Creating an estate plan is one of the strongest ways to protect your family and make sure your wishes are honored after your death. Two common estate planning tools are wills and trusts. Choosing whether to establish a will vs. trust in North Carolina is an important decision, as both provide specific advantages.
Choosing between a will and trust ultimately depends on your personal financial situation, family dynamics, long-term care plans, and other long-term goals. Speaking with a North Carolina estate planning attorney can help you analyze your personal goals and explain which option fits your will or trust case.
Here’s the breakdown, or watch the full video for Tiffany’s complete explanation with all three case studies.
Understanding North Carolina’s Trust and Will Laws
North Carolina trust and will laws allow both trusts and wills to be used in an estate plan. A will is a document that allows you to:
Designate an executor of your estate
Decide how property should be distributed after your death
Nominate guardians for minor children
A trust is a legal arrangement in which an authorized person, or trustee, manages property according to the terms established by the grantor. Trusts are used to decide how property should be managed and distributed in the case of incapacity or death.
Having an estate plan, whether it is a will or a trust, is important to avoid generic asset distribution under North Carolina’s intestacy laws. Yet, only 24% of Americans have a will, and only 18% of adults 55 and older have established a will, healthcare directive or proxy, and durable power of attorney.
Main Differences Between a Trust and Will
While wills and trusts are often used to accomplish similar goals, they do have key differences. Some of the biggest differences to be aware of include:
When they take effect, a will only becomes effective after you pass away. Certain trusts become effective immediately after they are created and assets are put into them. This allows for asset protections and incapacity planning throughout your lifetime in addition to the benefits after you pass away.
Probate. Assets distributed through a will typically go through probate, while many types of trusts can avoid probate. Avoiding probate is important to many individuals, as it can keep loved ones out of a lengthy, expensive, and stressful court process.
Privacy. Probate proceedings are public, which means decisions made through a will are more visible to the public, while trusts remain more private.
Incapacity planning. A will does not help manage your finances if you become incapacitated, since they are not effective until after death. However, trusts allow a trustee to manage trust assets if you are unable to do so. This is important as you age and become more susceptible to illness or disability. In North Carolina, 9% of the population is 65 and older.
Guardianship for minor children. Trusts typically do not allow you to designate a guardian for minor children. In a will, you are able to name your preferences for who is going to care for your children.
Complexity. Wills are less complex than a trust, as they are often simpler and do not require you to retitle your assets. With a trust, you must be sure to transfer all assets into the trust, and the trust document may be more complicated to set up.
While there are broad differences between a will and a trust, it is important to note that these differences can vary depending on your specific intentions, the wording of your legal documents, and the different types of trusts. Because of this, you should hire an estate planning lawyer before making a final decision.
Why You Should Hire an Estate Planning Lawyer From Thomas & Webber
At Thomas & Webber, we understand that estate planning means so much more than simply drafting a legal document. We work to understand your unique financial circumstances, relationships, and long-term goals, so your estate plan reflects your wishes. A North Carolina estate planning attorney can explain whether a trust, will, or both provides the most significant advantages for your specific case.
FAQs
What Are the Disadvantages of a Trust?
The specific disadvantages of a trust depend on your goals and the type of trusts you are creating, but the disadvantages may include a higher upfront cost, having to retitle trusts, and a limited ability to change or revoke the trust. If you hire an estate planning lawyer, they can help you weigh the benefits and disadvantages of different types of trusts to find one that offers the advantages you are looking for.
What Is the Average Cost of a Trust in North Carolina?
There is no average cost of creating a trust in North Carolina because cost varies by trust case. The trust type, complexity of your estate, value of your assets, and lawyer you choose to work with all impact the cost. The upfront cost of a trust tends to be higher compared to a will because it requires additional planning and funding the trust. However, the long-term financial protections can make the upfront cost worth it.
What Are the Disadvantages of Choosing a Will Over a Trust?
Choosing a will over a trust may mean disadvantages such as going through probate, which involves more administrative expenses, court oversight, delays, and time. A will also cannot plan for incapacity during your lifetime, does not provide significant protections against creditor claims, and is not as private as a trust. However, a will may be a valuable part of your estate plan if you are looking to distribute assets or determine guardianship for minor children.
Can You Have Both a Trust and Will in North Carolina?
Yes, you can have both a trust and will in North Carolina. Many individuals benefit from having both documents because the two documents can serve different purposes in their estate plan. For example, you can use a trust to help manage assets during your lifetime and protect high-value assets from creditor claims, while you may use a will to name guardians for minor children and transfer any remaining assets.
Reach Out to a North Carolina Estate Planning Attorney
Planning for the future may seem stressful or scary. However, you don’t need to go through this alone. Contact Thomas & Webber to learn about your legal options when it comes to your estate plan.
Tiffany Webber is the Owner and an attorney at Thomas & Webber, serving clients from offices in Mooresville, Huntersville, and Denver, North Carolina. She focuses her practice on real estate and estate planning, bringing more than nine years of legal experience. Tiffany is admitted to the North Carolina State Bar (2016) and earned her J.D. cum laude from Charlotte School of Law, graduating in the top 10% of her class. She has been recognized as a North Carolina Lawyers Weekly Rising Star (2021) and a Super Lawyers Rising Star (2023).
