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Removing the Confusion Associated with Trusts

Posted on June 29th, 2022

Our Mooresville Estate Planning attorneys at Daly Mills Estate Planning represent clients throughout North Carolina by creating both real-time and long-term solutions that allow them to live their lives with confidence. We believe that customized estate planning provides a clear vision for how their futures unfold.

For some, that means creating a trust. Unfortunately, there is a lot of confusion associated with trusts, and who might benefit from them.

Our Iredell County estate planning lawyers can help shape your estate and your future by determining which type of trust is right for you and your loved ones, so everyone is prepared for what tomorrow might bring.

What is a Trust?

A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.

When our clients create a trust, they are creating an asset that utilizes its resources to protect their loved ones’ financial interests.

There are three things that every trust must have to be valid.

They include:

  • A person to create the trust, who may also be referred to as a grantor, trustor, settlor, or maker.
  • The party the grantor names in the trust to care for and manage the trust property, who is referred to as the trustee.
  • The party for whose benefit the trust was created, also referred to as the beneficiary or beneficiaries.

There are many types of trusts, which can be used for unique purposes, depending on the grantor’s wishes. The major distinction between trusts is whether they are revocable or irrevocable.

What is the Difference Between a Revocable and Irrevocable Trust?

A revocable trust is also known as a living trust.

A revocable trust allows the grantor to name her or himself as the trustee to retain control of the assets and terms during his or her lifetime while making provisions for a successor trustee to manage them in the event of their incapacity or death.

One of the many benefits of creating a trust is its assets may be able to pass outside of probate, saving time, court fees, and potentially reducing estate taxes as well.

Revocable trusts are flexible and can be dissolved at any time, should circumstances or intentions change, but typically becomes irrevocable upon the grantor’s death.

An irrevocable trust typically transfers assets out of the grantor’s estate and potentially out of the reach of estate taxes and probate but cannot be altered after it has been executed. Therefore, once the trust is established, the grantor will lose control over the assets, and loses all rights to change the terms or decide to dissolve the trust. The grantor cannot function as a trustee when forming an irrevocable living trust.

Irrevocable living trusts are exclusively designed to produce specific tax or asset protection results.

If you have questions about including a trust as part of your estate plans, we can help you determine which type of trust is right for your unique needs.

Contact Our Dedicated Will and Trust Attorneys in Mooresville, North Carolina Today

To learn more about how we can help you establish a will or trust that fits your needs to help safeguard your future, call us at (704) 286-8437 to schedule an initial consultation with our will and trust attorneys in Mooresville, North Carolina today.