Estates and Trusts

Want to protect your firearms and pass them down to future generations? A gun trust in North Carolina may be the solution. In our latest article, the North Carolina estate planning attorneys at Wilson Ratledge will explain what a gun trust is and how to set one up.

What is a Gun Trust?

A gun trust, also known as a firearms trust, is a legal entity that you create to hold and manage firearms. The trust is controlled by a trustee, who is responsible for managing the firearms and ensuring that they are used in compliance with state and federal laws. Beneficiaries of the trust, known as trust beneficiaries, are individuals who are allowed to access and use the firearms.

Benefits of a Gun Trust in North Carolina

There are several benefits to creating a gun trust in North Carolina. Some of the most notable include:

Allowing Multiple Individuals To Access and Use the Firearms

A gun trust allows multiple individuals, known as trust beneficiaries, to access and use the firearms. This can be especially useful for families who want to ensure that multiple members can use their guns for hunting or self-defense.

Protection from Creditors 

Assets held in a trust are generally protected from creditors. This means that if the trustee or one of the trust beneficiaries were to become the subject of a lawsuit, the firearms held in the trust would not be at risk of being seized.

Streamlining the Process for Obtaining Certain Types of Firearms

In North Carolina, certain types of firearms, such as those subject to the National Firearms Act (NFA), require a special process for acquisition and ownership. A gun trust can streamline this process and make obtaining these types of firearms easier.

Avoiding Probate

When a person passes away, their assets go through probate. Probate can be a lengthy and expensive process, and it can also make the assets public record. A gun trust can help to avoid probate and keep the assets private.

Avoiding the Need for a Will

A North Carolina gun trust can be used to transfer firearms to beneficiaries upon the death of the trustee, avoiding the need for a will.

How to Set Up a Gun Trust in North Carolina

Setting up a gun trust in North Carolina is a relatively simple process. It involves the following steps:

Choose a Trustee 

The trustee is the individual who will be responsible for managing the firearms and ensuring that they are used in compliance with state and federal laws. It is essential to choose a trustee that you trust and who has a good understanding of firearms and the laws surrounding them.

Choose Trust Beneficiaries 

Trust beneficiaries are the individuals who will be allowed to access and use the firearms. It is crucial to consider the age and experience level of the beneficiaries to avoid any potential legal issues that may arise from firearm misuse.

Have an Attorney Draft the Trust Agreement

The trust agreement is the document that sets out the terms and conditions of the trust. It should include information such as the trustee’s responsibilities, the trust beneficiaries, and the firearms to be held in the trust. The trust agreement should also include instructions for what should happen to the firearms in the event of the trustee’s death or incapacity.

Fund the Trust 

The trust must be funded with the firearms that will be held in the trust. This can be done by transferring ownership of the firearms to the trust or by purchasing firearms using trust funds.

Register the Trust 

In North Carolina, a gun trust must be registered with the state before acquiring any firearms subject to the National Firearms Act (NFA). The registration process will include submitting a copy of the trust agreement and a list of the firearms to be held in the trust.

Review and Update 

It is important to review and update the trust agreement regularly to ensure that it continues to meet the needs of the trustee and beneficiaries and complies with any changes in the law.

Contact Our Law Firm for Assistance

Gun trusts can be useful for managing firearms in North Carolina, but they are subject to an extremely intricate and complex web of state and federal laws. If you’re interested in setting up a gun trust, it’s important to work with one of our North Carolina trust attorneys at Wilson Ratledge. Our attorneys specialize in North Carolina firearms law, and we can help you set one up that meets your needs. 

A spendthrift trust is created by an individual (the settlor) for the benefit of another individual (the beneficiary). It is commonly used to protect the assets for the benefit of an individual who may not be financially savvy or who may be at risk of incurring significant debts. 

The North Carolina estate planning attorneys at Wilson Ratledge explain the main reasons why people consider setting up a spendthrift trust which are as follows:

1. Protection of Assets from Creditors

One of the primary advantages of a spendthrift trust is that it provides protection for the trust’s assets from the beneficiary’s creditors. This means that the assets of the trust are not subject to seizure by the beneficiary’s creditors to satisfy outstanding debts. This can be an important consideration for individuals at risk of incurring significant debts, such as those with a history of financial irresponsibility or those at risk of legal liability.

