Wilmington Trusts Lawyer
Do you need a trust? The answer depends on what you’re hoping to do with your estate, and figuring out the details is a lot easier with a Wilmington trusts lawyer by your side. Trust-based estate planning doesn’t have to be overwhelming, but there are a lot of considerations to be made. Diving into the options without all the necessary information can lead to costly mistakes that will leave your estate assets vulnerable. If you’d like to learn more about trusts and how you can protect your assets, contact a Wilmington, NC, trust lawyer from Johnson Legal. Call now to schedule a free consultation.
What is a Trust?
A trust is a legal relationship in which one person entitles another entity with property or assets that eventually benefit the third party.
Some terminology you may hear when discussing trust administration includes the following:
- Settlor, Creator, or Grantor — The person who creates the trust in the first place
- Trustee — The person who manages the assets held within the trust
- Beneficiary — The person who will benefit from the trust, often when a particular set of circumstances outlined in advance has been triggered
When a settlor creates a trust, the settlor signs over ownership of the assets to the trust which amounts to a collection of assets and liabilities based on a contract. For this reason, a trust has no capacity to sue or be sued or to defend an action. Assets retitled into the name of the trust may include deeds to real estate, bank accounts, or personal property. While the trust may be the owner of the retitled property, the social security number of the trust is the same as the settlors, which is where the buck stops.
Why Would Someone Create a Trust?
There are many reasons to create a trust, and the specifics vary with each individual’s unique financial situation. Some of the most common reasons to create a trust include the following
To Save Time and Money
While a will is often less expensive than a trust to set up, upon death, probate will most likely require the assistance of an attorney, involves court fees, and can take six months to a year to complete. Thus, any savings upfront will be offset by the cost of probate.
To Provide for Minor Children
Many parents set up trusts with their children as beneficiaries in preparation for the possibility that they pass away while their children are still minors. Having assets in a trust with a trustee, such as a family member, can help ensure that the minor children have their needs met and that the assets remain protected until they are old enough to manage the funds themselves.
For Special Needs Planning
Families that include members with unique medical or mental health needs often participate in special needs planning. That plan will usually involve a trust set up to benefit the individual with a trustee to help oversee the management of the assets.
To Avoid Probate
Probate is the court-appointed management of an estate following the owner’s death. Assets in a trust are not subject to probate law because the ownership was transferred to the trust prior to death. A probate lawyer can help keep these assets out of probate, which can be cumbersome, lengthy, and expensive.
As a Superior Incapacity Tool
While we create ancillary documents with all our estate plans, including a Financial Power of Attorney, which establishes an agency during incapacity, financial organizations often question such authority if the document is not specific enough or more than three to four years old. Alternatively, a trust acts as the strongest form of power for an incapacitated person due to the trust’s long history of existence in the law.
A trust is not filed with the court, nor is the court involved in its administration, as with a will-based estate plan. This keeps all the details of your estate private and out of the public record. In the alternative, when a will is filed with the court, along with a decedent’s inventory of assets, it all becomes part of the public file that anyone can access.
As a Soft Landing
When a loved one passes away, it is challenging to be saddled with court deadlines and attorney fees. Instead, a trust avoids these issues and provides loved ones a soft place to land with an easy transition through the property distribution process and, in the end, peace of mind.
To Reduce Tax Burdens
Sometimes, a trust can be used to shelter assets from certain taxes. Setting up a trust could be a way to reduce estate taxes and maximize the benefit that your assets will provide to loved ones or charities.
What is Required to Set Up a Trust?
Setting up a trust requires a notarized legal document that lays out the details of the arrangement. Additional documents usually accompany a trust, including Certification of Trust, Trustee Affidavit, Assignment of Personal Property, and Funding Instructions. Once the trust is established, the trust needs to be funded. Think of a bank account that you’ve opened. Once it’s opened, you need to make a deposit for it to function. Funding a trust is another way of describing the process of retitling assets into the name of the trust. Generally, any property in the name of the decedent, upon death, is required to go through probate. That’s what a trust avoids, so it is essential to retitle properties soon after the trust is created. Not all properties are placed into the trust. For example, automobiles are generally not placed in a trust because insurance companies will not insure a trust-owned vehicle. Retirement accounts are not retitled into the trust because, by nature, an IRA or 401k is required by estate law to remain in the individual’s name.
What Do Trust Attorneys Do?
As you consider setting up a trust as part of your estate planning, you may wonder if an attorney is necessary. One of the most important functions of a trust attorney is to help you sort through all the possible options and choose what’s best for your situation with confidence and clarity. There are many types of trusts. One of the biggest distinctions is revocability. A revocable trust is one where the terms can be changed at the will of the settlor. An irrevocable trust is one where the terms cannot be altered without the involvement of the beneficiaries. Other terms about trusts that might be part of your planning depending on your assets and wishes include blended family (QTIP) trusts, ILITs, standalone retirement trusts, minors trusts, spendthrift trusts, generation-skipping trusts, charitable trusts, and asset protection trusts. Each of these will require precise paperwork and management, and an experienced Wilmington trusts lawyer can ensure that your trusts are set up exactly to your specifications and needs.
When Should I Contact a Wilmington Trust Attorney?
Estate planning can be overwhelming, and many people wait too long to start. Don’t let the fear of not knowing all of your plans stop you from getting the framework in place. There are ways to set up your estate plan and trusts so that they can be altered and amended as your needs and wishes change. The risks of having nothing in place when an unforeseen accident or medical emergency occurs can be devastating, and most people find it comforting to know that they are prepared. Remember, if you fail to have an estate plan in place, Uncle Sam becomes your representative. The best time to contact a Wilmington trusts attorney and get started on the process is as soon as possible. Having a conversation about your plans can help you understand what options are available and time the moving of your assets to best meet your estate administration goals.
Contact our Wilmington, NC lawyers right away to discuss your estate planning and trust needs with a free consultation.