Updated June 01, 2022
The North Carolina living trust is a legal document that is used to mandate the disposition of an estate while avoiding probate. Litigating a Will through probate court proceedings can be a long and costly process, so, in some cases, a living trust is a simpler, more cost-effective way to distribute the assets of a decedent. The person creating the living trust, the Grantor, will have to put all of their assets into the trust’s name and appoint a Trustee to control the trust. When the Grantor dies or becomes incapacitated, provisions within the living trust will manage the distribution of the Grantor’s assets as per their instructions. There are two main types of living trusts (Irrevocable and Revocable) and they both have different advantages and disadvantages. When deciding whether you need a living trust and if so what type to create, you should always consult with a legal professional to ensure you make the right choice.
Laws – Chapter 36C (Uniform Trust Code)
Will (Last Will and Testament) – This document is required in order to divide any property not put into the living trust without litigation.
Individual Roles
There are four (4) basic roles in a living trust:
Grantor (or “Settlor”) – The person who creates the living trust.
Trustee – The person who is in control of the living trust.
Successor Trustee – The person who will become Trustee when/if the active Trustee falls ill or dies. Most often used for when the Grantor is named Trustee during their lifetime.
Beneficiaries – The people who are indicated as heirs to the living trust’s estate.
Types
Irrevocable – Cannot be revoked or amended once it has been signed. It features the following benefits:
- Avoids probate
- Keeps details of the estate’s divestment private
- Can protect your assets from litigation and creditors
- Saves extremely large estates from estate tax
Revocable – Unlike an Irrevocable Living Trust, this type can be revoked or amended by the active Trustee. However, it only has these two main features:
- Avoids probate
- Keeps details of the estate’s divestment private
- Assets may be added and withdrawn from the Trust by the Grantor.
How to Make a Living Trust in North Carolina
The requirements for making a trust, under § 36C-4-402, are that the Grantor is of sound enough mental health to express a clear desire to create a living trust and is able to comprehend the responsibilities and consequences of such an action. Also, the same person, within the living trust, cannot be the sole beneficiary and the sole trustee. In order to create a living trust, you must write a document that lists all of your assets that are being put into the trust and names the trust’s Trustee and Beneficiaries. After signing the living trust document, ideally in the presence of a Notary Public, you will need to formally transfer all of the listed property into the Trust (or Trustee’s) name.
Motor Vehicles – To place a vehicle into the trust’s ownership, you can use a Bill of Sale and/or transfer the vehicle title through the North Carolina Division of Motor Vehicles (for a fee of up to $98).
Real Estate – To put any real estate under the living trust’s name, you will need to fill and notarize a North Carolina Deed and file it with your County Register of Deeds.
Financial Accounts – The transferring of financial accounts into the trust will have to be performed on a case-by-case basis. Inform the manager for each account of your desire to put your account into the trust’s name. In some cases, you will need to create a new account for the living trust. You will likely be required to present documentation in order to prove your trust.
Do I Need a Living Trust?
For most people who are planning the divestment of their estate in North Carolina, creating a living trust is the only option that allows for their heirs to avoid probate. Only inheritors of small estates valued at $20,000 or less ($30,000 or less if the decedent’s spouse is the sole heir) can use a Small Estate Affidavit to bypass probate and transfer ownership of the decedent’s property into their name. If your estate is very large and/or involves multiple properties and investments, creating a living trust will ensure that your estate is properly divested. Creating and maintaining a living trust can be costly, so it is pertinent to consult with a legal/financial professional to determine whether a Living Trust or a Last Will and Testament will be the best option for you.