Estate planning is something every North Carolina resident should do regardless of how much money they have or how old they are. If individuals have no legal provisions in place when they die, a variety of fees and court costs can be assessed on any money and other assets that may have been meant for a loved one.
The first part of estate planning is determining who will receive the proceeds of any life insurance policies and retirement accounts. The beneficiary designations should be periodically reviewed, especially after certain life changes, so that a payout is not distributed to an unintended ex-spouse.
Beginning in 2018, individuals are able to gift up to $15,000 to another person without being assessed a gift tax. Individuals may also contribute to a 529 college savings account for future generations; however, a lower tax bill is only possible if the account is created by someone other than the parents of the child, such as a grandparent.
An estate planning tool like a trust allows individuals to bypass the probate process and possibly reduce their tax costs. Specifically, individuals may place assets in irrevocable trusts, which require the grantor to relinquish control of the assets. There are also qualified personal residence trusts in which individuals can transfer the ownership of their home to the trustee. This type of trust allows the grantor to remain in the home as long as the rent is paid.
An estate planning attorney may advise clients of what types of trusts could be appropriate for the goals and preferences they have for their assets. Depending on the type of assets, the attorney may recommend living trusts, testamentary trusts, express trusts, irrevocable trusts or constructive trusts.