2. Professional Asset Management

Another advantage of a spendthrift trust is that it allows for professional asset management. The trustee, who is typically a financial institution or an individual with expertise in financial management, is responsible for managing the assets of the trust in a way that is consistent with the terms of the trust agreement. Even with smaller trusts for which an institutional trustee may not be cost effective, the trustee can engage the services of a financial advisor for this purpose.  This can provide peace of mind for the settlor, knowing that the trust assets are being managed by a professional acting in the beneficiary’s best interests.

3. Flexibility

Spendthrift trusts can also be tailored to meet the specific needs and goals of the settlor and beneficiary. The terms of the trust agreement can specify how the assets of the trust are to be used, such as to provide for the basic needs of the beneficiary or to support a particular hobby or interest. This flexibility allows the settlor to customize the trust to meet their specific goals and objectives.

4. Avoidance of Probate

In North Carolina, assets held in a trust are not subject to the probate process. This means that upon the settlor’s death, the assets of the trust will continue to held for the benefit of the beneficiary, and if appropriate at some later time, transferred to the beneficiary without the need for court involvement. This can be a significant advantage for individuals who wish to avoid the time and expense of probate.

Setting Up a Spendthrift Trust in North Carolina

Step 1: Choose a Trustee

The first step in setting up a spendthrift trust in North Carolina is to choose a trustee. The trustee can be an individual or a financial institution. The settlor should choose a trustee that they trust to manage the assets of the trust and make decisions in the best interests of the beneficiary.

Step 2: Determine the Purpose of the Trust

The settlor should also determine the purpose of the trust. This can include providing for the beneficiary’s basic needs, such as food, shelter, and medical care, or it can be more specific, such as providing for education or supporting a particular hobby or interest.

Step 3: Gather the Necessary Documentation

To set up a spendthrift trust in North Carolina, the settlor will need to work with an attorney to create the following documentation:

a. A written trust agreement: This document outlines the terms of the trust, including the purpose of the trust, the powers and duties of the trustee, and the rights of the beneficiary.

b. A list of the assets to be placed in the trust: This can include cash, stocks, real estate, or other assets.

c. A certificate of trust: This is a summary of the trust agreement that can be used to provide evidence of the existence of the trust to third parties.

Step 4: Fund the Trust

Once the trust agreement and other necessary documentation have been gathered, the settlor will need to transfer the assets to be placed in the trust to the trustee. This is known as “funding” the trust. The assets should be transferred to the trustee in a manner that is consistent with the terms of the trust agreement.

Step 5: Review and Update the Trust

After the trust has been set up and funded, it is essential to periodically review and update the trust to ensure that it continues to meet the needs of the settlor and the beneficiary. This may involve making changes to the trust agreement, adding or removing assets from the trust, or appointing a new trustee. 

Wilson Ratledge, PLLC

Working with an estate planning lawyer in North Carolina is advisable if you need to set up a spendthrift trust in the Tarheel State. We can also help you review and update the trust as per your wishes to ensure that it remains effective and in compliance with all your future aspirations.

In today’s world, it is essential to have a customized estate plan set up to protect your assets. The use of various trusts can accomplish this. There are different types of trusts, each with unique benefits. By understanding the different types of trusts, you can choose the best one for your needs. 

The Raleigh trust attorneys at Wilson Ratledge explain more on this topic.

What Are Trusts?

Generally speaking, a trust is a legal instrument in which one person (the trustor) gives another person or party (the trustee) the legal title to the property for the benefit of another person or people (the beneficiaries). A trust can be created for various purposes, including estate planning and philanthropy. There are three main types of trusts: revocable trusts, irrevocable trusts, and testamentary trusts. 

When creating a trust, individuals should consider the following factors: 

a. Beneficiary: The beneficiary of a trust is the person or organization that will receive the benefits of the estate. The beneficiary may be someone you know well, a loved one, or an organization you’d like to support.

b. The trustee: The trustee is responsible for administering the trust and distributing its assets according to its terms. The trustee must be someone you can trust to act in your best interests.

c. Purpose of the trust: A trust can have many purposes, including estate planning, charitable giving, and property protection from probate costs.

