How to Make a North Carolina Living Trust

Transferring assets through a living trust in North Carolina is a somewhat difficult process.

A living trust is a legal arrangement that a person makes to have all of his assets transferred to beneficiaries, maintaining control of the trust while alive. North Carolina probate law dictates how these living trusts are to be arranged. Creating a living trust takes time and careful planning, and knowing the North Carolina law can make the process go much smoother.

Instructions

1. Hire a trust lawyer. In North Carolina, just as in every other state, the most important step in planning a living trust is hiring an excellent lawyer that has a proven record. This may involve research, calling estate law firms, getting references from friends and family and consulting lawyers.

2. Evaluate the different types of living trusts. This is the the first decision that should be made with your trust lawyer. There are advantages and disadvantages to certain living trusts. A simple living trust avoids the probate court proceedings that usually accompany estate planning. However, an AB trust is another type of trust shared between a husband and wife. AB trusts reduce the overall tax burden for married couples. North Carolina is not a community property state, which means that assets are not equally divided among spouses, so AB trusts may come in handy here.

3. Record who your beneficiaries will be. This is entirely up to you, but it is best to take legal advice in choosing the beneficiaries that will best handle your assets and the liabilities that come with your estate. If you do not choose you beneficiaries well, any mishandled assets will simply be passed down according to North Carolina law (spouse, then children, then other relatives).

4. Plan how your assets will be divided. Your assets include property, earned income, investments, and other areas. There are rules concerning the division of different assets. Your lawyer will help you to understand the best way to divide assets.

5. Calculate the taxes and liabilities that will be factored into the value of the estate. Under North Carolina General Standard 37-21 (a) and (b), all taxes, lawyer's fees, interest on benefits, insurances and any other liabilities will be deducted from the estate before any assets are bequeathed to beneficiaries. The law sounds simple, but it can dramatically affect the value of the estate and must be handled carefully.

6. Draft the trust papers. Sign the papers in front of a notary public and ensure that you are named as the trustee.

7. Transfer all property named in the trust to your name, if it is a simple living trust. Any assets not directly belonging to you cannot be passed on to heirs without complication and may not be passed on at all.

References

• Nolo: Making a Living Trust In North Carolina
• North Carolina Legislature: Trusts