In today’s world, it is essential to have a customized estate plan set up to protect your assets. The use of various trusts can accomplish this. There are different types of trusts, each with unique benefits. By understanding the different types of trusts, you can choose the best one for your needs.
The Raleigh trust attorneys at Wilson Ratledge explain more on this topic.
What Are Trusts?
Generally speaking, a trust is a legal instrument in which one person (the trustor) gives another person or party (the trustee) the legal title to the property for the benefit of another person or people (the beneficiaries). A trust can be created for various purposes, including estate planning and philanthropy. There are three main types of trusts: revocable trusts, irrevocable trusts, and testamentary trusts.
When creating a trust, individuals should consider the following factors:
a. Beneficiary: The beneficiary of a trust is the person or organization that will receive the benefits of the estate. The beneficiary may be someone you know well, a loved one, or an organization you’d like to support.
b. The trustee: The trustee is responsible for administering the trust and distributing its assets according to its terms. The trustee must be someone you can trust to act in your best interests.
c. Purpose of the trust: A trust can have many purposes, including estate planning, charitable giving, and property protection from probate costs.
There are several benefits to using trusts as an estate planning tool. One advantage is that trusts are often easy to create. They are also flexible. This means they can be tailored to meet your specific needs without going through lengthy legal procedures.
In addition, trusts are most notable for their ability to help your loved ones avoid probate and they also have the potential for tax advantages.
How Trusts Work To Help Your Loved Ones Avoid Probate
When a loved one dies, it can be an extremely difficult time. In North Carolina, however, when a person dies without a solid form of estate planning, their loved ones have to go through probate.
So, what is probate?
Probate is the legal process of transferring property and assets from a deceased person’s estate to their beneficiaries. This can be a long and complicated process and can be expensive. But a trust can help avoid probate altogether.
Remember, a trust is a legal document that allows one or more people (the trustees) to manage someone’s estate for them. As the deceased’s assets are now the trust’s property, the assets in the trust can be transferred directly to the beneficiaries instead of going through probate.
Types of Trusts in North Carolina
a. Revocable trusts: Revocable trusts are designed to provide estate planning benefits for individuals who may want to alter their trusts at some point in the future. Revocable trusts can also be terminated by the trustee, typically in cases of a change in circumstances. This trust is generally used by people who want to control their estate but do not want their families to have to deal with probate or other estate-related tasks after their passing.
b. Irrevocable trusts: The terms of an irrevocable trust, as the name implies, cannot be changed once created. However, an irrevocable trust is a type of legal estate planning tool that can provide significant benefits for the creator and beneficiaries. Irrevocable trusts are typically created for individuals who want to protect their assets and avoid probate. They can be a great option for people who want to create a lasting legacy. Irrevocable trusts can provide tax advantages, such as exemption from capital gains taxes and inheritance taxes, and they can provide security for the trust assets.
c. Testamentary trusts: A testamentary trust enables you to transfer all or a portion of your assets upon your death so that they can be managed in line with your desires. Unlike the trusts above, this type of trust does not begin to “function” until after the trustor’s passing.
Need To Set Up a Trust?
In conclusion, trusts are a vehicle for preserving and protecting your assets. By understanding how trusts work and what kind of protection they provide, you can make informed decisions about the best way to safeguard your assets. If you have any questions about trusts or need help setting one up, please don’t hesitate to contact a North Carolina estate planning and trust attorney at the Wilson Ratledge Law Firm. Our North Carolina trust specialists are very knowledgeable and would be happy to help you.