I am a big fan of stand-by living trusts (revocable trusts called a Declaration of Trust) for a person’s core estate planning document. It is a trust often unfunded presently, but in place and ready for funding and use if the person (the settlor) thereafter becomes incapacitated. This is a much better (and in the long run results in lower legal fees) than otherwise trying to manage property during a person’s incapacity under a (i) financial power of attorney or (ii) court-managed guardianship.
Here is a North Carolina situation where you — if you live in North Carolina — benefit from funding the trust now rather than waiting later at your incapacity or death.
Funding the living trust now prior to death avoids exposure to the following North Carolina statutory probate fee. North Carolina law under G.S. §7A-307(a) imposes a probate fee on non-real estate at a person’s death, if the non-real estate passes under the terms of the owner’s Last Will and Testament. This statutory fee (payable to the court) is 40 cents per $100 value of the non-real estate property, not to exceed $6,000. This computes to the maximum $6,000 fee on $1,500,000 of non-real estate passing under the terms of a person’s Will.
The above goal is to have your living trust hold and govern your property for your beneficiaries at your death, rather than your Last Will and Testament. This avoids the above probate fee.
Qualified retirement accounts such as IRAs, 401(k), if governed by a beneficiary designation to a beneficiary other than the account owner’s estate, do not pass under a person’s Will and are not subject to this $6,000 probate fee.