There are several benefits to using trusts as an estate planning tool. One advantage is that trusts are often easy to create. They are also flexible. This means they can be tailored to meet your specific needs without going through lengthy legal procedures.

In addition, trusts are most notable for their ability to help your loved ones avoid probate and they also have the potential for tax advantages. 

How Trusts Work To Help Your Loved Ones Avoid Probate

When a loved one dies, it can be an extremely difficult time. In North Carolina, however, when a person dies without a solid form of estate planning, their loved ones have to go through probate. 

So, what is probate? 

Probate is the legal process of transferring property and assets from a deceased person’s estate to their beneficiaries. This can be a long and complicated process and can be expensive. But a trust can help avoid probate altogether. 

Remember, a trust is a legal document that allows one or more people (the trustees) to manage someone’s estate for them. As the deceased’s assets are now the trust’s property, the assets in the trust can be transferred directly to the beneficiaries instead of going through probate. 

Types of Trusts in North Carolina

a. Revocable trusts: Revocable trusts are designed to provide estate planning benefits for individuals who may want to alter their trusts at some point in the future. Revocable trusts can also be terminated by the trustee, typically in cases of a change in circumstances. This trust is generally used by people who want to control their estate but do not want their families to have to deal with probate or other estate-related tasks after their passing.

b. Irrevocable trusts: The terms of an irrevocable trust, as the name implies, cannot be changed once created. However, an irrevocable trust is a type of legal estate planning tool that can provide significant benefits for the creator and beneficiaries. Irrevocable trusts are typically created for individuals who want to protect their assets and avoid probate. They can be a great option for people who want to create a lasting legacy. Irrevocable trusts can provide tax advantages, such as exemption from capital gains taxes and inheritance taxes, and they can provide security for the trust assets.

c. Testamentary trusts: A testamentary trust enables you to transfer all or a portion of your assets upon your death so that they can be managed in line with your desires. Unlike the trusts above, this type of trust does not begin to “function” until after the trustor’s passing.

Need To Set Up a Trust?

In conclusion, trusts are a vehicle for preserving and protecting your assets. By understanding how trusts work and what kind of protection they provide, you can make informed decisions about the best way to safeguard your assets. If you have any questions about trusts or need help setting one up, please don’t hesitate to contact a North Carolina estate planning and trust attorney at the Wilson Ratledge Law Firm. Our North Carolina trust specialists are very knowledgeable and would be happy to help you.

Blended families are families that have children from two or more different relationships. This type of family can be found in all types of households, from single-parent homes to those where either a mom or a dad has decided to remarry. Blended families come in a variety of shapes and sizes, and they can provide all the family members with a wealth of experience and opportunities.

To avoid any disputes, blended family estate planning is a growing trend in North Carolina. This type of estate planning involves the creation of a will and other legal documents that will govern the distribution of property when a family member dies, whether they are members of the same genetic bloodline or not. This can be a complicated process, but it can help to ensure that everyone in the family is taken care of, regardless of their relationship with the deceased.

For assistance with estate planning in North Carolina, the Raleigh estate planning attorneys at Wilson Ratledge can help.

Estate Planning Considerations for Blended Families

As we mentioned earlier, blended family estate planning is sometimes a little tricky. For example, occasionally, one spouse may have more wealth or financial assets than the other. In addition, many people prefer to create an estate plan that:

a. protects their assets while still allowing them access to the estate plan during their lifetime

b. provides the least tax liability for them as well as for their loved ones

c. helps their loved ones avoid probate.

Apart from these, there are several important factors to consider when creating a blended family estate plan, such as

a. Who makes decisions about major assets, such as real estate and stocks? 

b. Who inherits money or property if someone dies prematurely? 

c. What happens to the youngest members of the family if they are not of age at the time of one’s passing?

d. Who takes care of the pets?

e. How will disputes between family members be resolved? 

Another common estate planning consideration for blended families includes making provisions for guardianship or conservatorship should one spouse become incapacitated.

