North Carolina residents who do not have a will or trust should start thinking about the benefits of estate planning. Though it may seem too difficult or costly to get a trust, the cost and process are almost certainly less burdensome than the cost of not having one. There are several options one can consider.
Estate planning is important for everyone who has some form of assets, even if the assets are not high in value. Trusts are either revocable or irrevocable. Besides the self-explanatory names, these trusts have other differences. Someone with a revocable trust can add assets to the trust at any point in life. This trust can also be modified to change the beneficiaries. An irrevocable trust generally cannot be changed or added to at any point.
At first glance, a revocable trust sounds like a better option, but irrevocable trusts have their advantages. Assets transferred to the irrevocable trust will no longer be taxed as part of the estate. Beneficiaries of an irrevocable trust would have control over the assets in the trust, and, if it is a simple trust, they would be responsible for the taxes, which are likely lower than those of the person who created the trust (the grantor). The grantor of a complex trusts can retain interest from the trust and pay a trust tax, or the grantor can have the interest distributed to the beneficiaries, in which case they would pay the taxes.
Trusts generally avoid probate, which is a lengthy and costly process whereby a probate court oversees the distribution of a decedent’s assets. Individuals who would rather their money go to their beneficiaries than to the government may want to consult with an estate planning attorney to discuss options.