Many people use trusts as a way to distribute assets to their beneficiaries. Trusts are easy to establish as a part of an estate plan with the help of an attorney who has experience in estate law. There are many ways to protect a trust, which we will look at in the next two posts. First let’s learn more about trusts in estate planning in Raleigh NC.
What is a Trust? | Estate Planning in Raleigh NC
A trust is a legal agreement that outlines how you want your assets distributed upon your death. They are a good option if you want to avoid probate and reduce estate taxes on your assets. There are three people involved in a trust. There is the person who creates the trust, or the grantor or trustor. The second person is the trustee, who is the person named as manager of the trust, which can be the same as the trustor. The third party is the people who receive the benefits from the trust. They are also known as the beneficiaries.
How does it work?
When you create a trust, you put your assets in it to be managed while you are alive and then distributed upon your death. Your assets are taken care of by the trustor and are no longer yours. That means you do not have to pay income taxes on money made from them, and upon their distribution, they are not subject to estate taxes.
A trust generally has specific instructions on how it is to be used. It can provide income for someone while you are alive or be held until your death. For instance, a trust can be set up for a child with instructions that it is to be distributed when he or she turns 18 years old.
What is a trust protector?
When establishing a trust, you can provide guidelines for the trustee in order to protect the trust and the assets. These are upheld by a trust protector, which is a way to protect a trust. He or she can oversee the trustor to ensure the best decisions are being made. This can be an added layer of protection for a trust that you are not managing yourself.
Here are a few of the ways a trust protector can help you keep your trust safe.
- He or she can change the named trustees if the trustee can no longer serve.
- A trust protector can resolve any issues that may arise between beneficiaries and trustees.
- Distributions can be changed if there are major life changes such as death, divorce or disability.
- If a beneficiary needs to be added because of a new birth or adoption, they can make these changes.
- If laws change that affect the trust, the trust protector can make changes to the trust in order to accommodate them.
- He or she can also refuse to make investments that may compromise the trust.
While all of these powers can be given to the trust protector, they do not have to be all inclusive. The person creating the trust needs to review what areas are important in managing the trust to see which are applicable.
Estate Planning in Raleigh NC
If you have questions about the role of a trust protector, call Eldreth Law Firm. We can help you establish and protect your trust as part of your estate planning in Raleigh NC.