Contact

Step-by-Step: How to Set up a Trust for Secure Assets

Creating a trust may sound complicated, but with the right guidance, it doesn’t have to be a difficult process. A properly structured trust can give you immense peace of mind, knowing your assets and wishes will be protected and fulfilled.

In this article, we’ll walk you through the basics of setting up a customized trust in North Carolina in a straightforward, step-by-step manner. With some careful planning and an experienced estate planning attorney on your side, you can ensure your trust achieves your specific goals and provides for your loved ones in the years to come.
 
Whether you want to avoid probate delays, reduce taxes, or protect assets for future generations, a thoughtfully crafted trust is a powerful tool. Let us demystify the process so you can gain the security and control a trust can provide.

1. Determine Your Trust Goals and Needs

So, what exactly is a trust? Simply put, it’s a legal arrangement where you transfer assets to be managed by a trustee for beneficiaries. Trusts can accomplish a lot – avoiding probate delays, reducing estate taxes, protecting assets, caring for minors, maintaining privacy over wealth, and more. As you think about your own goals, you’ll need to decide what type of trust makes the most sense. Here’s a quick overview of common options:

  • Revocable living trusts are flexible since you maintain control and can modify terms anytime. They allow assets to avoid probate at death. But they don’t minimize estate taxes.
  • Irrevocable trusts lock things in once created. You can’t revoke them, but they remove assets from your taxable estate, which cuts future estate taxes. Careful planning is crucial.
  • Testamentary trusts only take effect at death based on instructions in your will. They don’t impact anything during life. They can set conditions around distributing inheritances.
 
Now that you understand the basics, it’s time to choose a trustee to manage the trust. This is an important decision we’ll explore next.

2. Choose a Trustee

Choosing a trustee is a big decision that can really impact your trust’s success. The trustee oversees the assets, makes distributions to beneficiaries, and ensures adherence to the trust terms.
 
You have options when selecting a trustee. Banks and trust companies are professionals who charge reasonable fees to manage trusts. But family members or close friends can also be good choices if they’re organized, impartial, and financially savvy.
 
Think carefully about who you appoint. A responsible, ethical trustee who is great with investments and record keeping will be able to effectively carry out your wishes. Look for someone who is organized, detail-oriented, and committed to fulfilling their fiduciary duties.
 

Take the time to make sure you are designating the right person or institution to serve as trustee. Having confidence in your designated trustee is essential.

3. Determine Trust Assets and Beneficiaries

Now, it’s time to figure out which assets you want to put into the trust. This could include cash, investments, real estate, insurance policies, or even an interest in a family business. The options are open based on your specific situation.
 
You’ll also need to name the beneficiaries – those who will receive distributions from the trust. Typical beneficiaries are spouses, children, or other family members. But you may also want to include charities you wish to support.
 
One approach is naming primary beneficiaries who receive distributions first and contingent beneficiaries as backups. This allows you to structure how assets are handed out based on changing life circumstances.

4. Make Key Trust Decisions

When structuring the trust, consider factors like the timing of distributions, conditions around access to funds, and the ages or life stages of your beneficiaries. For example, you may tie payouts to a beneficiary graduating college or reaching a certain age.
 
Adding an independent trust protector – often a trusted family advisor, lawyer, or accountant – can provide helpful oversight of the trustee. A trust protector acts as a watchdog to ensure the trustee is acting properly and following the terms of the trust. They have the power to replace the trustee if needed. Appointing a trust protector provides an added layer of protection and accountability to make sure your wishes are carried out as intended.

5. Create the Trust Document

Work closely with a trust lawyer to draft the trust document itself. It will define important provisions like the trustee’s powers and payment schedule, instructions for distributing assets, and the naming of successors to positions like trustee or trust protector.

6. Fund the Trust

Once signed, the trust must be funded by retitling assets like bank accounts, investment accounts, and real estate in the name of the trust. Any assets you transfer while living may be subject to gift taxes. Our skilled estate planning attorneys can help navigate tax implications.

Prudent Planning Provides Peace of Mind

While the process takes time and careful planning, the payoff is immense peace of mind. Knowing your assets and wishes are secured beyond your lifetime makes the effort worthwhile. Don’t go it alone.
 

If you are creating or updating a trust in North Carolina, contact Cline Donaldson PLLC today to schedule a free consultation.

Do Trusts For Family Members Get Taxed In North Carolina?

If the beneficiaries are your spouse or children, the trust typically won’t owe North Carolina income tax. But trusts for unrelated beneficiaries may be taxed. Family trusts often have tax advantages.

Can I Protect My Own Assets In An Irrevocable Trust In North Carolina?

Unfortunately not. North Carolina prohibits “self-settled” trusts where you shield your own assets. You cannot separately protect your wealth from creditors in an irrevocable trust that still benefits you.

Is There A Limit On How Long Trusts Can Last In North Carolina?

There’s no limit! Unlike some states, North Carolina trusts can span multiple generations. You can set up a trust that benefits your heirs for many years to come.

Schedule a Free Consultation to Set Up a Trust in NC

When you’re ready to take the next step in securing your legacy, call us to schedule a free consultation. We’ll address all your questions and concerns about setting up or updating a trust in North Carolina. Cline Donaldson PLLC has the knowledge and experience to guide you every step of the way. Let our team help provide the peace of mind that comes with prudent estate planning.
Learn more about Trusts

About the Author

Scott Donaldson

As one of the founders of Cline Donaldson PLLC, Scott Donaldson leverages his background in law enforcement to provide exceptional representation across core practice areas, including personal injury law and estate planning. Before founding his Wilmington-based firm in 2023, Mr. Donaldson honed his understanding of the law as a Lieutenant in the esteemed New York City Sheriff’s Office.

He subsequently graduated cum laude from Campbell University’s Norman Adrian Wiggins School of Law, earning the Law School Book Award for demonstrating exceptional mastery of complex legal subjects. With an extensive legal background, Mr. Donaldson brings authoritative experience and insight when navigating each client case. He remains dedicated to upholding the highest legal standards and achieving optimal outcomes for all he represents.

More Resources

Contact Us Today

Contact us today.

Speak to a lawyer today

With you through life’s defining moments.

Proudly representing clients in North Carolina

Wilmington

6329 Oleander Drive

Wilmington, NC 28403

Hours: 24/7 

Hampstead

14889 US-17 Suite 108,

Hampstead, NC 28443

Hours: 24/7

Copyright © 2025 Cline Donaldson PLLC. All rights reserved. Privacy Policy.
Site design by Taffy Studio