FAQ

A revocable living trust is a trust you create during your lifetime that you can usually change, amend, restate, or revoke while you are living and competent. Many people use a revocable living trust as the centerpiece of their estate plan.

A revocable living trust can help avoid probate for assets properly titled in the name of the trust. It can also allow a successor trustee to step in if you become incapacitated or after you pass away.

A revocable trust can help avoid probate, but only for assets that are properly transferred into the trust or coordinated with the trust. Simply signing a trust does not automatically move your house, bank accounts, business interests, or other property into the trust.

Trust funding is one of the most important parts of trust-based estate planning. If an asset remains titled solely in your individual name with no beneficiary designation, it may still require probate.

Trust funding is the process of transferring assets into the name of your trust or coordinating beneficiary designations with your estate plan. This may include real estate deeds, bank accounts, investment accounts, business interests, tangible personal property, and other assets.

A trust that is signed but not funded may not accomplish the client’s probate-avoidance goals. Proper funding is what makes the trust work.

Yes. Most people with a revocable living trust also need a will, often called a pour-over will. A pour-over will acts as a backup document that directs any probate assets into the trust after death.

The goal is usually to have as few assets as possible pass through the will, but the will remains an important safety net.

A revocable trust can usually be changed or revoked by the person who created it. It is often used for probate avoidance, incapacity planning, privacy, and efficient administration.

An irrevocable trust generally cannot be changed as easily. Irrevocable trusts may be used for asset protection, Medicaid planning, tax planning, special needs planning, or legacy planning. Because irrevocable trusts involve giving up certain rights or control, they should be created only after careful legal advice.

Usually, no. A revocable living trust is not primarily an asset-protection tool for the person who created it. Under North Carolina law, property in a revocable trust may still be subject to the settlor’s creditors during lifetime and, in some circumstances, after death. (North Carolina General Assembly)

A revocable trust is typically used for probate avoidance, privacy, incapacity planning, and smoother administration—not creditor protection for the trustmaker.

Yes, a properly drafted trust can provide significant protection for beneficiaries. Instead of leaving money outright to a child or beneficiary, a trust can hold the inheritance and allow a trustee to distribute funds according to the terms you choose.

This can be helpful if a beneficiary is young, financially inexperienced, disabled, in a difficult marriage, struggling with addiction, receiving public benefits, or vulnerable to creditors or poor financial decisions.

A trustee manages trust assets according to the terms of the trust and applicable law. In North Carolina, a trustee generally has duties to administer the trust in good faith, act loyally for the beneficiaries, keep records, protect trust property, and follow the trust’s instructions. (North Carolina General Assembly)

Choosing the right trustee is one of the most important decisions in a trust-based estate plan.

You should choose someone who is responsible, organized, financially careful, trustworthy, and able to communicate with beneficiaries. A trustee can be a family member, friend, professional fiduciary, trust company, or other qualified person.

Many clients choose a spouse or adult child as the first trustee and name one or more successor trustees in case the first person cannot serve.

Yes, with a revocable living trust, many people serve as their own initial trustee during their lifetime. This allows them to keep control over their assets while they are living and competent.

The trust should also name successor trustees who can step in if the original trustee becomes incapacitated, resigns, or passes away.

No. Trusts are not only for wealthy families. A trust may be helpful for anyone who wants to avoid probate, keep family affairs private, plan for incapacity, simplify administration, protect beneficiaries, or manage real estate and other assets after death.

Yes, many people transfer their home into a revocable living trust. In North Carolina, this typically requires a properly prepared and recorded deed.

Before transferring real estate to a trust, you should consider mortgage issues, title insurance, homeowner’s insurance, property tax treatment, Medicaid planning concerns, and whether the property is owned individually, jointly, or as tenants by the entirety.

Yes, a trust can often own LLC membership interests or business interests, but the operating agreement and business documents should be reviewed first. Transferring business interests to a trust can help with continuity if the owner becomes incapacitated or passes away.

This is especially important for business owners who want to avoid disruption and ensure someone has authority to manage or transfer the business interest.

A special needs trust is a trust designed to benefit a person with a disability while helping preserve eligibility for means-tested government benefits. The trust can provide supplemental support without simply giving assets directly to the beneficiary.

Special needs planning is highly technical and should be tailored to the beneficiary’s benefits, family support system, and long-term needs.

A Medicaid trust is commonly used to refer to an irrevocable trust designed as part of long-term care or Medicaid planning. These trusts are not the same as revocable living trusts.

Medicaid planning involves strict rules, timing issues, transfer penalties, and significant tradeoffs. Anyone considering a Medicaid asset protection trust should speak with an attorney before transferring assets.

• You should review your trust after major life events, including marriage, divorce, death of a spouse, birth of a child or grandchild, a move to another state, a significant change in assets, a business sale, a change in tax law, or a change in family relationships.

  Even without a major change, many people review their estate plan every three to five years.

After death, the successor trustee gathers trust assets, reviews the trust terms, pays proper expenses, communicates with beneficiaries, handles taxes and accounting issues, and distributes assets according to the trust.

Trust administration is usually more private than probate, but it still involves legal duties and careful administration.

If you live in North Carolina or own North Carolina property, it is wise to work with a North Carolina trusts attorney. Trust law, probate rules, real estate requirements, spousal rights, and estate administration procedures vary by state.