For those living in North Carolina who want to plan their estates, a revocable living trust is a useful tool to help preserve wealth and minimize taxes. It is a way to protect some assets from the probate process while still retaining control and ownership of them.
What to know about living trusts
A revocable living trust is where the owner and the trustee are the same person, and that person keeps ownership of the trust for as long as they live. They are totally free to transfer any asset they want into the trust or out, they can invest and save assets in the trust, and they can spend assets in the trust. The trust has no separate existence from a tax perspective, and the owner reports any income from it on their own tax forms. This is in contrast to an irrevocable trust where the owner can place assets into the trust, but they then lose ownership over them and cannot get the assets back.
The advantage of a revocable trust is that when the owner dies, the assets in the trust do not have to go through probate court, potentially saving a lot of time and money. The trust needs to specify beneficiaries and a successor trustee. The trustee will take over the task of distributing the assets to the beneficiaries. The trust documents should also specify a trustee if the owner becomes incapacitated and cannot make decisions.
Living trusts avoid probate court, provide flexibility and also provide privacy because their details are not public. They are often excellent tools for estate planning for a family.