In this episode of the Good Steward Law and Wealth Podcast, host Ledry Jennings walks listeners through practical estate‑planning techniques for four major categories of real estate—primary residences, family farms, vacation homes/cabins, and mineral interests—focusing on how to keep these assets out of probate, protect them from creditors and Medicaid liens, and ensure they pass to intended heirs across generations. For primary homes, he recommends using an Arkansas‑specific beneficiary deed that transfers the property into a revocable trust while preserving the owners’ control and shielding the home from Medicaid liens without a look‑back period. For family farms, he advises placing the farm in a trust (or LLC for asset protection) with “bloodline” provisions and a voting‑share management structure that can accommodate multiple generations and protect against divorce or creditor claims. Vacation properties are best held in an LLC for liability protection, then assigned to a trust; he also discusses funding ongoing expenses via an endowment or required contributions and establishing a manager election process to avoid deadlocks. Mineral interests, common in South Arkansas, require first clarifying legal descriptions, then consolidating ownership in a family LLC to streamline income distribution and simplify future transfers, especially given the volatility of oil, gas, and emerging lithium extraction. Throughout, Jennings emphasizes the importance of early organization, proper drafting, and the use of trusts and LLCs to achieve multi‑generational wealth preservation and Medicaid protection.
Welcome to the Good Steward Law and Wealth Podcast, where host Ledly Jennings explores law and finance to help listeners become better stewards of their wealth. Each episode covers the latest trends and strategies in estate planning, elder law, investment, and wealth management. Tune in for the knowledge and tools for financial success and security.
Welcome back to the Good Steward Law and Wealth Podcast. Today we are going to talk about real estate. We're going to talk about everything you need to know about real estate as it involves your estate plan. So this is an important topic for a lot of people because pretty well everybody owns real estate, whether it is your home, vacation property, a cabin, farmland, mineral interest, it varies, all considered real estate, but this applies to most people. So the goal is most people want to pass on their real estate outside of probate, and they want it to go to who they want it to go to and how they want it to go. And this gets a little more tricky too when we deal with certain assets. So we'll start with the types of real estate. I loop these all into, I guess, 4 categories. So you have your home, then you have like a family farm, and that could be 40-acre cattle farm, or, you know, 20-acre tree farm, anything like that, just a family heirloom farm that could have a variety of purposes. In South Arkansas, we see a lot of cattle farms, tree farms, that kind of thing. The third one is vacation home or cabin. Get a lot of cabins on the river or a condo on the beach. That kind of thing. And then the fourth one is mineral interest. So I still consider this real estate. It's underneath the ground, but it still passes via a deed, just like real estate. So we want to talk about each of those four different types and how we deal with them in an estate plan. The first one, and most important because it applies to everyone, is your home. How do you pass that on to your beneficiaries? And I'm going to skip over all the details and tell you the best answer for 90% of my clients is we do what's called a beneficiary deed to the client's trust. So that starts with the assumption that you have a revocable trust, or I am setting one up for you, and we get your home into that trust via a beneficiary deed. And this is specific to Arkansas on the beneficiary portion. Some other states and other people just do a deed to the trust, but we do a beneficiary deed. And the reason for that is, is you want to make sure that you maintain control of your home while you're living. You know, husband and wife can sell it whenever they want. They can move, they can change it, but you also want to make sure it goes to your heirs outside of probate. And you want, and a lot of people want to make sure that it's protected. So if you leave the family home to your son, you want to make sure that home or its proceeds when sold stay with your son. And don't go to an ex-spouse or creditors or anything like that, bankruptcy, you know, it's protected. What you pass on goes to him and stays with him. The reason we do a beneficiary deed is one, it puts the home into the trust when you pass away and you can control with it what you want to happen after that. You could say, I want it divided this way. I want it sold and the money split in these percentages. I want this to stay in the family, whatever you want to say, you can say it. Um, the other reason we do a beneficiary deed, and this is a big one in Arkansas, is most of my clients come to me and say, I don't want to lose my home paying for long-term care, meaning they don't want to, um, have to go to the nursing home. And because it's so expensive that they end up having to either sell the home to pay for it or. Medicaid puts a lien on their home. And to talk about this, how it generally works is Medicaid in Arkansas allows you to have a home. They don't count it as an asset, but if they pay for your long-term care, they will put a lien on it when you're gone to get their money back. And the reason this is important is long-term care averages $8,000 to $8,500 a month right now. So it's very expensive., it's tough to pay for. So a lot of people want to get Medicaid, which is the government, to pay for their care. Um, so a way to protect the home from those liens unique to Arkansas is a beneficiary deed. Now it needs to be drafted correctly, so come see me, but it's called a beneficiary deed. And what it does is it allows you to not count that home as an asset, but in turn Medicaid does not put liens on it., when you pass away. And like I said, this is unique to Arkansas. I'm not sure what other states have this, and it's fairly new. Um, it hasn't always been in place this way. So a beneficiary deed protects that home. A lot of people, you hear about a 5-year lookback period on Medicaid liens and counting assets, and yes, that is true, but it does not count with this beneficiary deed in your home. There is no lookback period. Day one, when you file the deed, your home is protected. And that's the way the law sits now. I won't guarantee that laws don't change, you know, tax laws, DHS laws, those are written in pencil, but that's the way it sits now. And that's how we're conducting our planning. So that's how you treat the home, beneficiary deed to the trust. And then the family farm. So this is a big concern for people. What I usually do if the family farm is income-producing and they use it for operations. Maybe we put it in an LLC for asset protection. But ultimately, we want to make sure the farm gets into your trust. Because the end goal for most of my clients, they say, I want this farm to remain