What Is a Family Trust, and How Do You Set One Up?
A revocable family trust, also known as a living trust, offers several benefits to clients in North Carolina:
Avoidance of Probate: One of the primary advantages is that assets held in a revocable trust do not go through probate, which can be a lengthy and costly process. This allows for a more efficient distribution of assets to beneficiaries.
Flexibility: As the name suggests, a revocable trust can be altered or revoked by the grantor at any time during their lifetime, providing flexibility to adapt to changing circumstances or wishes.
Privacy: Unlike a will, which becomes a public record after death, a trust remains private. This means the details of the estate and its distribution are not disclosed to the public.
Continuity in Management: In the event of the grantor's incapacity, a successor trustee can manage the trust assets without court intervention, ensuring continuous management of the estate.
Control Over Distribution: The grantor can specify how and when the assets are distributed to beneficiaries, which can be particularly useful for managing distributions to minors or individuals who may not be financially responsible.
Asset Protection: The family trust can protect assets from your beneficiaries’ creditors, lawsuits, and divorce.
Keep your Assets in Your Bloodline: You can add the option of having your property stay in your bloodline by utilizing an inheritance protection trust allowing your assets to only be distributed to your children, grandchildren, or blood relatives that you decide upon as long as the assets are held in the trust.
To set up a revocable family trust, a client should follow these steps:
Consult with an Estate Planning Attorney: It's advisable to work with an attorney who routinely handles estate planning to ensure the trust is set up correctly and in accordance with state laws.
Draft the Trust Document: The attorney will help draft the trust document, which outlines the terms of the trust, including the trustee, beneficiaries, and how the assets will be managed and distributed.
Transfer Assets into the Trust: The client must retitle their assets in the name of the trust. This includes real estate, bank accounts, investments, and other significant assets.
Choose a Trustee: The client must appoint a trustee to manage the trust. This can be the client themselves during their lifetime, with a successor trustee named to take over upon their death or incapacity.
Review and Update the Trust: It's important to periodically review the trust to ensure it still aligns with the client's wishes and make any necessary updates.
By setting up a revocable family trust, clients can ensure their estate is managed according to their wishes while providing benefits such as privacy and probate avoidance.