Preserving Your Legacy: Understanding Living Trusts in North Carolina

Unraveling the intricate tapestry of life, we find that our legacy is an invaluable thread we weave for our loved ones. In the beautiful state of North Carolina, a living trust acts as a fortress, safeguarding the culmination of our hard work, sacrifices, and aspirations.

Just as a fortress shields its inhabitants from external threats, a living trust shields your family's legacy, ensuring that the fruits of your labor are preserved and dispersed according to your wishes.

This article will explore the basics of living trusts in North Carolina, including what they are, how they work, and the benefits they provide.

What is a Living Trust?

A living trust, also comprehended as a revocable or inter vivos trust, is a lawful arrangement in which a person (the grantor or settlor) places assets such as real estate, investments, and bank accounts in a trust that a trustee manages. The grantor retains control of the assets and can change or revoke the trust anytime during their lifetime.

Is a Living Trust Required in North Carolina?

Creating a living trust to transfer your assets to loved ones after your death can potentially save them time, complexity, and financial strain.

Unlike a Will, which can entangle property in probate court for months or even years, subjecting it to significant court expenses and attorney fees, a trust allows for the expeditious distribution of assets to beneficiaries, often without the need for legal intervention.

While some states have adopted the Uniform Probate Code—a standardized law that streamlines the probate process—North Carolina is not one of them. North Carolina, on the other hand, has a simplified probate procedure for specific estates.

This accelerated probate route, known as "dispensing with administration," becomes available if the following criteria are met. There is no Will, no debts or creditors require notification, and the heirs unanimously agree on the division of assets.

Assume your estate meets the criteria for this efficient procedure. In that case, the probate process will be quick, simple, and relatively inexpensive, potentially eliminating the need to create a living trust solely to avoid probate.

In North Carolina, How Do You Create a Living Trust?

Creating a living trust may appear intimidating, but it is quite simple with the proper steps and assistance of an estate planning attorney. The following are the steps for creating a living trust in North Carolina:

Determine which type of trust is appropriate for you

Your specific situation determines the type of trust you should choose. If you are single, for example, you will almost certainly need an individual living trust. If you are married, you should establish a joint trust to hold your individually and jointly held assets.

When one spouse passes, the surviving spouse is usually designated as the remaining beneficiary and the surviving trustee. The property passes to the named heirs when the surviving spouse dies.

Establish the terms of the trust

Create trust instructions outlining how you want your trust's assets managed during your lifetime and after your death.

Choose a successor trustee as well as beneficiaries

Select a successor trustee to manage your trust and ensure your assets are correctly distributed to your beneficiaries after death. Then, decide who will receive the trust property, also known as the beneficiaries of the trust.

Develop trust

You can draft the trust document yourself or with the help of an attorney.

Sign the agreement of trust

You must sign the trust in front of a notary public after you have completed it.

Make a donation to the trust

You'll need to transfer the assets you want to the trust after establishing it. Remember, however, that you cannot transfer all your assets to your living trust. For example, individual retirement accounts (IRAs) cannot be placed in a trust.

The Benefits of a Living Trust in North Carolina

Some of the advantages of having a living trust in North Carolina are as follows:

• Incapacity provision: If the grantor becomes incapacitated, a living trust can provide for asset management.
• Minimization of estate taxes: Assets held in a living trust may be subject to fewer estate taxes.
• Privacy: Unlike a Will, which becomes a public record after the grantor's death, a living trust is a private document.

Which type of trust should you establish: revocable or irrevocable?

Revocable living trusts and irrevocable living trusts are the two most common types of trusts.

Revocable living trusts are popular because they can be amended whenever you are mentally competent. For those who want the flexibility to change their living trusts to reflect changing goals and preferences throughout their lives, a revocable living trust is a popular choice.

Once established, an irrevocable trust cannot be changed. You no longer have the same legal rights to the assets you placed in the documents once they become active. People are usually intimidated by it, so revocable trusts are preferred.

How Do I Make Changes to My North Carolina Living Trust?

There are several ways to modify a revocable trust in North Carolina. The following are some of the most common methods:

Changes to the Trust

This is the most basic way to change a living trust. A trust amendment may be the best option if you only want to make minor changes to your living trust.

To execute the trust on time, being specific about what you are changing is critical. Avoid making too many changes to your trust over time, as this may confuse the trust's language.

If you need to make multiple changes to your living trust, a restatement may be a better option.

Reaffirming a Belief

Restating a trust is essentially redoing the entire trust. The living trust remains in place, but the new document has modified its provisions.

This is a good option if you're making many changes to the trust. You must include the original document's date, restate the provisions, and incorporate the changes you're making when completing the restatement form.

Trust Revocation

Trust revocation is a severe measure that should be used only as a last resort. A trust revocation achieves similar results to a restatement, but there are some differences.

All property held in trust is returned to the original owner with a revocation. You must transfer your assets to a new trust if you revoke your trust. Be cautious if you choose this option because assets can be forgotten during the process.

Also, remember that legally removing the property from your living trust may have unintended tax consequences.

What Happens If You Die in North Carolina Without a Living Trust?

If you die in North Carolina without a trust, your assets are distributed according to your Will. If you pass away without leaving a Will, your assets will be distributed in accordance with North Carolina intestate succession laws.

Intestacy laws attempt to distribute your assets to your closest living relatives, beginning with your spouse, children, etc.

Any assets you've been "keeping to yourself" or want to keep private at the time of your death may become public records if you don't have a trust. Everything will almost certainly go through probate, which could take months.

You will also have no say in how or when your assets are distributed to your beneficiaries.

Do I Need a Will in North Carolina if I Have a Trust?

Yes, even if you have a living trust, you will still need a Will in North Carolina. This is because a Will serves as a backup plan for any assets you do not place in your trust or forget to place.

For example, if you buy a house but do not have time to put it in a trust before you die, it will pass through your Will if it is included there.