Create a Living Trust in North Carolina
Create a Living Trust in North Carolina
A North Carolina living trust is an estate planning tool that allows you to have your assets owned by your trust during your lifetime and distributed after your death. A revocable living trust provides a wide range of benefits that may make it right for you.
Living Trusts in North Carolina
A living trust in North Carolina (also known as an inter vivos trust) is set up by the grantor, a person placing assets in trust. When you establish a trust like this, your assets will be owned in the name of the trust, but managed for your benefit while you are alive. To reap as many benefits as possible, it is usually desirable to transfer all of the assets you can into the trust (retirement accounts and life insurance don’t qualify).
The trust is managed by a trustee whom you select. It is common to choose yourself as the trustee so that you can make all the decisions. A successor trustee is named to take over after you die. This trustee is in charge of continuing to manage your assets and distributing them to your beneficiaries according to the terms you set up. A trust of this type can be changed by you whenever you wish and even eliminated if you want. An irrevocable trust is a different animal and cannot be altered once you sign it.
Your living trust North Carolina keeps your assets from needing to go through probate. Probate is the court process through which a will is verified and carried out. These procedures can take months to complete and involve the costs of an executor, attorney, and court fees. North Carolina has not enacted the Uniform Probate Code, a standardized law that simplifies probate, so its procedures can be complex. A small estate administration option is available if you do not own real estate and have assets not exceeding $20,000 ($30,000 if you have a surviving spouse). This procedure likely makes more sense than a trust in this situation from a financial standpoint.
Skipping probate also means your assets can be distributed immediately after you die if you wish as opposed to assets that go through probate which cannot be released until the process concludes. A trust avoids probate in any state in which you own property, which can be a huge savings.
Do I Need a Living Trust in North Carolina?
When you create a living trust in North Carolina you avail yourself of the advantages a trust provides. The trust allows you to completely control your assets during your life and maintain control after you die as well. During your lifetime, the trust has technical ownership of your assets, but you continue to use them, spend them, or give them away as you normally would. Nothing in your daily life changes. After your death, the trustee is there to continue to manage the assets and then distribute them to the people you choose at the times you select. A will distributes assets immediately after probate ends. A trust lets you keep assets in the trust if you wish and pass them on at later dates, such as beneficiaries’ significant birthdays.
Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
Another reason to use a trust is that it creates a veil of privacy for you and your family. Wills become part of the public record when they go through probate. Your trust will never become public record and no one needs to know what assets are in it, who your beneficiaries are, or how assets are being distributed. Your trust is more difficult to contest than a will, which offers more security.
Living Trusts and Estate Taxes in North Carolina
A living trust does not create a shortcut around estate taxes. North Carolina has no estate tax, but the federal government applies it to estates in excess of $5 million. You can use a special type of trust to avoid estate tax. This is known as a QTIP trust (also called a marital trust or AB trust) and it passes assets from the deceased spouse to the surviving spouse without estate tax. Living trusts don’t hide your assets from Medicaid or from creditors.
How to Create a Living Trust in North Carolina
When creating a living trust in North Carolina, you complete the trust document and sign it in front of notary. You then must take the final step of transferring ownership of the assets into the trust for it to be effective. A living trust provides a variety of benefits. Consider its advantages and disadvantages in light of your own goals.
Create a North Carolina living trust online with LegalZoom. With a LegalZoom living trust, you will receive a pour-over will, transfer deeds, and a document organizer.