USA – ARKANSAS Law and Practice Contributed by: Aaron Bundy and Danya Bundy, Bundy
the estate, do not participate in the step-up, which is the trade at the heart of every large gift, so we keep substitution powers in grantor trusts to hold the choice open. Low-basis farmland, timber, minerals, and founder equity are usually held until death, while cash and high-basis assets fund lifetime gifts. Arkansas con - forms with federal basis rules for state income tax purposes, and the 50% capital gain exclusion further softens the state cost when appreciated assets are sold during life. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms Annual exclusion gifts of USD19,000 per donee and direct payments of tuition and medical expenses move wealth downstream without transfer tax, and 529 contributions add the state income tax deduc - tion and, from 2026, an expanded federal K-12 allow - ance. Custodial accounts under the Arkansas Uniform Transfers to Minors Act, Section 9-26-201 et seq of the Arkansas Code Annotated, suit modest amounts, while trusts handle anything serious, since a gifted custodianship must end by age 21 and cannot be extended. For larger estates, irrevocable gift trusts with with - drawal rights, insurance trusts, grantor retained annu - ity trusts, and instalment sales to grantor trusts remain the core techniques. Family limited liability companies permit gifts of minority interests at appraised values reflecting lack of control and marketability, which stretches the exemption. Beneficiary deeds under Section 18-12-608 of the Arkansas Code Annotated pass real estate outside probate at death, a useful administrative tool with rules worth respecting: the deed must be recorded before death, may be revoked only by another recorded instrument and never by will, and nothing revokes it on divorce. It provides no tax advantage, since the property stays in the taxable estate and takes the basis adjustment there. 2.7 Transfer of Assets: Digital Assets Arkansas adopted the Revised Uniform Fiduciary Access to Digital Assets Act in 2017, codified at Sec - tion 28-75-101 et seq of the Arkansas Code Anno - tated. The Act gives personal representatives, trus -
tees, guardians, and agents a lawful route to digital accounts. A designation made through a custodian’s online tool controls first, and the user’s estate planning documents control next. The terms of service fill any remaining gap. Documents should authorise disclo - sure of content expressly, because without user con - sent custodians may limit fiduciaries to a catalogue of communications rather than the communications themselves. Cryptocurrency and other self-custodied tokens pre - sent an access problem, since there is no custodian to serve. If keys die with the owner, the asset does too. Digital property is an inventory and logistics exercise: a maintained asset list, express authority in the will and trust, matching authority in the power of attorney, and a secure arrangement for key succession, tested while the owner is alive and well. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities The revocable living trust anchors most plans, driven by probate avoidance and incapacity management. Irrevocable structures include gift trusts for descend - ants, insurance trusts, grantor-retained annuity trusts, qualified personal residence trusts, charitable remain - der and lead trusts, and special needs trusts. Civil-law style private foundations are not part of US practice, and in Arkansas the word foundation almost always describes a charitable entity. Arkansas trust law is modern, codified, and recently renovated. The Arkansas Trust Code, Section 28-73- 101 et seq of the Arkansas Code Annotated, is the state’s version of the Uniform Trust Code and has gov - erned since 2005, bringing with it nonjudicial settle - ment agreements, virtual representation, and orderly modification and termination procedures. Act 293 of 2023 added a decanting statute, Section 28-73-818, under which a trustee holding distribution discretion may pour an irrevocable trust into a new one for the same beneficiary class without court approval or ben - eficiary consent, subject to statutory guardrails. Act 291 of 2023 made Arkansas a domestic asset protec -
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