Written by Jim Worthington on March 23, 2022

Hopefully, the last article convinced you that you need a revocable trust if you live in North Carolina. Kentucky residents may want a revocable trust as well so this article should help my clients in both states.

As a reminder, a revocable trust is a document where you as the settlor and initial trustee provide for your own benefit during your lifetime and then for your family’s (or others’) benefit following your lifetime. You will name a successor trustee to serve after your lifetime or if you become disabled.

Trust Terms and Successor Trustees

You should work with an experienced lawyer to spell out the terms of the trust and to choose the successor trustee.

The terms of the trust set out any limits on how people can use the trust.

  • You may want children to provide for themselves and only turn to the trust in an emergency.
  • You may want the trust to last until your children reach a certain age.
  • You may have children with special needs for whom the trust will be a crucial part of their support.

Choosing the trustee is another important step. You will likely be your own trustee and you may want your spouse to be the first successor trustee. A successor trustee serves when the predecessor is unable or unwilling to do so. Picking the successor trustee to handle the trust after you’re gone is the bigger choice. Banks and trust companies are experts at being a trustee and are often a good choice. Picking a family member can be risky as very few individuals have the combination of skills to make wise decisions about both how to spend your money and how to invest it. And, if the trustee is older than the beneficiary, the trustee may not be able to keep serving as long as the trust lasts.

Once you make these important decisions, the next step is funding the trust by making it the owner of bank accounts, investment accounts, vehicles, real property, and other assets. If properly set up and funded during lifetime, a revocable trust can avoid probate. Establishing the trust will keep the terms of the trust private. But it won’t keep the value of your estate or of particular assets private unless they are in the trust during your lifetime.

  • For real property, this means having a lawyer prepare a deed and recording it. If you own property in more than one state, this will often mean hiring a lawyer in the other state to prepare the deed because of the laws governing lawyers. If you don’t have a lawyer in the other state, your lawyer should be able to refer you to someone.
  • For business interests, this means an assignment or stock transfer. You may want your business lawyer to prepare this, and you consult with your accountant about any tax consequences.
  • For tangible personal property, this means a bill of sale for some property. However, some tangible personal property, e.g., vehicles and boats, are titled, and you will have to go to a government office to change their title.
  • For bank and investment accounts, this means filling out the financial institution’s paperwork to open the account in the name of the trust. They will often ask for a copy of the trust and have their legal department review it.

Why do I still need a will if I have a revocable trust?

Clients with a revocable trust still need what’s called a pourover will. It’s very hard to transfer every asset into the trust. Remembering everything you own is surprisingly difficult. It’s easy to forget about the small savings account you opened when you first started driving or the CD you purchased years ago to help a friend’s daughter who was starting her banking career.

Even if you’re the rare person who is 100% complete in funding your revocable trust during your lifetime, your family may receive a check from a nursing home or assisted living facility made payable to your estate after your lifetime. A pourover will does exactly what its name implies: it pours those assets over into the trust.