Before we discuss what is a living trust, let’s first discuss what is a trust. A trust is an estate planning tool where you retitle your assets from your name to the name of the trust. Once the assets are retitled to the name of the trust, the assets are governed by its terms. Trusts will guide the assets during your life and after your death.
There are two types of trusts: revocable and irrevocable. The revocable living trust (also known as a living trust) is a trust that is revocable (hence its name) and is flexible such that it allows you to modify or remove the assets from the trust at your discretion. Generally, the grantor (or the person who puts the assets into the trust) can remove and add assets to the trust. On the other hand, an irrevocable trust is more permanent, and the grantor cannot add or remove assets from the trust once the trust is completely funded. The grantor cannot be the trustee of this trust so any withdrawals from the trust must be approved by the trustee. Generally, a grantor cannot modify an irrevocable trust, but this is a discussion for another day..
For today, we will be talking about revocable trusts (also known as living trusts.)
Benefits of a Living Trust
- It eliminates the need for probate
Probate is the legal process where a will is examined to determine its validity and authenticity. It also refers to the process of distributing a deceased person’s property regardless of whether the deceased has a will. The probate process in North Carolina can be expensive and time-consuming.
Due to the living trust being a private document, the assets held in the trust won’t be subject to the probate process because the assets are held in the name of the trust. If you want to avoid or streamline the probate process, then you should consider creating a living trust.
- Privacy
A trust (whether revocable or irrevocable) helps you keep your estate plan private. Whether you have a will or not, the only people who will know about your trust property are your trustees and beneficiaries. Since the living trust is a private legal document, you can keep critical information about your estate private unless someone contests it in court.
- Maintaining Control
When creating a trust, you can set the ground rules for what happens to the assets inside the trust. If you would prefer a beneficiary to meet certain criteria before inheriting the asset, or if you would like to create a trust for a beneficiary because they are disabled or may not be the best at managing money, you can create and set those parameters in your trust. Trusts allow you to maintain control over your assets during life and after death.
How to Create a Living Trust in North Carolina
Creating a living trust requires advanced knowledge of estate and tax planning to determine what actions to be taken with regards to your assets. At Rountree Losee, we have experienced estate planning attorneys who can guide you through the trust creation and funding process. Here are some of the steps to follow:
- Determine the type of trust you want.
- Take inventory of your assets.
- Pick a trustee. You can use your name or pick someone else to be your trustee. If you choose to use your name, you’ll need to select a successor to manage the trust after your death. Always make sure you trust the person you are appointing as trustee or successor trustee.
- Hire a Wilmington estate planning attorney to help you create the trust document.
- Sign the document in the presence of a Notary Public.
- Fund the trust.
Contact Rountree Losee For Superior Estate Planning Services
A living trust is a great way to manage your assets during your lifetime and ensure they are correctly distributed after your death. At Rountree Losee, our estate planning attorneys are ready to help you create a living trust to ensure the smooth distribution of your assets. Please contact us online or call us at 910-763-3404 to schedule a consultation.