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Home » Estate Planning » Charlotte Living Trust Lawyer Explains the Basics

Charlotte Living Trust Lawyer Explains the Basics

October 27, 2017 by John Potter

Charlotte living trust lawyers If you’ve just started looking into estate planning and have been doing your own research to learn a little more about the different tools and strategies used to create an effective estate plan, you may have run across an unfamiliar term: the inter vivos trust or living trust. You may have read a little about revocable and irrevocable trusts and wondered how a living trust is different. Let our Charlotte living trust lawyer explain the basics.

What does the term “living trust” mean?

Living trusts are also called “inter vivos” trusts — the Latin term inter vivos translates to “between the living” – and is used to describe any trust created during your lifetime. In that respect, it differs from a testamentary trust, which only becomes effective when you die.  When you create an inter vivos trust, you ordinarily transfer assets to the trust while you are still alive. A living trust can be either revocable or irrevocable — it just has to be established and active while the grantor (the one creating it) is alive.

The revocable living trust

A revocable inter vivos trust is a powerful legal agreement that can be used for a variety of purposes. The trustor (or grantor) who transfers his assets into the trust  usually names himself as the trustee and keeps control over the assets while he is alive. Normally, the trustor writes the terms of the trust so the assets are used for his benefit until he dies; at that point, a successor trustee named by the trustor takes over and the assets are distributed for the benefit of the beneficiaries named by the trustor.  If you have questions about how a revocable living trust works, ask our Charlotte living trust lawyer.

Benefits of revocable living trusts

There are  some special advantages that attach to revocable trusts. They don’t require the trustor to give up control over his assets since he can be both trustee and beneficiary during his lifetime. Plus, the trustor can revoke the trust and take ownership of the assets back at any time if necessary.

Revocable trusts provide a useful way to transfer assets to heirs when you die since the terms of the trust will determine which beneficiaries receive which parts of the estate without the need for court involvement.

Revocable trusts can also provide for the needs of minor children, heirs with special needs, and other heirs who might need special distributions schedules or conditions placed upon when and how they receive their inheritance. The trust offers a great deal more flexibility than a simple Last Will and Testament and can enable you to address a wider variety of estate planning challenges.

The irrevocable living trust

If you need protection against estate taxes or better asset protection, the irrevocable trust may be a better option.  These irrevocable trusts cannot be revoked or changed once they are created, but significant benefits come with this inflexibility.  For example, an irrevocable trust can help avoid estate tax liability by placing certain assets outside of your estate. Since those assets are no longer owned or controlled by you, they are not counted when the IRS calculates your estate’s value for tax purposes.

Other benefits of an irrevocable living trust

The irrevocable trust can also protect assets from being counted by Medicaid when you’re trying to qualify for nursing home benefits. Of course, to make the most effective use of any trust for Medicaid planning, it is best to begin your planning early because Medicaid counts assets transferred to the trust within five years before applying for Medicaid (the “lookback period”).  If you have more questions, let our Charlotte living trust lawyer help.

Special living trusts

Living trusts can be used to accomplish a variety of specific goals. Charitable trusts can be set up to provide funds to a charity for a set period of time, with whatever is left over at the end of that time going to your heirs. You can even set up a trust that provides income to you until you die and then delivers the remaining assets to your favorite charity. These trusts are valuable for both you and the charities since it enables you can support those causes over many years, keep some benefit for you or the family, and still receive tax deductions.

A spendthrift trust can be a useful way to ensure that your wasteful heirs don’t frivolously spend their inheritances. These trusts can provide measured distributions over time or simply protect the inheritance from the heir’s creditors by giving your trustee discretion over distributions. Living trusts can also serve as a substitute for a guardianship of the estate or conservatorship if you are incapacitated. This can protect your entire estate from being tied up in a court proceeding for an extended period. You can also create trusts to care for pets or manage other planning needs that are difficult to address through traditional wills and powers of attorney.

Join us for a FREE seminar today!  If you have questions regarding living trusts or any other estate planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC, or Huntersville, NC) or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or at (859) 372-6655 (Florence, KY).

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John Potter
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Filed Under: Estate Planning

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