Do I Need A Trust? 6 Important Factors to Consider

Do I need a trust is a common question among people who want to protect their assets. The answer depends on several factors, including the size of your estate and your state’s laws.

You may not need one if you have a small estate and live in a state with favorable probate laws. However, if you have a large estate or live in a state with unfavorable probate laws, a trust can help protect your assets from being taxed or going through probate. Trusts can also be used to provide for minor children or disabled adults.

This blog post will discuss 6 important factors that you need to consider before deciding whether or not you need a trust lawyer to serve as a guide.

What is a Trust?

As you get older, you may start to think about how to protect your assets and your loved ones in the event of your death. One way to do this is to create trust. But what is trust, and do you need one?

A trust is a legal entity that owns your assets, and you are the trustee. That means you have control over the trust and can decide how the assets are used. The advantage of a trust is that it can help you avoid probate, which is the legal process of distributing your assets after you die.

Probate can be time-consuming and expensive, so a trust can be a good way to keep your assets out of probate. In addition, trust can also help you manage your assets while you’re alive. For example, if you become incapacitated, the trustee can step in and manage the trust for you.

Trusts can be used for a variety of purposes, including:

  • Protecting assets from creditors
  • Minimizing estate taxes, and
  • Avoiding probate

In North Carolina, there are two types: living trusts and testamentary trusts. A living trust is created during your lifetime, while a testamentary trust is created after your death through your will with the help of a will attorney.

Do I Need a Trust? Factors to Bear in Mind

Ultimately, whether or not you need trust depends on your circumstances. A lawyer can help you decide if getting one is suitable for your specific case. But generally, here are a few pointers that can help you determine whether you need trust or not.

Purpose of the Trust

So, what do you want the trust to do? There are many different types, each with its specific purpose. Some common purposes for trusts include providing for children’s education, preserving assets for future generations, and managing property during incapacity.

The purpose will determine the type of trust best suited for your needs. For example, a trust created for providing for a child’s education will be different from a trust created to manage property during incapacity.

How much of your estate can you protect from probate?

Trusts can be a helpful tool in protecting your assets and avoiding probate, but it’s important to understand how much of your estate can be shielded from probate. In North Carolina, these assets skip probate entirely:

  • Bank accounts with transfer on death (TOD) or payable on death (POD) clause.
  • Retirement accounts and life insurance policies with a designated beneficiary.
  • Real estate is owned as tenants by the entirety or joint tenancy (with rights of survivorship).
  • Property on revocable trust.

With these methods, you can bypass probate several estates, making it worth it. But the case might be different when you own a home or can add a beneficiary to the deed.

Will You Qualify for a Simplified Probate?

In North Carolina, there are two types of probates: simplified and regular. You may be able to qualify for simplified probate if:

  • Your estate is valued at less than $20,000
  • All of your assets are jointly owned
  • All of your debts have been paid.

If you qualify for simplified probate, it might not be worth paying the cost.

Do you have Young children or Children with Special Needs?

A trust allows you to offer ongoing financial support for loved ones who may not be able to manage the asset themselves. So it can be a good idea to get one of you to have such loved ones in your loved ones. Besides, giving them an inheritance can disqualify them from getting government support.

The cost of probate in North Carolina

Probate can be expensive and time-consuming, so many people choose to create trust instead. In North Carolina, a probate lawyer costs anywhere from $2,000 to $10,000, depending on the size and complexity of the estate. By contrast, the cost of setting up a trust is typically much less.

In addition, trusts can be used to avoid probate altogether. Probate can take months or even years to complete, but trusts can be processed quickly. As a result, they are often the best option to simplify the process.

Do you have a taxable estate?

North Carolina has its estate tax, which is imposed on an individual’s taxable estate value. The term “taxable estate” includes all of a person’s real and personal property that is subject to probate. If your estate is valued at less than $5.49 million, you are not required to create a trust. However, if your estate is valued at more than $5.49 million, you must create a trust to avoid paying taxes on the full value of your estate.

Do I Need A Trust? Who Needs One?

The question of who needs one is complicated, as there are many factors to consider. In general, trusts are created to protect assets and ensure that they are distributed according to the trustor’s wishes.

Trusts can be used for various purposes, including asset protection, estate planning, and tax reduction. While trusts are not required for everyone, there are certain situations where they may be beneficial. For example, trusts can be used to protect assets from creditors or to minimize estate taxes. They can also be used to manage the property on behalf of young children or people with disabilities.