What a trust does that a will doesn’t
A will goes through probate. The court admits it, your executor is appointed, and the court oversees the estate until it’s settled. See wills for how that works in each state.
A trust works differently. You sign a trust document, then move property into it, and a trustee manages that property for your beneficiaries. While you’re alive, you can be your own trustee. After you die, the person you named as successor trustee takes over and follows your written instructions. Property held in the trust doesn’t need the probate court to change hands.
That gives you three things a will can’t:
- Privacy. A will filed with the court becomes a public record. A trust document generally stays private.
- Control after you’re gone. A trust can hold money for a grandchild until age 25, or pay a child in stages instead of one check.
- Help if you can’t act. If you become unable to manage your affairs, your successor trustee can manage property in the trust without asking a court to appoint someone.
To create a trust in either state, you need the capacity to make it, a clear intent to make it, a definite beneficiary, and a trustee with real duties. One person can’t be the only trustee and the only beneficiary (N.C. Gen. Stat. § 36C-4-402; S.C. Code § 62-7-402).
Revocable or irrevocable: the plain difference
A revocable trust, often called a living trust, is one you can change or cancel while you’re alive. Both states treat a trust as revocable unless its terms say it’s irrevocable (N.C. Gen. Stat. § 36C-6-602; S.C. Code § 62-7-602). While it’s revocable, the trustee answers to you, not to your beneficiaries (N.C. Gen. Stat. § 36C-6-603; S.C. Code § 62-7-603).
An irrevocable trust is one you generally can’t change once it’s signed and funded. People use one for a specific goal, such as long-term care planning, and they give up control to reach it. We explain the one that fits your situation. Neither is the default.
The capacity you need to make, change or revoke a revocable trust is the same as for a will (N.C. Gen. Stat. § 36C-6-601; S.C. Code § 62-7-601). So a trust, like a will, has to be signed while you can still make your own decisions.
The disadvantages of a trust, and when you may not need one
A trust has real costs, and you should hear them before you choose one.
- It only controls what you put in it. A house still titled in your own name at your death goes through probate, trust or no trust. Moving property in, called funding the trust, is a separate step, and it’s easy to leave unfinished.
- More work up front. You sign the trust, a new deed for the house, and new paperwork for any accounts you move into it. A will is one document.
- You still need a will. A short “pour-over” will catches anything left outside the trust and sends it in. That property still goes through probate.
- No shield from your creditors. While you’re alive, property in your revocable trust can still be reached by your creditors in both states (N.C. Gen. Stat. § 36C-5-505; S.C. Code § 62-7-505).
You may not need a trust if everything you own is in one state, your beneficiaries are adults, and your accounts already name who receives them. A will and up-to-date beneficiary forms can do the job. A trust earns its extra steps when you own real estate in both Carolinas, want money held for a young or vulnerable beneficiary, or want your affairs kept private.
Putting your house into a trust
For many families, the house is the reason to have a trust, and it’s also where trusts fail. Signing the trust doesn’t move the house. A new deed from you to yourself as trustee does. With that deed recorded, your successor trustee can sell the house or deed it to your children without waiting on a probate court.
That deed is recorded in the county where the house sits: with the Register of Deeds in North Carolina, and with the county’s recording office in South Carolina. Recording protects the transfer against later buyers and creditors (N.C. Gen. Stat. § 47-18; S.C. Code § 30-7-10). If you own a house in each state, each one needs its own deed, prepared under that state’s rules.
A common worry is the mortgage. Moving your house into a living trust doesn’t let the lender call the loan due. Federal law protects the transfer as long as you stay a beneficiary and keep living there (12 U.S.C. § 1701j-3(d)(8)).
We prepare and record the deed that puts your house in the trust. If you’ve already inherited a house that’s still in a relative’s name, see inherited property and deeds.
What doesn’t go into a trust
Some property belongs outside it. Retirement accounts, such as a 401(k) or an IRA, generally stay in your name and pass by the beneficiary form you filed with the plan. Moving them into a trust can trigger income tax. Life insurance also passes by its beneficiary form.
