North Carolina residents may take advantage of a variety of trusts as part of their overall estate plan. For instance, a testamentary trust is one that is included in a will. The will spells out which assets the trust is to hold after the testator passes away, and they do not avoid probate. However, it may avoid the cost of trying to create and fund a trust while still alive.
Bypass and marital trusts may work to benefit both a spouse and any children a deceased person may have. Bypass trusts take advantage of the roughly $5.5 million lifetime estate and gift tax exemption to help an individual cement his or her legacy. The surviving spouse can generally make use of assets in the trust, and he or she may also receive whatever doesn’t go into the trust. Marital trusts are primary for the benefit of a surviving spouse, and they are typically used if a person has children from another marriage.
Charitable trusts may provide an individual with income while also helping a worthy cause at the same time. If a person chooses a charitable remainder trust, he or she receives income from the trust while still alive with the rest going to a charity upon that person’s passing. With a charitable lead trust, the charity receives a set amount with an individual receiving the rest.
A trust may be a valuable estate planning tool for a variety of reasons. In some cases, it may help assets avoid probate while also providing potential estate tax relief as well. Trusts may also make it easier to donate to charity or restrict how a child or grandchild can use his or her inheritance. An attorney may discuss different types of trusts and their potential benefits.