Drafting a will can be a straightforward way of establishing your final wishes after you pass away, but it is not ideal for all situations and types of property. If you want to avoid putting your family through the probate process or have more control over what happens to specific property, it may be a good idea to set up a trust in addition to or as an alternative to a will. Trusts have many benefits and can fulfill a wide variety of needs, but they can also be tricky to set up without guidance from a qualified trusts and estates attorney. To ensure your trust is effective and enforceable, consider retaining a Cary trusts lawyer to help you construct a trust to offer you asset protection.
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There are two categories a trust can fall into, depending on when it goes into effect and how much control the person creating the trust, known as the settlor, retains over the assets in that trust. First, trusts that are designed and funded while the settlor is still alive are referred to as living trusts, while one that is not funded until the settlor’s death is called testamentary. The latter type of trust is often established within the terms of someone’s will.
If someone creates a living trust, it will be considered either revocable or irrevocable. A revocable trust is one to which the settlor can make changes after they set it up. They can add or remove terms, name a new trustee, and grant property to different beneficiaries or remove them from the trust altogether. Conversely, an irrevocable trust grants the named trustee permanent control over the assets, meaning the settlor no longer has control over that property and cannot change any terms regarding how it will be managed. Each type of trust has various advantages and disadvantages. For example, assets in irrevocable trusts are not considered part of a settlor’s taxable estate and therefore do not count toward estate taxes. In contrast, revocable trusts offer much more flexibility to settlors but do not offer the assets any protection from liquidation by creditors seeking to collect on debts. A Cary estate planning attorney could help you decide which type of trust best suits your needs.
North Carolina General Statutes §36C-4-402 outlines specific requirements for forming a trust in the state. According to this section, a trust is only valid if the settlor is mentally capable of creating a trust, has confirmed their desire to create a trust, has named a competent trustee and granted them specific duties to perform, and has not named a singular person as both the sole beneficiary and the sole trustee. If you need help creating a valid and legal trust in Cary, NC, contact a trusts lawyer from Cary Estate Planning.
Trust-based estate planning can be beneficial in a variety of ways.
If your children stand to inherit a generous sum of money, it may not be in their best interests to receive it all in a single, lump-sum distribution. Trust-based planning can provide for your children over time and can be planned to coincide with life’s milestones – such as college, their first home, marriage, and having children of their own – or based on specific ages or dates.
The last thing your family wants after losing you is having to go to court, file inventories and accounting, and deal with the administrative burdens of probate. Utilizing a trust-based estate plan can simplify your family’s lives and allow them to grieve their loss in peace without going to court.
Probate files are open to the general public and contain information about a person’s assets at the time of their passing. Some families wish to avoid the potential of people knowing what they own by using trust-based planning and avoiding probate altogether. A trust is simply a contract, and it is not required to be submitted to the court after you pass.
Trusts can be used to take advantage of tax regulations that help avoid estate or income tax penalties. Irrevocable trusts are often used to transfer assets out of your taxable estate if your net worth is close to, or may exceed, the federal estate tax exemption amount (just over $11.58 million for an individual and $23 million for married couples).
Trusts can accomplish much more on behalf of a settlor and their assets than a will can in certain respects, but they are also significantly more complex to set up in exchange. If you are interested in creating a trust for your property and assets, seeking advice from an experienced legal representative should be a priority. With guidance from estate planning lawyers, you could have a much easier time establishing a trust that serves your best interests and those of your designated beneficiaries. Contact a North Carolina family estate planning attorney from our Wake County law firm to schedule an initial strategy meeting and discuss your options.
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