Estate Planning Lawyer’s Guide to Choosing the Right Trust in Arkansas

Creating a trust is often an important step in a comprehensive estate plan. Broadly speaking, trusts offer individuals greater control over how their assets are protected, managed, and distributed during life and after death. With many options available, choosing the right type of trust can feel overwhelming. An experienced estate planning lawyer can help you navigate these choices and tailor a strategy to fit your unique goals—whether that’s avoiding probate, minimizing taxes, or ensuring long-term support for loved ones.

What is a trust?

A trust is a legal arrangement that allows one party (the trustee) to hold and manage assets on behalf of another (the beneficiary), according to the instructions set by the person who creates the trust (the grantor or settlor). Trusts are powerful tools because they can be tailored to promote a wide range of goals, including, but not limited to, helping you control how your assets are used, minimizing taxes, avoiding probate, and providing long-term asset protection for yourself and your loved ones. To learn more about the basics of trusts and estate planning, the American Bar Association provides a helpful overview here.

What Are the Types of Trusts Available in Arkansas?

When it comes to estate planning in Arkansas, trusts are one of the most versatile tools available. Whether you're looking to avoid probate, protect assets from creditors, plan for long-term care, or provide for a loved one with special needs, there’s a good chance a trust can help you achieve your goals. Below, we break down the most common types of trusts so you can better understand how a trust may be beneficial in your situation—with the guidance of an experienced estate planning lawyer.

• Revocable Living Trust
• Irrevocable Trust
• Special Needs Trust
• Charitable Trust
• Spendthrift Trust
• Qualified Income Trust (Miller Trust)
• Domestic Asset Protection Trust

Revocable Living Trusts: Advice from an Estate Planning Lawyer

A revocable living trust is often referred to as a will substitute because its primary advantage lies in probate-avoidance. A revocable living trust is created during your life and is funded with assets during your life, or automatically upon your death through beneficiary designations.This type of trust allows you to retain full control of your assets during your lifetime. You can change or revoke the trust at any time.

Best for:

• Individuals who want to avoid probate
• Those with out-of-state property who want to simplify their estate administration
• People who want to maintain control of their assets while alive
• Families seeking privacy (unlike a will, it doesn’t become public)

Pros:

• Avoids probate
• Keeps your estate matters private
• Offers flexibility and control

Cons:

• Offers no asset protection from your creditors
• May become irrevocable upon death

When to consider it: If you want to simplify the transfer of your estate and avoid probate, a revocable trust is often a strong choice. Your estate planning lawyer can ensure proper funding and alignment with your other estate documents.

Irrevocable Trusts: Strategies for Tax Planning and Asset Protection

An irrevocable trust is similar to a revocable living trust in that it is created and funded during your life, but unlike a revocable living trust, an irrevocable trust may generally not be changed or revoked after its creation. This type of trust is more rigid than a revocable living trust but has potential tax benefits and opportunities for asset protection which are not available to a revocable living trust.

Best for:

• Individuals looking to reduce estate taxes (often high-net-worth individuals)
• Those wanting to protect assets from future creditors, lawsuits, or divorce proceedings
• People planning for Medicaid eligibility (at least 5 years before applying)
• Donors wanting to remove life insurance proceeds from their estate

Pros:

• Can be structured to removes assets from your taxable estate
• Potential to shield assets from future creditors or spouses
• Opportunities for for Medicaid planning

Cons:

• You lose complete control over the assets placed in the trust
• More difficult to amend or dissolve, though under several recently enacted laws, there are improved opportunities for flexibility with irrevocable trusts in Arkansas.

When to consider it: If asset protection or tax planning is a top priority, speak with an estate planning lawyer about whether an irrevocable trust aligns with your goals.

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Special Needs Trusts: Protecting Eligibility for Benefits

A special needs trust, or trust under 42 U.S.C. § 1396p(d)(4) government assistance programs like SSI or Medicaid.

Best for:

• Parents or guardians of a child with disabilities
• Individuals receiving SSI or Medicaid who are being left an inheritance or gift
• Families who want to supplement care without losing public benefits

Pros:

• Maintains benefit eligibility
• Provides long-term financial support

Cons:

• Must be carefully structured to comply with benefit rules
• Ongoing administrative responsibilities

When to consider it: If you’re caring for someone with a disability, an estate planning lawyer can draft this specialized trust to ensure their financial security without compromising benefits.

Charitable Trusts: Supporting a Charitable Cause While Promoting Other Planning Goals

A charitable trust is a type of irrevocable trust that allows you to give to a nonprofit organization in a way that provides certain income or other tax benefits to you.

