trusts Archives

Tax law changes for trusts and estates

North Carolina residents who are planning for the future may be interested to learn about the ways in which recent tax reforms affect trusts and estates. The Tax Cuts and Jobs Act, which passed in December 2017, has a number of implications for estate planning. In the first place, the law created a $10,000 limit for deductions on state and local income taxes. While there has been some confusion about whether this applies to individuals only, it does pertain to income for trusts and estates beginning in the 2018 tax year.

Trust accounts and FDIC insurance limits

Many people in North Carolina use trusts as estate planning tools. These types of accounts can provide significant benefits in terms of estate tax planning and give funders a measure of control over how their assets can be used in the future. In order to ensure the security of these accounts, trust creators should understand the associated insurance limits provided by the Federal Deposit Insurance Corporation (FDIC).

Appointing the right people in an estate plan

When North Carolina residents start the estate planning process, they should pay close attention to who is appointed to various roles in the estate. There are a number of different responsibilities associated with these documents. For example, there may be an agent who is responsible for making a person's health care decisions. There is usually an executor who is in charge of the will and other estate planning documents. If there is a trust, there will also be a trustee.

Good trust advice

North Carolina residents who want to incorporate trusts into their estate plans should be wary of whose advice they use. Some professionals may provide advice that is not complex enough to address the goals of a particular estate plan, or the advice provided may be rooted in obsolete strategies. In order for professionals to provide pertinent estate planning advice, they will have to determine how the goals of their clients may have evolved due to the tax-related changes in 2017.

The benefits of a spendthrift trust

North Carolina residents who are concerned about keeping their money safe for future generations may benefit from creating a spendthrift trust. Such a trust could help prevent creditors from making claims against that money. It can also prevent a beneficiary from spending money unless a trustee makes a distribution. This is ideal in the event that a parent believes a child or grandchild has poor money management skills.

How interest rates can affect trust decisions

Trusts can be an important part of financial and estate planning for many people in North Carolina, and the decision about what type of trust to create can be influenced by changing interest rates. Interest rates are on the rise after 10 years of low rates, which means that some types of trusts could be useful now in different ways than in the recent past. For people choosing other types of trusts, they may want to act quickly to make a decision, given that rising interest rates could lead to a less advantageous tax situation for the future.

Creating an estate plan that family members will understand

Some people in North Carolina may have a will, but in some situations, a will may not be enough. There may be other elements to the estate plan as well such as powers of attorney and trusts. However, what the estate plan may not include is information that lets heirs know why certain decisions about the estate plan were made. Clarifying this may mean heirs are less likely to argue over or challenge the plan.

Using estate planners

North Carolina residents may find it beneficial to consult a professional estate planner when making arrangements for how their estate is to be handled after their death. Consulting a team of professionals when developing an estate plan can help ensure that there is an easier transition of the ownership of assets when a person dies. The team can consist of an estate planning attorney, a financial advisor and a CPA or accountant.

Using pour-over wills

A North Carolina resident can use a pour-over will as a backup mechanism to ensure that assets are passed to a trust after death. With a pour-over will, an estate owner is essentially designating their trust as the main beneficiary of any assets that are not already under the ownership of the trust or being passed directly to living beneficiaries in other ways.

Why estate planning can be an important step

People in North Carolina often want to enjoy a greater level of control and management of their assets and their future, even when facing declining health. This means that estate planning can be particularly critical not only to setting one's affairs in order but to securing peace of mind for oneself and one's family. Making an estate plan can be important for people with businesses and other sizable assets; however, it can also be a critical step for people with smaller estates who want to protect their loved ones.

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