Legal Question in Wills and Trusts in North Carolina

First, if you are preparing a living trust and pourover will, you should not be preparing it yourself but through an estate planning attorney. Living trusts should not affect any beneficiary designated accounts if the accounts are never put into the trust How are you proposing on funding your living trust? Things like your VALIC account (whatever that is) should not go into the living trust since there is already a designated beneficiary if the person named as your beneficiary is part of your overall estate plan.

Further, there are good reasons for leaving things like IRAs out of trusts. With an IRA, the named beneficiary can add it to their own IRA and delay paying taxes for their lifespan (subject to other rules). However, if you make the trust the beneficiary of an IRA, a trust has to take distribution of the IRA over a 5 year period (this is the maximum), which can result in a significant tax liability depending on what is in the IRA. Paying $1000 today is not the same as paying $1000 10 years or more from now.

Living trusts do not avoid probate. They can, if drafted correctly, help to minimize probate. However, do you even need a living trust? What assets do you own? Many things pass outside of probate. For example, if you own a home jointly with your spouse as husband and wife, the home passes as of the minute of death to the spouse. If the spouse is designated as the beneficiary of life insurance or the VALIC accounts, same thing happens and it goes to her. If there is a joint checking account with her, this also passes to your spouse. Cars can be assigned to the spouse as part of her spousal allowance. So what do you own that you believe justifies a trust?

If you got some will and trust kit from an internet website or some trust mill hosting a ballroom seminar, then I would encourage you, before you proceed further and make a costly mistake, to have it reviewed by an estate planning attorney.