It is never too early to start learning about trust fund options, even if you are only just starting to accumulate assets. For starters, North Carolina residents should learn about the characteristics of revocable and irrevocable living trusts, which are two of the more common options.
Benefits of a revocable trust
The big difference between revocable and irrevocable trusts is self-explanatory: irrevocable trusts cannot be amended after they are created, and revocable trusts can. Individuals who expect to accumulate more assets in the future that they would want to add to their trust should consider the benefits of a revocable trust. Revocable trusts can be changed with a simple trust amendment, though too many amendments could make the trust too confusing to interpret later on. If there are multiple amendments to a trust, a trust restatement, which is a single document, can be used to affirm that no changes are being made and recapture all amendments to the trust.
Revoking a revocable trust
Revocable trusts can also be revoked in their entirety, but there could later be challenges that a trustor was not mentally competent at the time of the action. Additionally, if a trustor plans to make several significant changes to a trust, he or she can revoke the trust and then create a new one. This option should be avoided if possible since revoking and then creating another trust is expensive and time-consuming. If spouses are co-trustors of a trust, either one can revoke the trust in its entirety at any time, but the couple must agree to any changes in writing.
Another thing that makes a revocable trust convenient is if the trustor also has a pour-over will. These wills allow assets not accounted for in the trust to pour over into the trust upon death. The will can also extend to any amendments made by the trustor during his or her life. If you are wondering whether to create a will and/or trust, a North Carolina estate planning attorney can help you think through your options.