Cars and everyday bank accounts can pass by a payable-on-death form or through the pour-over will instead of being retitled. We go through your list with you and say which items move into the trust and which stay out.
Choosing a trustee
Your trustee has legal duties. In both states, a trustee must manage the trust only in the beneficiaries’ interests (N.C. Gen. Stat. § 36C-8-802; S.C. Code § 62-7-802). Once the trust can no longer be changed, the trustee must keep beneficiaries reasonably informed about it (N.C. Gen. Stat. § 36C-8-813; S.C. Code § 62-7-813).
Pick someone organized, honest and willing, and name a backup. You can name the same person as trustee and as executor of the pour-over will, so one person handles both.
Should you use a lawyer for a trust?
You can buy a trust form online. The form isn’t usually the hard part. The hard parts are the deed, the choice between revocable and irrevocable, and making the trust, the will and your beneficiary forms agree. A missed deed or a mismatched form can send the house through probate anyway.
Christine Hart prepares trusts under North Carolina law. Justin Montgomery and Tiffany Lumpkin prepare them under South Carolina law. If you own property in both states, tell us when you call.
How much does a trust cost in NC and SC?
The cost depends on what your plan needs. A trust is part of estate planning, and estate planning is a flat fee. You see that fee in a fee letter before any work begins. The letter lists what your plan includes and says whether the deed for the house is part of it. Recording fees the county charges are additional to the fee and listed in the same letter.
Questions people ask about trusts
Is it better to have a will or a trust in NC?
It depends on what you own and who it’s for. The disadvantages section above lists when a will is often enough. One North Carolina point: if you also own a house in South Carolina, a will alone means a second court process there. A funded trust can avoid both (N.C. Gen. Stat. § 28A-26-1; S.C. Code § 62-4-207).
What assets cannot be put in a trust?
Retirement accounts generally shouldn’t be moved into a trust, because the transfer can be taxed. They pass by their beneficiary forms instead. Life insurance also passes by its form, though a trust can be named as the beneficiary.
Who legally owns the property in a trust?
The trustee holds legal title and manages the property for the beneficiaries. With a revocable trust where you’re your own trustee, you keep control of it during your life.
Can a person do a living trust without a lawyer?
Yes. Neither state requires a lawyer to sign a trust. See should you use a lawyer above for the steps a form doesn’t do for you.
How long can a house stay in a trust after death?
As long as the trust’s terms allow. Some trusts tell the trustee to sell the house, or deed it to a child, soon after a death. Others keep it for years, for example until the youngest child reaches a set age.
Who has more power, a beneficiary or a trustee?
The trustee manages the property, but must do it for the beneficiaries and keep them informed once the trust can no longer be changed. Beneficiaries can ask a court to step in if a trustee breaks those duties (N.C. Gen. Stat. § 36C-10-1001; S.C. Code § 62-7-1001).
Can a nursing home take your house if it’s in a trust?
It depends on the kind of trust and when it was made. Medicaid counts what’s in a revocable trust as yours (42 U.S.C. § 1396p(d)(3)(A)), so a revocable trust doesn’t protect the house. See Medicaid and long-term care for how that planning works.
Book a first meeting
For a North Carolina trust, meet Christine Hart at McDowell Street. For a South Carolina trust, meet Justin Montgomery or Tiffany Lumpkin at Sigma Drive. Either can be by phone or video. Call 980-243-4470 or request a time online, and tell us which state your property is in.
You’ll see the fee in writing first, and you’ll read every draft before you sign.
Not sure a trust is the right tool? Start with estate planning, which compares a will and a trust side by side.
Want to hear from people who’ve worked with us? Read client reviews.
Responsible attorneys: Christine Hart (North Carolina), 122 N. McDowell Street, Charlotte, NC 28204. Justin Montgomery and Tiffany Lumpkin (South Carolina), 201 Sigma Drive, Suite 300, Summerville, SC 29486.