Trusts. It used to be trusts were used only by the extremely wealthy. We’ve probably all used the term ‘trust-fund baby’ in some way, shape or form to describe that person who seemed to have it all, no worries, no need to work, always with a pocketful of money because daddy’s trust fund took care of everything. While that may have been the case fifty years ago, trusts are becoming an increasingly popular part of estate planning for the wealthy and middle-class alike. Indeed, more and more people of moderate means are using trusts for all the benefits they provide over an estate plan centered around a Will. Trusts don’t require probate so at your death, the trust assets can be relatively easy to control and disburse. Trusts are not part of the public record like a probated or recorded will so nosy neighbors or parties with bad intentions cannot discover the extent of your estate and to whom it has been left. When properly funded, trust property is not subject to administration, and since administration typically involves a ‘probate tax’, the assets in the trust can be passed down without incurring this tax. In North Carolina, the probate tax can be as much as $6,000.00, which is generally far more than the cost of preparing a trust with an attorney. Trusts can allow the grantor or settlor (the person creating the trust) to maintain control over the trust property. Thus there are no additional forms to create, no additional tax forms to file. All income for property in the trust is reported and taxed on the grantor’s personal income tax return. This is very important. While trusts can and do serve all the above purposes, it should be noted that, generally, trusts by themselves do not act to reduce or defer taxes, and trusts by themselves do not provide asset protection. If tax reduction or deferral, or asset protection is an important consideration, there may be other alternatives involving trusts that can serve those purposes.
We will have more about trusts, generally and specifically, in future postings. If you have questions about creating a trust or if you have questions about a trust that has already been created, the Estate Planning Attorneys at Sodoma Law are happy to help.
DISCLAIMER: THE INFORMATION ON THIS WEBSITE WAS PREPARED BY SODOMA LAW AND IS INTENDED FOR INFORMATIONAL PURPOSES ONLY AND NOT IN ANY WAY CONSIDERED LEGAL ADVICE.
