A trust is used to transfer certain assets to a trustee, who will manage or hold the assets for the intended heir. North Carolina residents can use a trust if they want to reduce the amount of taxes on their estate, bypass the lengthy probate process and protect their assets. Individuals who create a trust are able specify to who and how the assets placed in the trust will be distributed.
One of the main advantages of a trust is that grantors can ensure that the assets are handled according to their stated preferences. A trust is also beneficial for the beneficiaries as well as they will not be required to pay court fees or estate taxes, and the assets in the trust generally cannot be touched by creditors of the beneficiaries or lost due to a divorce. Creators of a trust are also able to stipulate to whom the assets should go if a beneficiary dies.
Individuals who value their privacy may favor using a trust instead of a traditional will, as a trust facilitates the speedy transfer of assets privately. In contrast, when a traditional will is used, the assets may have to undergo the probate process, which can be public, expensive and lengthy.
There are many different types of trusts individuals can choose from to meet their specific needs and goals. For example, a credit shelter trust, also referred to as a family trust, allows individuals to bequeath certain assets via the trust to beneficiaries and leave a remaining tax-free amount to a living spouse. An estate planning attorney can describe the requirements of setting such an instrument up.
