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Do you need a trust? And who should be my trustee?
You might need a trust, and you can choose who you want to be your trustee. The answer depends on what you want for your estate plan.
The first thing to know is there are two kinds of trusts: 1) Irrevocable Trusts and 2) Revocable Trusts.
The key difference is that once you set up an Irrevocable Trust, it is substantially locked in place and hard to unravel. A Revocable Trust can be terminated by the person who sets up the trust, otherwise known as the "grantor." A Trust is a contract between the Grantor and the Trustee, the Trustee being the person in charge of the Trust. The Grantor places assets, usually cash, into the Trust, and charges the Trustee with the responsibility of those assets.
Quite frequently, the Grantor is also the Trustee of the Trust at the creation of the Trust. All trusts have at least one Trustee, though you may have more than one Trustee. The Trustee is in charge of the Trust, and carries out the responsibilities of the Trust, and disburses the assets of the Trust.
One of the best advantages of the Trust is that it can simplify the Probate Process when the Grantor passes away. When someone passes away, his or her property that passes through the Probate Process must be audited by the Clerk of Court under North Carolina law. Property in the name of the Trust at the time of death is exempt from the auditing process. The Trust simplifies the accounting process that the Clerk of Court must approve, under which all funds must be accounted for. This process can add time and expense to an estate, including possible appraisal fees and accounting fees to assist in preparing the report of funds to the Clerk.
A Trust may simply pass the assets to the heirs, as well as assist in paying final expenses of the deceased. This greatly reduces the amount of paperwork needed for the Probate Process. Another advantage of a Trust over a basic Will is the ability to hold money into the future.
Generally speaking, a Will serves to pass the assets, including money and land to the beneficiaries. The passage of the assets is immediate in a Will. If you use a Trust, you can delay when your beneficiaries will receive an asset. When setting up a Trust, you can select a close friend or family member to be the Trustee after your death, and to watch over your assets until you feel that your children, or other beneficiaries, reach an responsible age to manage their inheritance. You can also provide access to the assets through the Trustee during this waiting period.
To illustrate this example, you can direct your Trustee to take care of the money you want to leave to your children, until your children reach the age of 25. However, you can also instruct your Trustee to pay their health bills and educational expenses until they receive the money at age 25. This can give your children the best of both worlds, in that it allows them to reach an age of maturity to manage money, but still provides for their well being until they reach the right age.
These are just two of the many useful ways to implement a Trust, and there are numerous more. No two situations are completely alike, and everybody is going to have different needs when looking at estate plans. Here at Westall, Gray & Connolly, we will be glad to sit down with you and discuss what you would like to accomplish and see if a Trust is right for you.