A revocable living trust is one of the essential tools used in estate planning. It lets you control and handle your property during your life and determine how it will be distributed after your death. This helps eliminate the probate process and ensures that your loved ones are protected after your passing.
The following is insight into some of the things you need to know about revocable living trusts in North Carolina and how to change them.
Revocable Living Trust vs. An Irrevocable Living Trust in North Carolina
The two major types of trusts are the revocable living trust and the irrevocable living trust. A revocable trust allows the creator, called the Grantor, to change the trust if need be.
However, an irrevocable living trust does not allow the grantor to make any alterations or modifications, with some exceptions. This means that irrevocable trusts are less flexible than living trusts, but they also have advantages.
North Carolina law allows owners or creators of the revocable trust to make changes or revoke the trust at any time. Most people make changes to their living trust when a significant change affects their life or property.
Typically, revoking the whole living trust document and creating a new one can be complex and potentially expensive event. The complexity can include creating a new trust document, funding the new trust, and then distributing the assets of the old trust. You can “restate” or amend the living trust document to avoid this. Restatement involves re-writing the original trust document, which does not require a total dissolution of the original trust document.
Below are some significant reasons for making changes or revoking a revocable trust in North Carolina.
Significant Reasons for Amending a Revocable Trust in North Carolina
Some of the main reasons for making amendments to a revocable living trust include:
- Getting Married. If you created a revocable trust while still single, you might want to include your partner in the trust document as a beneficiary or joint estate owner. With this, you will be required to amend the existing trust document.
- Having Children. In many cases, a grantor will include their children in the trust as a beneficiary of the trust. If you had created the trust before you had children, you may want to amend the trust to include children.
- Adding High-Value Property. You may be prompted to change an existing revocable trust document if you want to add a high-value item. Such property may cause conflict during property division, and it is vital to consider listing it together with the other assets.
- Death Of A Spouse. If your spouse dies and they were joint owners or beneficiaries of the trust, you might be required to change the trust document to account for these changes.
- Death Of Another Major Beneficiary: If an heir who has been allocated a significant part of the estate dies, you may be required to make changes to the trust document to reallocate the property.
Revocation or Amendment of a Revocable Trust in North Carolina
North Carolina General Statute § 36C-6-602 allows the grantor to revoke or change a revocable living trust anytime. If the trust is composed of property other than joint property, each grantor has the right to amend or revoke the trust regarding their portion of the trust’s property. A grantor may amend or revoke a trust in the following ways:
- Through compliance with the methods given in terms of trust
- Through oral statement to the trustee if the revocable trust was created orally
- Through issuing the trustee with any other well-documented method that clearly shows the grantor’s intent to amend or revoke the trust.
After the settlor has made amendments to the revocable trust, the trustee must deliver the trust property as per the amended trust document. A trustee who is not aware of the changes made to the revocable trust is not liable to the grantor or the grantor’s beneficiaries in interest for distributions made to the property.
Knowing how and when to amend or revoke your living trust is essential for your overall estate plan. Typically, any significant life changes should prompt you to review your estate plan. This helps you decide the best next step to take and ensure that each property is well distributed.
As trust and wills are essential tools for many estate plans, it is vital to seek help from a knowledgeable attorney when making changes to them. David Anderson and his team are here to help, with the experience and insight to make sure your family is protected after your death. Contact us today and let us help you with all your estate planning needs.