Trusts

Trusts offer a powerful and flexible way to manage and protect your assets, both during your lifetime and after your death. While many people associate trusts with the wealthy, they can benefit families across a wide range of financial situations. The right trust strategy can help you avoid probate, especially when transferring real property, maintain privacy, protect assets, and exercise greater control over how and when your beneficiaries receive their inheritance.

At the Law Office of Michael Paul, PLLC, we work with individuals and families throughout Rolesville, Wake Forest, and the surrounding areas to determine whether a trust-based estate plan makes sense for their circumstances. We take the time to understand your goals and create trust solutions tailored to your unique needs.

Understanding How Trusts Work

A trust is a legal arrangement where one party, called the trustee, holds and manages assets for the benefit of another party, the beneficiary. You, as the person creating the trust (the grantor or settlor), transfer assets into the trust and establish rules for how those assets should be managed and distributed.

Unlike a will, which only takes effect after your death, certain types of trusts can operate during your lifetime. This allows you to see your plan in action and make adjustments as circumstances change. Trusts can hold various types of assets including real estate, bank accounts, investments, business interests, and personal property.

The trust document itself serves as a detailed instruction manual for the trustee, outlining when distributions should be made, under what conditions, and for what purposes. This level of control distinguishes trusts from simpler estate planning tools and makes them valuable for families with specific goals or concerns.

Types of Trusts We Help Create

Revocable living trusts are among the most common trust structures for estate planning. As the name suggests, you can modify or dissolve these trusts during your lifetime. You typically serve as your own trustee while you’re alive and capable, maintaining complete control over the assets. Upon your death or incapacity, a successor trustee steps in to manage the trust according to your instructions.

These trusts offer significant advantages. Assets held in a properly funded revocable living trust avoid probate, which means your beneficiaries can receive their inheritance more quickly and privately. The trust continues to operate seamlessly if you become incapacitated, without the need for court-appointed guardianship over your finances.

Irrevocable trusts, by contrast, generally cannot be changed once established. This permanence comes with benefits, particularly for asset protection and tax planning. Because you relinquish control over assets placed in an irrevocable trust, those assets may be protected from creditors and may not count toward your taxable estate.

Special needs trusts allow you to provide for a loved one with disabilities without jeopardizing their eligibility for government benefits like Medicaid or Supplemental Security Income. These trusts can pay for expenses not covered by public assistance, enhancing quality of life while preserving critical support.

Testamentary trusts are created through your will and don’t take effect until after your death. While they don’t avoid probate, they can provide ongoing management of assets for minor children or beneficiaries who need guidance with financial matters.

The Benefits of Trust-Based Estate Planning

Privacy is one of the most compelling advantages of trusts. When you die with only a will, that document becomes public record during probate. Anyone can see what you owned and who inherited it. Trusts, however, remain private. Your beneficiaries, the assets you held, and the distributions you made stay confidential.

Avoiding probate saves time and money. The probate process in North Carolina can take months or even years for complex estates. During that time, assets may be frozen, and your family faces uncertainty. A properly funded trust allows your successor trustee to begin distributing assets almost immediately, without court involvement or public proceedings.

Trusts provide exceptional control over distributions. If you’re concerned about a beneficiary’s spending habits, young age, or vulnerability to outside influences, you can structure distributions over time or tie them to specific milestones. You might direct that funds be used only for education, health care, or other specified purposes. This control extends far beyond what a simple will can accomplish.

For blended families, trusts can ensure that your current spouse is provided for during their lifetime while guaranteeing that remaining assets eventually pass to your children from a previous relationship. This balance can be difficult to achieve through a will alone.

If you own property in multiple states, a trust can help you avoid ancillary probate proceedings in each location. Real estate held in a trust can be administered through a single process, regardless of where the properties are located.

When a Trust Makes Sense

Several circumstances suggest a trust-based approach might serve you well. If you own real estate in more than one state, the probate savings alone can justify the cost of establishing a trust.

Families with minor children or young adult beneficiaries often benefit from trusts that delay full distribution until the children reach an age where they’re better prepared to manage significant assets. Rather than inheriting everything at eighteen, beneficiaries might receive distributions at twenty-five, thirty, or in stages over time.

If you have a child or family member with special needs, a properly structured trust is often essential to provide for them without affecting their public benefits. If you have concerns about a beneficiary’s financial responsibility, addiction issues, or susceptibility to outside influence, a trust allows you to protect their inheritance while still providing for their needs.

Business owners frequently use trusts as part of their succession planning. A trust can hold business interests and provide for orderly management and transition of the business after your death, avoiding disruption and potential conflicts among heirs.

Even if your estate isn’t large enough to trigger federal estate taxes, you may value the privacy, probate avoidance, and control that trusts provide. Many families with modest estates choose trust-based planning for these non-tax benefits.

Trust Administration After Your Death

Creating a trust is only part of the process. Properly funding the trust by transferring assets into it is crucial. An unfunded trust provides no benefits. We guide our clients through retitling assets, changing beneficiary designations, and ensuring the trust will function as intended.

After your death, your successor trustee assumes responsibility for administering the trust. This involves gathering trust assets, paying any outstanding debts or taxes, and making distributions to beneficiaries according to the trust terms. While this process is generally simpler and faster than probate, it still requires attention to detail and understanding of fiduciary duties.

We also assist successor trustees who need guidance administering trusts after a loved one’s death. Serving as a trustee carries significant responsibilities, and we help ensure the trust is administered properly and in accordance with the grantor’s wishes.

Trusts vs. Wills: Choosing Your Path

The choice between a will-based estate plan and a trust-based estate plan depends on your specific circumstances, goals, and concerns. Wills are simpler and less expensive to create initially. They work well for many families, particularly those with straightforward estates and no special concerns about privacy or probate.

Trusts require more time and expense to establish and must be properly funded to work effectively. However, they offer advantages that wills cannot match, including probate avoidance, privacy, and detailed control over distributions.

Many people ultimately benefit from a combination approach. A revocable living trust holds the majority of assets, while a “pour-over will” captures any assets not transferred to the trust during your lifetime and directs them into the trust after your death.

During our consultation, we’ll discuss your family situation, assets, concerns, and goals. We’ll explain the costs and benefits of each approach and help you make an informed decision about which strategy best serves your needs.

Getting Started with Trust Planning

Trust planning begins with understanding your current situation and your goals for the future. We’ll discuss your assets, your family dynamics, any special concerns you have, and what you hope to accomplish through your estate plan.

From there, we’ll recommend the trust structures that make sense for your circumstances and explain how they would work in practice. We draft trust documents tailored to your situation, using language that clearly expresses your intentions while meeting all legal requirements.

Once the trust is established, we help you with the funding process, which may include preparing new deeds for real estate, transferring accounts, and updating beneficiary designations. We also remain available as your circumstances change to discuss amendments or additions to your trust-based plan.

Moving Forward with Confidence

Trust planning doesn’t have to be intimidating. With experienced guidance, you can create a trust structure that protects your assets, provides for your loved ones, and accomplishes your goals efficiently and privately.

If you’re considering whether a trust might be right for your estate plan, we invite you to schedule a consultation. Contact the Law Office of Michael Paul, PLLC at 919-951-7955 or email michael@michaelpaullaw.com. Let’s discuss your situation and explore whether trust-based planning offers the protection and control your family needs.