It is important to understand your options if you are beginning the process of estate planning. All estate planning tools have their own advantages and disadvantages, which can help inform your choices.
Trusts are a popular estate planning tool for many reasons, and many families benefit greatly from these accounts. Before you create and organize your trust, be sure to have all the information needed to make an informed decision. Our team at Lassiter & Lassiter Attorneys At Law is passionate about education and empowerment in the estate planning sector.
A trust is a unique type of estate planning account in which an individual, known as the trustor or benefactor, places their assets. Once the trustor’s assets are in the trust, they are functionally held by a trustee. When the trustor dies, their assets usually bypass probate court because the trustee held the assets and did not pass away. This keeps more money in the trust and avoids expensive debts and taxes that are due in probate court.
There are two major types of trusts: revocable and irrevocable. A revocable trust, also known as a living trust, is an account that the trustor may make changes to throughout their lifetime. They can add or subtract benefactors, add or subtract assets, and even pay themselves an income during their retirement years. Once they die, the trust becomes irrevocable.
An irrevocable trust does not allow for any changes or modifications. Many people who have degenerative or serious diseases opt for an irrevocable trust rather than a revocable one. All trusts become revocable when the trustor passes away.
Many distinct advantages are unique to trust accounts. Many people choose to create trusts for their benefit to the benefactor and beneficiaries alike. The following are some of the advantages of having a trust account.
Trusts avoid probate court, which is a major benefit for many estates. During probate court, a judge settles the deceased’s debts and outstanding taxes before turning the estate over to the will executor. This process can take a significant amount of money out of the estate, leaving less for benefactors.
If you put your assets in a trust, more of your hard-earned assets will go to your beneficiaries rather than the government.
When assets move through probate court, the judge reads the last will and testament into the court record. This information becomes public, which means that anyone can find out the value of your estate as well as your final wishes if they choose to look in the court records.
When you have a trust and avoid probate court, your wishes remain private and are released only to your beneficiaries and close loved ones.
You can tailor your trust’s terms to meet your family’s needs, which gives you control over your assets even after you pass away. You may delay inheritances and benefits or organize inheritances to avoid creditors and others that hope to take money from your benefactors.
Trusts keep your family from using a conservatorship if you become incapacitated or unable to control your faculties. This is a significant relief for most families, as seeking a conservatorship takes a significant amount of time, money, and effort. With a trust, your finances are secure and accessible to your family even if you cannot function normally.
Trusts have two major disadvantages that are important to know.
Creating a trust requires a significant amount of paperwork and legal steps. Though this is generally worth it, in the end, you should seek the help of an experienced attorney to execute the paperwork properly.
If you wish to have a trust, you need to keep accurate records of your assets. This includes assets that you gain or lose during your lifetime, and you will need to be sure to update your trust any time there is a change in your benefactors. This can be tedious but often pays off for your family.
The only real downside of trusts is the time and effort it takes to organize and maintain them. You need to keep accurate records and complete all paperwork. However, with the help of an experienced trust attorney, you can navigate these challenges easily and confidently. It is unwise to attempt to create and maintain a trust without the help of an attorney.
A trust is more powerful than a will, but they are not necessarily right for everyone. If you have minimal assets, making a trust may not be worth the time and effort. In all scenarios, it is a good idea to speak directly to a North Carolina trust attorney to discuss your options and develop an estate plan that is right for you, your family, and your assets. All clients are unique and benefit from different options.
Income from a trust is taxable, which is a major downside for beneficiaries. The trust itself must file a tax return when the trustor passes away, as there are no real tax benefits for trusts. However, this is often preferable to probate court, where a judge takes similar actions with the deceased’s assets.
Trusts avoid certain types of assets by bypassing probate court. During probate court, the law subtracts debts and taxes from the deceased’s estate, which can be a significant amount of money depending on how much the deceased owes. With a trust, the trust needs to pay certain taxes when the trustor dies, but the estate avoids other taxes that are applicable in probate.
Our lawyers are experienced in North Carolina trusts, and we offer comprehensive estate planning services to our clients. To learn more about what type of estate plan may be right for you, contact Lassiter & Lassiter, Attorneys At Law today.
Call our office at 704-873-2295 or email us today.
Attorney Mike Lassiter grew up in Statesville, makes his living serving the people of Statesville and published a book capturing the changing landscape of small town life across North Carolina and Iredell County. His keen sense of history, dedication to the area and 30 years of legal experience make him an ideal attorney for your legal needs.
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