Setting up a family trust for your North Carolina home can be a powerful estate planning tool if you want to control how your surviving spouse and family members use the home in the future. The great thing about a family trust is that you can establish any condition or contingency to which your family will be subject before they are able to use the home or receive an ownership interest in it.
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Choose the beneficiaries of the family trust. You need to determine the specific family members who will have an in interest in the home once the trust takes effect. There’s no restriction on the number of family members you can designate as beneficiaries, nor is there any requirement that you include all of your children.
Appoint a trustee. The person who you designate as trustee of the family trust is responsible for overseeing and managing your home and for insuring that all terms of the trust are adhered to. Therefore, you should always choose a trustee who is trustworthy and responsible.
Create a legal trust document. In North Carolina, one option is to incorporate all terms of the trust, such as the names of its beneficiaries, their respective interests in the home and a devise of the home to the trustee, in your will so that the trust takes effect immediately upon your death. Alternatively, you can create the trust prior to your death by drafting a separate document that includes all terms of your family trust.
Fund the trust with your home. To fund the family trust with the home prior to your death, you must prepare a new deed naming the trust as the legal owner. But if you create the trust through your will by devising the home to the trustee, it isn’t necessary to prepare a new deed.
Record the new deed. You must record the deed at the Register of Deeds office in the North Carolina county where your home is located.
Tips & Warnings
When drafting the terms of your family trust, it’s a good idea to name a second alternate trustee. In the event that the first trustee is unable to fulfill his duties, providing for an alternate can prevent the family discord that commonly ensues when there are disagreements over who should serve as the replacement trustee.
If you obtain title insurance on your home, you should contact your insurer to determine whether the insurance will continue to cover the home after transferring it to a trust. Once you transfer the home to your family trust, you may not have any recourse if the policy is no longer effective; it’s best to obtain confirmation of the coverage in writing.
References & Resources
- Cadwalader, Wickersham & Taft, LLP: The Use of the Family Trust in the United States Today
- North Carolina General Assembly: N.C. Uniform Trust Code §36C-4-401
- North Carolina General Assembly: N.C. General Statutes §31-47
- North Carolina Estate Planning Blog: Real Estate and Living Trusts – Things to Consider
- Cumberland County Registrar of Deeds: FAQ