Creating an estate plan is an important decision for people in North Carolina. Most might try to go the simplest route and craft a will. In many instances, it is the wisest option. However, some people have different objectives and their financial and personal situation warrants a deeper dive into estate planning.
A trust is an alternative that many would be well-advised to consider. Before proceeding, it is wise to know what the goals are and how a trust can advance those goals. Knowing the facts about trusts beforehand can help with deciding whether it is a good idea or not.
Keys with considering a trust
There is a seemingly endless array of trust options available. In general, people should have a grasp of revocable and irrevocable trusts and which is preferable given their circumstances. Then the specifics such as the type of trust to select and how it will be structured can be addressed.
- A revocable trust is also called a living trust. The trust is created while the person – known as the grantor – is alive. The trustee will oversee their assets if they are unable to do so themselves. As the name implies, it can be revoked or changed when they want. Once the person dies, the trustee will follow the instructions they were given.
- An irrevocable trust cannot be changed unless the grantor’s beneficiary approves it or there is a court order. Their property is moved into the trust, so they technically no longer own it. The trust does. The irrevocable trust can be cost efficient as it eliminates probate. A trust can be costly to set up and manage.
People can also set up a special needs trust for a loved one who is unable to care for themselves. If a person owns a pet they are worried about after they are gone, they can set up a pet trust so the animal is cared for. A charitable trust allows the grantor to donate to causes important to them.
Despite these benefits, people who have a simple estate or want to leave their property to their family members like a spouse and their children could benefit from a will. A will needs to go through probate, but it is often easier than the intricacies of a trust.
Gather the necessary information for estate planning
For some, a trust is a better option because they maintain a certain level of control. If the circumstances warrant it, people who are thinking about how they will handle their assets and simultaneously care for loved ones in the way they believe is best, a trust could be a good choice.
Before committing to it or choosing another path, it is imperative to have all the facts and a full understanding of what a trust does and does not do. This is crucial when creating a comprehensive and effective estate plan.