Estates and Trusts

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.

Living trusts are a type of trust that holds your estate and its assets while still allowing you to maintain control and authority over your finances and estate while you are alive. Upon passing, the living trust will help your loved ones avoid the costs, delays, and headaches that come with probate. This is not like wills, which often have to be probated before their terms can be carried out. As such, living trusts are a powerful estate planning tool because they can provide flexibility and privacy when making estate decisions. 

If you have a will and you are considering a living trust, no problem! If you also would like to have both a will and a living trust, you may also do so with the help of an attorney. 

In North Carolina, the Raleigh estate planning and trusts attorneys at Wilson Ratledge can help. You can choose to have a living trust created automatically when you create your will or you can create a living trust after the fact.

How a Living Trust Works in North Carolina

The basic idea behind a living trust is that you create a legal document that sets up a special kind of estate plan. In North Carolina, living trusts are only valid if they are created in accordance with state law. As such, there are, however, a few important things to keep in mind if you want to create or use a living trust in North Carolina. Here’s how a living trust works in North Carolina: 

1. Determine what assets you want to protect: First and foremost, you want to make sure that the assets you wish to protect are specifically listed in your living trust. This will help avoid any potential future issues since those assets will automatically go through your living trust instead of through the courts. 

2. Decide who will be your successor trustee: The successor trustee for a living trust is typically the person who has the legal authority to manage the trust assets and make decisions on behalf of beneficiaries after the living trust creator dies or becomes incapacitated. To choose the right trustee, you’ll need to consider a variety of factors, including the person’s experience and qualifications. It’s important to select someone you trust and feel comfortable working with. You may want to choose someone who is well-educated and on the same page as you.

3. Create your trust deed: A trust deed is a document that sets forth the terms and conditions under which property will be transferred or managed during the lifetime of the trust. It should be created as soon as possible after creating the trust, as it will need to be updated as the trust changes over time. The trust deed should include information such as who will have the authority to make decisions on behalf of the trust, the property that will be managed by the trust, and when and how distributions will be made. 

Additional Tips for Creating a Living Trust in North Carolina

You should note that it is important to have an attorney draft the living trust terms and document. Signing the document in the presence of a notary public is also often recommended. For easier reference, we have outlined the key points to keep in mind when creating your living trust: 

1. Choose a skilled lawyer or law firm to help you create your living trust. 

2. Make sure all parties involved, including yourself, understand the terms of the living trust before signing it. 

3. Keep all relevant documents in a safe place. 

4. Update your living trust as needed, either through a lawyer or by revising codicils approved by both yourself and your spouse or other beneficiaries named in the trust agreement. This revision also has to be notarized.

Benefits of Living Trusts

Benefits of Living Trusts in North Carolina include: 

1. A living trust can protect your assets and provide for your family’s future. 

2. A living trust can ease the burden of estate planning since it can avoid probate. 

3. A living trust can help you keep control of your finances and estate planning decisions. 

4. A living trust is an easy way to create a special legacy for yourself or your loved ones. 

Is a Living Trust Right for You?

Given its many benefits, and given that a living trust can be created by virtually anyone, regardless of their occupation or amount of wealth, a living trust is most likely right for you. They are simple to create and can be amended as needed. 

If you are considering creating or revising a living trust, it is important to speak with a North Carolina estate planning attorney at Wilson Ratledge. We can provide you with advice on how best to use this powerful legal tool.

Tax-free savings accounts (TFSAs) and trusts are two popular options for saving money and reducing taxes. They are also useful in estate planning. This article will compare and contrast the two options, with a focus on how they work in North Carolina.

Tax-Free Savings Accounts (TFSAs) Basics

A TFSA is a type of account where people can save money and not have to worry about paying taxes on the interest that they earn. This is different from other types of savings accounts, where people have to pay taxes on the interest that they earn. This can be a great option for people who are looking to save money since they will not have to worry about giving a lot of that money to the government.

Trusts Basics 

A trust is a legal arrangement in which one person (the trustee) holds property for the benefit of another person or people (the beneficiaries). The trustee has a legal duty to manage the property in the best interests of the beneficiaries. The trust can be revocable or irrevocable, depending on the trust creator’s (the settlor’s) intent. A trust is a valuable estate planning tool because it can provide tax benefits and can also protect assets from creditors.

Differences Between TFSAs and Trusts

There are a few key differences between tax-free savings accounts (TFSAs) and trusts. The first is that TFSAs are much simpler to set up and manage than trusts. With a TFSA, you simply open an account and deposit money. There is no need to create a trust document, appoint trustees, or deal with a lot of complex legal issues.

Another difference is that TFSAs offer more flexibility than trusts. For example, you can withdraw money from most TFSAs at just about any time, for any reason. Trusts are much more restrictive in this regard; you can only withdraw money from a trust if it is for a specific purpose and there are often penalties for withdrawing money prematurely.

While trusts are often seen as a more complex option than TFSAs, they can be extremely beneficial in certain cases. For example, trusts can be used to reduce or even eliminate estate taxes, which can save your loved ones a lot of money. They can also be used to protect your assets from creditors and lawsuits. TFSAs mostly hold money, but trusts can hold assets, stocks, bonds, and even bank accounts.

The Benefits of Tax-Free Savings Accounts

1. Contributions are tax-free: You don’t have to pay taxes on the money you contribute to your TFSA.

2. Investment income is tax-free: The income you earn from investments in your TFSA is often tax-free.

3. Withdrawals are tax-free: You don’t have to pay any taxes on the money you withdraw from your TFSA.

4. There’s no age limit: You can continue contributing to your TFSA even after you reach retirement age.

5. TFSAs are flexible: You can use the money in your TFSA to save for any purpose, including education, a downpayment on the house, or to pay for your children’s education. You can also use the money in your TFSA to borrow money in some circumstances.

The Benefits of Trusts

1. Tax benefits: Trusts are a way to reduce or even eliminate estate taxes. For example, a discretionary trust may allow the settlor to reduce their taxable income by making distributions to the trust, and a fixed trust may provide a deduction for any interest paid on loans used to fund the trust.

2. Protection: Trusts can protect your assets from creditors and lawsuits. By placing your assets into a trust, you can ensure that they are not available to be seized by a creditor in the event of a lawsuit.

3. Probate avoidance: Probate is the process of distributing a person’s assets after they die. If a person has a trust, their assets will be distributed according to the trust’s terms rather than through probate. This can save time and money.

4. Family governance: Family governance is a system by which you can manage your family’s finances. One way to do this is by setting up a trust. A trust can help you keep your finances organized and make sure that your money is distributed in the way that you want it to be.

5. Incapacity planning: Incapacity planning is the process of creating a trust to help manage your affairs if you become incapacitated. This can be a helpful way to ensure that your finances and healthcare decisions are taken care of if you are unable to do so yourself. A trust can also provide peace of mind in knowing that your affairs are taken care of if something happens to you.

Consult With an Experienced Asset Protection Attorney

In conclusion, tax-free savings accounts and trusts are both great options for saving money and reducing your tax liability. However, there are some key differences between the two that you should consider before making a decision. If you are looking for a short-term option, a tax-free savings account is probably the better choice. But if you are looking for a long-term option, a trust is probably the better choice.

If you are interested in either option, you may talk to a Raleigh asset protection attorney at Wilson Ratledge so that we may both consider the better option for your particular needs. Once we have done that, we can then set up your preferred choice and ensure that you and your loved ones are well covered.