Four Kinds Of Trusts In North Carolina July 25, 2017 | ryan When a person dies, some level of court intervention is almost inevitable, even if the testator (person who died) had a will. So, in many estate plans, the objective is not to avoid probate court altogether, but to limit the amount of property that enters probate. This approach essentially eliminates the possibility of protracted probate court litigation. Generally speaking, trusts are either testamentary (taking effect when the testator dies) or inter vivos (living trusts). To be legally enforceable, all trusts must have a corpus (money or other property), a beneficiary, and a trustee; the settlor (person who creates the trust) and trustee can be the same person. Revocable Living Trusts Because they avoid probate taxes and give the settlors almost complete control over the corpus, RLTs are some of the most popular trusts in North Carolina. The “revocable” moniker means that the settlor can not only set up or eliminate the trust at will, but also add to, or remove from, the corpus during his or her lifetime, again almost at will. When the settlor dies, the remaining balance in the corpus transfers to the beneficiary or beneficiaries, who can be either natural people or legal people, like churches or schools. The primary tradeoff for all this flexibility is that, in most cases, the tax advantages of an RLT are not as strong as the advantages in a testamentary trust. Therefore, it is important to stay abreast of tax law changes in order to maximize the beneficiary’s return. Minor Support Trust Unlike RLTs, MSTs are almost always testamentary trusts. Commonly, the document names the beneficiary not as an individual but rather “any of my natural children who are alive and under 18 at the time of my death,” or something similar. MSTs usually contain two main clauses: A support provision that allows the trustee to withdraw money or other property from the corpus to support the minor child, and An inheritance provision that allows the beneficiary to inherit the entire corpus without restrictions. The trigger could be almost any life milestone, such as age 18 or graduation from college. A trustee has a fiduciary duty to the beneficiary, so there are stiff legal penalties if the trustee uses the money in the corpus to the detriment of the beneficiary. Special Needs Trusts Almost all families include at least one individual who, for whatever reason, may never be entirely capable of self-support. The disability could be physical or nonphysical, and it could be partial or total. There are sometimes legal issues involved, because if the disabled person receives government benefits, these benefits might end if the individual inherits money through a will. An SNT ends that possibility, since the money or other property in the trust does not go through probate, but instead passes directly to the beneficiary upon the settlor’s death. Partner With Experienced Attorneys Property owners have several legal options in terms of bypassing probate. For a confidential consultation with an experienced estate planning lawyer in High Point, contact McAllister, Aldridge & Kreinbrink PLLC. After hours appointments are available, (336) 882-4300.