Real Estate Transactions

Legal conveyances (transfer of property rights) can be accomplished through various means, including:

• Executing a deed
• Admitting a will to probate
• Creating an affidavit of inheritance
• Filing a petition to determine heirship of non-probated property

Our attorneys can help you understand which options are available to you and which would be most appropriate based on the unique details of your case.

If you own real estate titled in your name upon your death, it will go through probate before it passes to your beneficiaries – even if a will exists. In fact, a will is a ticket to probate. In Arkansas, the probate process takes a minimum of six months except for estates less than $100,000 which can take a minimum of three months.

Before real estate can be sold or distributed in probate, the estate is responsible for paying expenses such as taxes, insurance, utilities, and general upkeep of the property. The estate is also responsible for final debts and expenses, including funeral, court costs and attorney fees. If insufficient cash is available, then beneficiaries will have to find a way to pay the probate costs and selling the real estate may be the only way to cover the costs associated with a transfer of a decedent’s real property through probate. However, proceeds from life insurance policies or cash received through POD designations from investment accounts or banking institutions are not required to be spent on probate costs, but practically such proceeds may have to be spent if the estate has insufficient proceeds to avoid the sale of real estate to pay the debts of the decedent. Clearly, a serious dilemma could exist.

There are multiple ways to avoid probate of real property upon death. These include:

• Conveying property to a trust or to a legal entity such as a limited liability company, corporation or partnership
• Holding property as joint tenants
• Using life estate deeds and beneficiary deeds

Each of these methods has its own benefits and drawbacks, which we would be happy to discuss with you during an initial consultation.

Yes, it is important to keep this potential liability in mind. Arkansas allows a special type of deed known as a “beneficiary deed.” In other states, this deed may be referred to as a “transfer on death deed” or “lady bird deed.” Through this deed, you can designate a beneficiary or beneficiaries who will inherit your real estate outside of probate upon your death. One drawback to a beneficiary deed is it does not avoid liens on the property.  One major benefit to a beneficiary deed in Arkansas is that the Arkansas Legislature amended the law in 2021 so that a beneficiary deed will now avoid estate recovery by the Arkansas Medicaid Program if the deceased person was on Medicaid during his or her lifetime for long-term care.

Life-estate deeds also avoid the threat of Medicaid recovery. They can also be a very useful tool to avoid probate while preserving the property for heirs without fear Medicaid will take it away from them.

One of the biggest mistakes we see in trying to avoid Medicaid recovery and probate is to deed your home to your children outright. This is a bad idea because if your children end up in legal problems, get divorced, get sued for whatever reason, or go into bankruptcy, you could lose your home and have to move out. Also, if your children sell the home after you pass away, they will have to pay capital gains for the difference in what they sold it for less what you paid for it. So we highly discourage the deeding of the home to children outright, especially if you are living in the home.