A living trust is a legal agreement that holds your assets and real estate. You, the Grantor, name a trustee who is in charge of distributing the assets to the chosen beneficiaries at the time and in the way you state in the language of the trust. You can choose to be your own trustee or have someone else fill that role.
A Trust is its Own Legal Entity
A trust legally owns the property and assets you put in it. The trustee pays the taxes from the trust. With a trust, you can plan for what assets you want to give and to whom when you pass away.
Trusts are especially helpful for designating assets for children to inherit. The trustee has the job of making sure that the assets are given at the right time and in the amounts you choose. Some kids are ready to receive an inheritance at 18 years of age, while others may need to be 35. You have the power to make these types of decisions in a living trust.
Two Types of Living Trusts
- Irrevocable Living Trust: You, the Grantor, are not legally allowed to modify or remove property from the trust without the permission of the beneficiaries.
- Revocable Living Trust: you can remove property or modify the trust.
Benefits of a Living Trust:
Transfer of Assets:
When you work with an attorney to set up a trust, you avoid any DIY errors that are easy to make when writing a legal document as a layperson. You can transfer assets into a trust in a few different ways. If you have a brokerage account, you will work with the brokerage firm to transfer your shares to your trust holdings.
Transfer of Real Property:
An attorney also sets up real estate transfer to your trust, if needed, with the associated Certificate. Funding a trust with real estate involves transferring the property’s title, drafting a new deed, and getting it signed over to the trust. The trust then acts as the entity that owns the real estate. The Clerk of Court files the new deed to the property.
Pour-Over Will:
You do not usually put all of your assets into the trust when you also have a pour-over will. Estate planning with a pour-over will allows you much more freedom with your assets while living. With a Pour-Over Will, your property automatically pours into your trust, managed by the trustee when you die. You must have already set your trust up before death for a pour-over will to work.
Durable Power of Attorney:
Naming someone as your durable power of attorney is integral to setting up your living trust. You may transfer any of your assets to the trust, but your durable power of attorney allows them to manage your other assets that are still in your name and not named as part of your trust.
Health Care Power of Attorney and Advance Directive:
As part of your estate planning, many documents will help protect you and your assets. A healthcare power of attorney lets you designate who will make medical decisions for you if you are incapacitated and cannot make your own decisions.
Digital Asset Directive and Releases:
Digital assets include things such as your:
- social media accounts
- email accounts
- pictures online
- logos or businesses operated online
- bitcoins
- other valuable digital assets such as graphic designs or digital movies
As part of your estate planning, your trust can include these valuable assets and instructions and passwords for the ones to be passed on. You can also include directions for deletion.
Counsel Regarding Asset Protection:
In North Carolina, there is no Uniform Probate Code. If your estate is worth less than $20,000 ($30,000 if married spouse survives), then North Carolina does have a simplified probate process. For everyone else, probate court is required for assets that are not in a trust. For this reason, estate planning often includes putting your assets above $20,000 into a trust. Probate court can be a long drawn out and public process in which others make claims against your estate. A trust bypasses the probate process to save your heirs time and money.
We Can Help
Contact us at Vail Gardner Law for help with setting up a living trust or other estate planning documents. Our focus is on planning for your future and helping you leave a legacy. Contact us today and find out how we can help you!
Sources:
https://mobile.ncleg.net/EnactedLegislation/Statutes/PDF/ByChapter/Chapter_32C.pdf