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A living trust may be created as either "revocable" or "irrevocable." A revocable trust, as the name implies, gives the grantor the ability to revoke, amend, and/or change any of the terms and provisions of the trust, or terminate the trust entirely, at any point during his or her lifetime. As such, the grantor maintains "control" of a revocable trust in the eyes of the IRS, which can have tax implications. An irrevocable trust may not be changed, amended, revoked, or terminated by the grantor after the trust becomes effective. As such, the grantor maintains no control over an irrevocable trust for tax purposes.
Note: After divorcing, provisions in a trust may need to be modified or re-written depending on the type of trust involved, the actual provisions and guidelines laid out by the trust, and the impact your divorce may have on the intent behind those provisions.
There are many types of trusts which can be as specific as the grantor desires so long as the terms are in line with North Carolina law. Some of the more common specialized trusts include: Custodial Trusts, Special Needs Trusts, Trusts for Pets, Trusts for Cemetery Lots, and Charitable Trusts. In short, a trust may be created for ANY reason so long as the purposes of the trust are lawful, not contrary to public policy, and are possible to achieve.
Testamentary trusts are established under the Last Will and Testament of the grantor and have no effect until the grantor dies. Testamentary trusts can serve numerous purposes, such as: providing an avenue to manage assets and control distributions to minor, disabled, and/or irresponsible beneficiaries; protecting the interests of children born to a previous marriage; or providing a fund for the benefit of a charity. A testamentary trust is always revocable during the testator's lifetime as it does not come into existence until the death of the grantor of the trust.
A "living trust," also known as an "inter vivos" trust, is established during the lifetime of the grantor, and can create many lifetime benefits while still serving as a "will substitute" at death. Living trusts are managed by a trustee according to the terms of the trust and can serve numerous purposes, such as: shifting the burden of asset management to a trustee, creating a benefit for the grantor during life, or creating a benefit for another party (beneficiary) while not presently giving control of the funds to that beneficiary.
To speak with one of our Charlotte attorneys regarding Wills, Trusts, and Estate Planning, call us at 704-412-1442.
Note: North Carolina law is specific in the information that may be included in a Trust, the manner and methods by which a Trust may be created, and the steps necessary to execute a Trust. Failing to follow any of these rules may invalidate an otherwise enforceable Trust.
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To speak with one of our Charlotte attorneys regarding Wills, Trusts, and/or Estate Planning, contact us at 704-412-1442.
A "trust" is a common means by which property may be distributed to beneficiaries. A trust is an instrument created by a "grantor" and run by a "trustee" who manages and distributes assets from the trust to beneficiaries pursuant to the wishes of the grantor and the terms of the trust agreement. The trustee is designated by the grantor in the device creating the trust. If a specific trustee is not named or not available, a trustee will be assigned by a court. The two most commonly used types of trusts are living trusts and testamentary trusts.
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