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Can a trust shield my assets from probate?


A trust is a fiduciary arrangement where the giver, or grantor, provides directions to a “trustee” who holds and manages assets on behalf of your beneficiary or beneficiaries.

A trust allows you to give instructions about how your assets should be managed and to whom they should be given, and to pick a reliable trustee to make sure your wishes are carried out long after your death.

Trusts are very flexible, and can be drafted in a variety of ways. Different types of trusts may convey the following benefits:

  • A trust may save your family money by shielding assets from probate, an expensive, court-monitored process which divides up the estate after death.
  • A trust may provide for children or grandchildren until they are mature enough to handle their own affairs.
  • A trust may prevent family assets like farms or businesses from being unnecessarily divided or sold.
  • A trust may make sure that benefits go to the right people, at the right times, for the right purposes, and in the right amounts.

Revocable Living Trust

A revocable living trust is a popular type of trust designed to avoid the expenses of probate or to shield valuable personal property from public view. The revocable living trust allows you to serve as your own trustee during your lifetime, which allows you to keep taking care of your own assets.

The revocable living trust can help assets pass outside of probate, yet allows you to retain control of your assets during your lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change.

Because probate is a public process where the assets of the estate are publicly disclosed, many clients prefer to place certain valuable personal property such as guns, jewelry, coins, or collections in trust so that it will pass to heirs privately and confidentially instead of in open probate court, where these valuables could be later targeted by thieves.

Irrevocable Trust

An irrevocable trust is a trust, where assets are normally transferred during life, with terms and provisions that cannot be changed by the grantor. If you place assets into an irrevocable trust, all aspects of your ownership are removed. Thus the trust’s assets are removed from your taxable estate, helping certain larger estates avoid estate taxes. Irrevocable trusts may also be used as a tool to help protect assets from creditors, or for Medicaid planning.

Family Trust

A family trust is designed to pass assets to children but may also be used to care for a surviving spouse. Family trusts may be used to assure that money is available to your children for important reasons, such as for the beneficiaries’ education. The family trust is designed to make sure that the bulk of your funds are not given to beneficiary children at too early an age (before the children are responsible).

With this trust, a reliable adult trustee whom you select in advance will disburse trust funds to children as needed, with the body of the trust assets not distributed to the children until they reach an age you select in advance (can be any age you select, such as 21, 25, 30, or 35). The family trust often provides the trustee with significant flexibility in taking care of children–trust assets are distributed into a “common pot”, and the trustee may make distributions to the children who require the funds at the time when funds are actually needed.

Marital Trust

A marital trust is set up to benefit your spouse. Assets may be transferred during life or at death. When the trust is formed, you may choose who receives any remaining assets in the trust after your spouse dies.

If the estate is large enough, a marital trust takes advantage of the marital deduction for federal estate tax. With a marital trust, you may transfer, during life or at death, an unlimited amount of property to your spouse without incurring gift or estate taxes. A marital trust saves estate tax costs in only larger estates, because federal estate taxes do not even come into play until the estate’s gross assets plus taxable gifts reach $5.45 million (2016 figure). The NC State Estate Tax was abolished in 2013.

Special Needs Trust

The special needs trust can be set up for a handicapped child in order to allow you to ensure proper management of trust assets for the benefit of the child, supervision of the beneficiary (the handicapped child), and distribution of funds that will provide for the handicapped child’s future, while at the same time preserving the governmental benefits to which the child is entitled. For more detailed information click here.

GunWise RLT℠ Revocable Living Trust

For more information on using our GunWise RLT℠ Revocable Living Trusts in North Carolina to protect your firearms collection, please download the GunWise RLT℠ Fact Sheet.

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