People in North Carolina who need to make estate plans might wonder whether they should wait until new tax laws are passed by the Trump administration. The best course of action is to avoid delaying the creation of an estate plan and make one that’s based on existing laws. Tax changes may not even take effect for years or be reversed by a later administration. Furthermore, there are some benefits to creating an estate plan that are unrelated to taxes. For example, an ironclad trust shields an estate from creditors, divorce and other potential claims on its value.
There are several factors a person should keep in mind when creating a trust. Given the uncertainty concerning tax laws, trusts should be flexible. It may be possible to claim a state other than North Carolina as a jurisdiction if it is more trust-friendly. Trust protectors, third-parties who manage estate plans, can also make an estate plan more flexible.
In most cases, an individual’s spouse should be the beneficiary of a trust so he or she can benefit from its distributions. A loan provision may also allow an individual to access assets that continue to remain protected under the provisions of the trust. If an irrevocable trust is set up as a grantor trust, it may be possible to swap assets in and out of it.
Trusts can also be powerful tools for reducing estate tax. Individuals who are concerned about estate taxes may want to speak with an attorney about how a trust and other tools can be used to reduce them. For example, annual gifts are permitted up to a certain amount and may lower the value of an estate. A lawyer may be able to discuss the pros and cons of these approaches and how they may best be implemented.