As such, blended family planning needs to be properly thought out as it often has to include using a combination of wills, trusts, and other legal documents to divide property and assets between spouses, children, and grandchildren in a way that suits the needs of all involved.

Tips for Creating a Blended Family Estate Plan

As the number of blended families continues to grow, so do estate planning considerations for these families. Here are some tips to help you create a plan that will work best for you and your loved ones.

1. Create a written estate plan with your attorney. This will include details about who will inherit what property, assets, and debts, as well as any special instructions about how money should be distributed if you die suddenly or due to old age.

2. Don’t be vague. Establish clear boundaries in your estate planning documents about who will have authority over different aspects of the estate. This will help avoid any conflict or confusion over who is responsible for what during difficult times. 

3. Make sure all of your legal documents (such as wills, trusts, and powers of attorney) are updated and in order. These documents can provide guidance on who will inherit what property if you die. It should specify how your property should be divided.

4. You may consider discussing estate planning with your spouse or significant other so that everyone is aware of your wishes for the future.

5. If you have young kids that you would like to include in your estate plan, create a timeline for major decisions, including who will inherit what and when payments should be made. This will help make sure everything happens as you wish and without drama. 

6. Consider making provisions for conservatorship and guardianship in the event that you become mentally or physically incapable of making decisions.

7. Be sure to include your pets in your estate plan so that they may be taken care of properly after you are gone.

Speak to a Skilled Estate Planning Attorney

In conclusion, a blended family estate planning strategy is a great way to make sure that everyone in your family is taken care of financially. By working together with a qualified estate planning attorney, you can create a plan that meets your unique needs and ensures that everyone in your family is comfortable and secure.

If you are a member of a blended family and you want to create an estate plan, contact a North Carolina estate planning lawyer at Wilson Ratledge Law Firm. We can help you create a plan that is tailored specifically to your unique situation. We will work with you to create a plan that meets your needs and protects your loved ones.

In recent years, a growing list of entrepreneurs and business owners have been using their resources to effect social change through causes they support. Big names in business, such as Yvon Chouinard of Patagonia, Barre Seid of Tripp Lite, and others have successfully utilized succession planning to achieve their goals, and it’s something you can do as well with the right planning partner.

The Patagonia Route

Chouinard’s route, even in the light of many ultra-wealthy entrepreneurs subscribing to Buffett/Gates’ Giving Pledge (which you’ve likely heard of), is unique. The founder, his wife, and their two children irrevocably transferred company ownership into two different entities.

The voting stock was assigned to a purpose trust, reportedly incurring over $17 million in gift taxes. All of the nonvoting stock, representing 98% of the company value, was transferred to a nonprofit organization, Holdfast Collective. The nonprofit is funded by an annual dividend paid from the company earnings after reinvestment, which is estimated to be over $100 million. As a nonprofit organized under Section 501(c)(4), the entity must support the common good, civic betterment, and general welfare of communities.

Their goal in transferring the company in this manner was to both protect Patagonia’s employees and also make sure ownership would uphold company values moving forward.

Purpose Trusts And Their Usefulness In Succession Planning

Purpose Trusts are non-charitable trusts with no beneficiaries – they are designed to benefit a specific purpose, as opposed to most revocable trusts, where they are structured to benefit a person or group of people. As defined in Section 409 of the Uniform Trust Code, the trust’s purpose is selected by the trustee, and can have a term of up to 21 years.

Patagonia’s structure, the Patagonia Purpose Trust, now owns 100% of the company’s voting stock (which makes up only 2% of the company value). In this case, the gift of voting stock from the Chouinard family to the trust was taxable, but the tax only applied to this small percentage of the total company value.

Structuring the company transfer this way allowed the family to maintain control of the company by selecting individuals or committees to manage the company. Alternatively, they can elect to have existing managers run the company with trustee approval.

Purpose trusts can be an effective way to provide benefits to a family over generations while avoiding unnecessary taxes, control disputes, or many other obstacles for a business facing a succession planning situation.

In Patagonia’s situation, the family saved an estimated $700 million in taxes from 50 years of appreciation in the company. Thanks to the Protecting Americans From Tax Hikes Act of 2015, the transfer of nonvoting stock to the Holdfast Collective is also exempt from federal gift tax.