in my family. I don't want it to go to anyone other than my kids or their kids. So my descendants, some call it bloodline protection. When we deed the family farm to a trust, it gives us the ability to have that bloodline protection. So what we could do is say, I deed it to my trust, then within the trust, the trust says, give this in equal shares to my kids, and the kids own it together. But what it says is it stays in that trust. So if one kid gets a divorce, that for his share of the farm doesn't go to an ex-spouse, it stays with him and his family and for his kids. And most of the time at generation 1, maybe you have 2, 3 kids, they get along, they're okay with managing the farm together, they each own percentages, they are fine. But down the line, you know, they have kids. So eventually, 3 owners turns into 9 owners, it could, and then that could get a little messy. So what we always build in, in family farm situations, is a management structure where you assign voting shares to where each family unit can vote a manager into place to manage the farm farm. That way one person's managing it, one person's making the decision, but they each have an equal say in who that person is. So it's important to think about who would manage this property, not only at this first generation, but the second and third generation. Every plan I do when we're talking about family land is we plan for at least the third generation and how that would shape out. So that's important. And that's the family farm. Now, there's other options, and we'll talk about these in other episodes about how you protect the farm from Medicaid nursing home care. And that can be done within a certain type of trust as well. So just know that and earmark that for future questions. But the third type of property we mentioned is a vacation home or cabin. You know, this is one of my more favorite plans to do, because it's a home and a property that people enjoy. And they've had good family memories there. And they want to keep that in the family to preserve those memories and build more. So it is a lot like I do with the family farm is we potentially get it into a trust. Now with a vacation home, if it's a beach condo, especially, most families are Airbnb-ing that or renting it out. A lot of times that happens with the fishing cabin or cabin on the lake as well. So I advise putting that in an LLC, which gives them asset protection. So if a renter slips and falls, they have asset protection. But once it's in the LLC, we assign it to the trust. And that way it ensures that that property passes on to the kids and the grandkids. But that same portion or issue comes up is how do you manage that? Who's in charge? So we issue a voting structure about who can elect a manager. Maybe they all elect a property manager and they say they manage the property, but when the funds come in, we divide the funds equally. So you build in a management structure that has provisions in there to break a tie, especially. You don't want two grandkids to be deadlocked on the decision and nothing happens. So we, we build all that in. But another important thing to think about is how do they pay for this property for the next generation? You know, most of the time parents, they say, well, I want my family to come use this property at least once a year for family reunions, for Christmas, for holidays. But we want to make sure they can afford it. One aspect I've done for a family recently is we put an endowment into the trust that says this money is going to be used, the interest from this money is going to be used to pay the bills yearly on this property. So property taxes, upkeep, utilities, that kind of thing, that money is used to pay those. If the property sold down the line, then they liquidate the money and split the proceeds. Another option is you require a manager to say this is what each family has to pay. You divide all expenses equally. If they want to continue using the property, then they have to pay their share. So I do that too, especially if there's not a lot, enough money to have an endowment of sorts, then we do that aspect. So that's important of how you pass on a family vacation home. You want to do it in a way that's protected from renters slipping, falling, you know, asset protection, but you also want to do it in a way that lasts for multiple generations. And the last thing I mentioned is mineral interest. So this is a big thing in South Arkansas where I am. Everyone has mineral interests, and it seems to come from way down the line, and it's divided. And, you know, I only own a 20th of this specific mineral interest. And the issue I run into is nobody knows what they own. They just know that the mineral operating company sends them a check once a month or once a year. But they couldn't tell you what specific interest they own or how they got it. So that makes it really tough in an estate plan because how do you pass on something that you don't really know that you own or how it's titled? So my favorite way that I've been advising clients is we call the operating company, figure out what is the legal description that I own, how does the division order look, and, you know, get the, get the asset organized so I know what I own. And once we know that, I create a family LLC to put all their mineral interests. So that way down the line, the operating company continues to send the check to one person, to one entity. So they send it to the LLC that may have a PO box or the address of whoever the manager is, and they send that check to that LLC. Now the LLC is, the ownership is kept internal. So you can say, well, my kids own this, now my grandkids own it, and whoever the manager is knows all the owners. So then he takes that check and divides it and sends it to each of the beneficiaries. But that's an easy way to pass on mineral interest for the next generation because it's all in one entity and you're not trying to figure out, all right, well, I inherited this from my grandpa, a division order was done and now it's owned by 3 people, but wait, now somebody's passed away. So it's owned by 8 people. It gets really confusing. And this is especially important. Um, South Arkansas is having a lot of talk right now about a lithium boom. Um, they found a way to drill for lithium down here, so it could have increasing value based on what the market says. Um, oil and gas goes up and down, lithium goes up and down. Sometimes there's a lot of money involved. Sometimes you get $100 a year. Um, so, but the main thing is get organized, know what you own, and know it takes work and effort on the front end to get it incorporated in your estate plan., but on the back end, you are saving time, money, and a headache. So that is real estate and how we plan for it in your estate plan. The key takeaways is you do not have to lose your family home to pay for long-term care. We can protect that and we can ensure your family farm passes on to the next generation in a protected manner. And that's it.
See you next time. Thank you for tuning in to the Good Steward Law and Wealth Podcast. If you're ready to take control of your financial future, visit goodstewardfirm.com to book a meeting and sign up for our newsletter.
