What Exactly Is a Revocable Living Trust?
If you’ve ever interacted with our judicial system, you know it leaves a lot to be desired. It’s no different for probate and estate administration. Administering an estate under a will in North Carolina can easily extend past a year before the executor is able to close things up.
Enter the Living Trust
At its simplest, a revocable living trust is a legal document you create during your lifetime that holds your assets. Unlike a will—which only takes effect after you’re gone—a living trust works immediately. It’s like appointing yourself as the CEO (“trustee”) of your estate, ensuring your affairs are in order long before anyone else gets a say.
A living trust lets you bypass the probate quagmire, offering several benefits:
Avoiding Probate: Probate isn’t just a procedural formality. Depending on your situation, it can be long and costly. With a living trust, your assets can transfer to your heirs without the state’s intervention.
Privacy Matters: This year, North Carolina’s court system will fully transition to digital case files. That includes the probate system and wills are no exception. While you’ve always been able to obtain a copy of someone’s will after their death, it at least required a physical trip to the courthouse. With “eCourts”, your will and an inventory of your assets will be available to anyone with a smartphone. In contrast, a living trust remains confidential, keeping your assets and finances confidential.
Incapacity Planning: Should you become unable to manage your affairs, a living trust can provide a seamless transition of power, ensuring someone you trust is already at the helm.
Small Business Considerations: For small business owners, a revocable living trust can help ensure your business operations continue smoothly, keeping your enterprise out of probate delays and protecting the goodwill you’ve worked so hard to build.
A Practical, Not Perfect, Tool
Before you start imagining that a living trust will solve every estate planning headache, let’s keep our expectations in check. They aren’t the financial equivalent of a Swiss bank account. For instance, a basic revocable living trust won’t eliminate taxes or magically make your investments grow overnight. And while it offers a streamlined approach to asset transfer, the initial setup does require extra effort than a simple will. And for some families, that extra work might just be overkill depending on their assets.
Final Thought
A revocable living trust offers a practical way to keep your estate planning straightforward and efficient. By sidestepping the often-burdensome probate process and maintaining a level of privacy and flexibility, it serves as a reliable tool for North Carolina families—and small business owners—looking to take control of their financial future.