witnessed and have been told about many families trying to protect their real property from probate without using a revocable trust.  If you think it is a clever idea to add your children as joint owners to your real property in order to avoid probate, please think again.

Problems.

1. Homestead Exemption.  Everyone has a constitutional protection called the homestead exemption that provides you the ultimate protection against your home (up to a certain value).  Simply put, no one can kick you out of your home because you owe them money (except a bank may foreclose on property you’ve collateralized but that’s a different topic for another day).  Because your children likely cannot call your home their primary residence, the homestead protection is not available to them.  Therefore, they could lose part of your home to a divorcing spouse or creditor.

2. Control.  Use of the above mentioned method gives ownership rights to your children.  Therefore, you are now at their mercy to some degree.  You must have your children sign away their rights anytime you want to sell, lease, or mortgage your property.  It is even possible for angry or resentful children to have the surviving parent removed from the home.

3. Probate.  Thinking this method avoids probate is correct, but only if you die before your children.  If you have several children, then hopefully this would never be a problem, but a real interpretation of this method is that it is a temporary fix.

Alternatives.

1. Revocable Trust.  This instrument will provide you and your spouse complete control during your lifetime, it will keep your property out of probate, and keep your property free of any civil judgments against your children.

For more free information about creating a revocable trust (or living trust) in Arkansas, please give us a call or write to us today.

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