An Experienced Team Of Advisors Is Critical

While not every business owner is interested in giving away their company, the magic of succession planning is the ability to customize solutions. Every business owner has the power to design a plan for the future of their company, no matter the size or annual revenue.

If you are exploring succession planning options for your organization, having the right team of experts on your side is critical. Your attorneys, financial advisors, accountants and family are all important pieces of crafting a strategy that fits your business, estate planning, charitable and/or social goals.

The team at Wilson Ratledge has decades of experience helping business owners and entrepreneurs structure their succession plans to protect their legacy and dreams. Contact our team today to schedule a consultation.

Probate is the process of transferring ownership of property, including assets such as cash, real estate, and investments, after someone’s death. The beneficiaries are often family members of the deceased. In North Carolina, probate is handled by the court system. 

North Carolina has a probate system similar to the probate systems in other states; it is divided into two phases: administration and distribution. The North Carolina estate planning attorneys at Wilson Ratledge will explain these and other things you need to know about the probate process in North Carolina.

Estate Administration During Probate in North Carolina

When a person passes away, their assets and liabilities become the responsibility of the court. This process is called “Estate Administration During Probate.” During estate administration, the court will settle the deceased person’s debts and make sure that their assets go to the people they were meant to go to. 

The process of estate administration can be complex, but it must be done correctly to protect the interests of those who are entitled to inherit. There are many steps involved in estate administration, and each one must be completed for everything to go smoothly. 

The steps involved in estate administration during probate can vary depending on the type of estate being handled, but typically they include the following: 

1. Checking to see if there is a valid will in place. If there is, it will dictate the steps that will be taken after the decedent’s death to settle their affairs. 

2. Appointing of a personal representative who will help with the identification of heirs and determination of their claims to the property. If there is a personal representative mentioned in the will, the court will most often ask them to go ahead with these duties.

3. Appraisal of assets and preparation of an inventory list. These are important as all debt needs to be settled before the rest of the estate is distributed.

Estate Distribution in North Carolina

After the estate administration process, if there is a valid will, and all debts have been settled, the estate will be distributed in accordance with the terms of the will. However, if the decedent has no will, the distribution of an estate in North Carolina will be governed by the state’s intestacy laws. These laws determine who inherits what property from a deceased person’s estate. In most cases, an individual’s closest living relatives will inherit the majority of the estate.

However, there are a few exceptions to this rule. For example, if a person leaves no surviving spouse or children, the estate will be divided equally between their parents and siblings. If there are no parents or siblings, the estate may be passed on to distant relatives. Additionally, if a person has left no descendants at all, the entire estate will go to the state. 

Are All North Carolina Wills Required To Go Through the Probate Process?

In North Carolina, all wills must go through the probate process to be effective. This means that the will must be filed with the appropriate court. Once filed, that court will oversee the management of the estate to ensure that it is distributed as instructed by the will. 

There are certain exceptions to the probate rule (we will discuss this in the next subheading), but for the most part, all wills in North Carolina must go through the probate process.

If there are any questions about how a will is going to be executed, it is important to get help from a lawyer. Going through the probate process can be complex and can take a long time, so it is important to have someone who understands what they are doing on your side.

How To Help Your Loved Ones Avoid Probate

If you would like your loved ones to skip probate, there are ways you can help them avoid it. To get started with this, you need to speak with a lawyer. 

Depending on the specifics, the attorney may recommend a living trust, a special needs trust, payable on death accounts, etc., to help your loved ones avoid the probate process altogether. 

Speak to an Attorney

Estate planning and probate can be a daunting task, but the Raleigh estate planning attorneys at Wilson Ratledge can help make the process easier. Our attorneys are experienced in these areas and are happy to speak with you about your specific needs. 

We can help you create a plan for your estate that takes into account your wishes and the needs of those you want to leave behind. If you are a family member of a decedent, you can also reach out to us if you want to make sure you have all of their documentation in order.

We are experts, and we will be happy to speak with you about your specific situation. Simply call 919-391-4210 to get started.