Wills and trusts are two of the most fundamental instruments used in putting together an estate plan. Unfortunately, not everyone appreciates the need to have these documents in place before they pass away. Dying without a last will and testament can cause unnecessary financial hardships for your survivors. Meanwhile trusts – which are not just for the wealthy – can be used to provide for your loved ones after you pass.
Building the right estate plan for you and your family starts with hiring an experienced law firm that understands your needs. Patrick, Harper & Dixon, LLP is here to serve you.
Benefits of Wills and Trusts
Dying without a will is known as dying intestate. When this happens, your estate must be probated. An administrator is appointed whose job it is to distribute your property according to North Carolina intestacy laws. Your estate will pass to heirs under certain rules of intestate succession. Put another way, the state decides who gets your assets, and in a way you may not have approved.
Having a will, also called a last will and testament, helps avoid this. The advantages of having a valid will in place are that you can:
- Decide which of your relatives, or other individuals, will inherit your property
- Appoint an executor who will ensure your estate’s final debts are paid
- Define and limit the powers and duties of the executor
- Leave assets to a charitable organization of your choice
- Name a guardian to care for your child if you suddenly die
- Dictate your funeral and burial instructions
- Save your family stress and headaches by, for example, settling the question of who inherits what and expediting the probate process
Valid Wills and Trusts
In North Carolina, a person who wants to make a will must be at least 18 years old and of sound mind. Although a handwritten (holographic) or even an oral (nuncupative) will can be valid, it is strongly advised that the will be typed and signed by two witnesses who observed the testator (person who makes a will) sign it.
At the same time the will is signed, the testator and witnesses can execute a notarized affidavit. This affidavit can affirm that the testator signed the will in the presence of the two witnesses. Doing this makes the will self-proving and, at probate, avoids the extra step of having to determine the validity of the signatures.
What Is A Living Will?
Although it has a similar name to the last will and testament, a living will is something much different. This instrument, also known as an Advance Directive for a Natural Death, is used to dictate the treatment you wish to receive when you are in a life-ending medical condition. For example, it dictates the circumstances in which your doctors should withhold life-prolonging medical care. Not only does this document make clear what measures you want physicians to use, it removes the burden of deciding such matters from your family. It is an important part of comprehensive estate planning and something you should discuss with your attorney.
What Are The Benefits Of Having A Trust?
Trusts grant even more estate planning options for families in which a last will and testament may not be sufficient. With a trust, an individual (known as a settlor) grants authority to another individual (known as a trustee) to hold and use certain property and assets for the benefit of another party (the beneficiary).
There are generally two types of trusts:
- Revocable. This type can be modified after it is established. For example, the settlor can change beneficiaries or the terms of the trust itself.
- Irrevocable. As the name suggests, this type of trust cannot be altered once it is set up. The trustee’s authority over the trust property cannot be changed because the terms can’t be changed.
There are advantages and disadvantages to both types of trusts in regards to taxes, flexibility, and protection of property from creditors. Trusts may also be used to accomplish specific purposes. For instance, charitable trusts can benefit a particular charitable organization. An attorney can discuss your estate planning goals and what type of trust will best fit your situation.
Generally, trusts offer the following benefits:
- Limiting distributions. Instead of granting your children one large inheritance at once, you can structure the distribution of this money over time. As an example, a child would get a certain percentage distribution upon graduating high school, and another distribution upon graduating college.
- Tax advantages. A properly structured trust can minimize taxes and may be advisable for certain high-net-worth individuals. But it should be noted that trusts are not just for the wealthy, and there are numerous tax advantages worth discussing with a lawyer.
- Avoiding probate. Probate is a time-consuming and often expensive court process used to settle an estate upon an individual’s passing. A trust can bypass the hassle and cost of probate.
- Privacy. Probate opens a person’s estate to the public because the court filings are a matter of public record. Not everyone wants the public to know the assets held in an estate, however. By avoiding probate, a trust maintains the family’s privacy.
What Is Required To Make A Valid Trust?
North Carolina statutes set forth some basic requirements to form a valid trust:
- The settlor must have legal capacity to convey property
- The settlor must intend to create a trust
- With some exceptions, there must be a definite and determinable beneficiary
- The named trustee must be competent and have assigned duties to perform
- The same individual cannot be the sole trustee and sole beneficiary
Contact Our Hickory Wills And Trusts Attorney
Sound estate planning includes wills and trusts, but having competent legal counsel is a must. Proper drafting ensures not only that all legal requirements are met, but that your wishes are respected. Are you ready to get started on your estate plan today? Do you have questions or concerns? Give the team at Patrick, Harper & Dixon, LLP a call.