Trusts are among the most useful tools available for estate planning in North Carolina. They take many forms and can be designed to fit a particular person’s situation. The specific structure of a trust determines how it controls assets, how assets are taxed and whether they’re protected from creditors. The person who creates the trust is referred to as the settlor or grantor. Once the settlor transfers assets into a trust, they are managed by the trustee according to the trust’s provisions.
Broadly speaking, an estate owner can create a revocable or irrevocable trust. With a revocable trust, sometimes called a living trust, the settlor keeps the right to dissolve the trust and take back possession of the assets. For tax purposes in many states, the settlor of a revocable trust remains the legal owner of the assets. Assets in a revocable trust may be open to attachment by creditors. Revocable trusts are similar to wills in that they can be used to distribute assets after the death of the settlor.
Irrevocable trusts do not allow the settlor to revoke or alter the trust once it is formed. The trustee becomes responsible for reporting tax information and making tax payments. This form generally offers more protection from creditors and can also be used in estate planning to distribute assets to beneficiaries after death.
People in North Carolina who have questions about trusts might want to speak with a lawyer. An attorney with experience in estate planning law might be able to examine a client’s circumstances and offer advice regarding the use of trusts. Legal counsel might draft and file the documents necessary to establish a trust, act as the trustee or identify and categorize assets for the client.