Best for:

• Philanthropic individuals who want to support a cause and still receive income or estate and gift tax benefits
• Those with appreciated assets (e.g., stock or property) wanting to avoid capital gains tax
• Estate planning for those seeking both family and charitable impact

Pros:

• Can reduce estate or income taxes
• Supports philanthropic goals
• May provide income to you or your family for a period of time before assets go to the charity or, alternatively, may provide income to the charity for a period of time before assets ultimately pass to your family

Cons:

• Irrevocable
• Complex to establish and administer

When to consider it: If charitable giving is a priority, talk to your estate planning lawyer about options like a Charitable Remainder Trust (CRT) or Charitable Lead Trust (CLT).

Spendthrift Trusts: Protecting Beneficiaries from Themselves (and Their Creditors)

A spendthrift trust is structured to limit the ability of the beneficiary’s creditors to reach trust assets and, sometimes, even the ability of the beneficiary to access or take advantage of trust assets himself..

Best for:

• Beneficiaries who are financially irresponsible, struggle with addiction, or face potential lawsuits or divorces
• Parents concerned about a child’s spending habits or creditors
• Trust creators wanting long-term asset protection and control for their beneficiaries

Pros:

• Limits the impact of poor spending habits
• Protects assets from lawsuits or creditors
• Encourages long-term financial security

Cons:

• Requires a trustworthy, competent trustee
• May limit a beneficiary’s flexibility

When to consider it: If you’re concerned about a beneficiary’s financial responsibility or you simply want to ensure the assets are protected from creditors, ask your estate planning lawyer about adding spendthrift provisions to your trust.

Totten Trusts: Tips for Simple Bank Transfers

A Totten trust—also known as a payable-on-death (POD) account—is a basic way to transfer money outside of probate. Like the revocable living trust, the Totten trust is often referred to as a will substitute because its primary advantage is being a cost-effective way to avoid probate when dealing with certain types of accounts.

Best for:

• Individuals with smaller estates or single bank accounts
• People who want a simple, low-cost way to avoid probate
• Anyone needing to ensure quick access to funds for survivors

Pros:

• Easy and inexpensive
• May avoid probate
• No legal fees required

Cons:

• Limited to bank accounts
• No asset protection during your life or, generally, after your death
• If the named beneficiary predeceases you, the account could be subject to probate still

When to consider it: For smaller assets or simple transfers, your estate planning lawyer may recommend this tool as part of a broader estate plan strategy.

Qualified Income Trusts (Miller Trusts): Medicaid Planning Opportunities

If your income is too high to qualify for Arkansas Medicaid long-term care, a Qualified Income Trust may help.

Best for:

• Seniors whose income is too high to qualify for Medicaid in Arkansas
• Families planning for nursing home or long-term care costs
• Those seeking Medicaid eligibility while retaining income for necessary expenses

Pros:

• Helps meet Medicaid income limits
• Allows you to access long-term care benefits

Cons:

• Must meet strict rules
• Limited use of funds

When to consider it: If nursing home care or Medicaid eligibility is on the horizon, consult with an estate planning lawyer about setting up this trust early.

Domestic Asset Protection Trusts: A New Opportunity in Arkansas to Protect Your Assets

Domestic Asset Protection Trusts (DAPTs) are irrevocable trusts that allow you to protect your assets from your own creditors while still being a beneficiary of the trust during your lifetime. In the past, under Arkansas law, assets placed in a self-settled trust were not protected from creditors of the settlor, but in 2023, Arkansas enacted a new law that authorizes the creation of DAPTs to allow greater asset protection opportunities. 

Best for :

• High-net-worth individuals who want to shield assets from future creditors or lawsuits
• Business owners or professionals in litigation-prone fields (e.g., doctors, dentists, contractors)

Pros:

• Can protect assets from future lawsuits and creditors
• You can still receive distributions and benefit from assets held in the trust

Cons:

• Must comply with certain statutory requirements
• Not generally protective against existing creditors of the settlor
• A third-party trustee is required, resulting in a certain loss of control by the settlor

When to consider it: If you’re considering advanced asset protection, your estate planning lawyer can explore this new option available under Arkansas law.

Why Working with an RMP Estate Planning Lawyer Matters

Choosing the right type of trust is not a one-size-fits-all decision—and it requires far more than filling out an online form. At RMP Law, our experienced estate planning lawyers take a personalized, strategic approach to protecting what matters most to you. We work closely with you to understand your unique family dynamics, financial situation, and long-term goals. Whether you're planning for your children’s future, caring for a loved one with special needs, or protecting your assets from long-term care costs or potential creditors, we ensure your plan complies with Arkansas law and truly serves your best interests.

Contact RMP Law today to schedule a consultation and start building a plan that gives you clarity, confidence, and peace of mind for the future.

Let RMP Law be your trusted legal partner, providing the guidance and advocacy you need to succeed. Contact us today! 

Main RMP Number: 479-443-2705

Disclaimer:

The information provided on this website does not constitute legal advice. Instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.