What is a grantor trust?
A grantor trust is a type of trust that is created in North Carolina in which the grantor, or person making the trust, is responsible for its assets and liabilities. The grantor can name a trusted person, called a trustee, to control the trust assets and manage the trust income. The grantor trust is an attractive option for those who wish to pass their assets on to their heirs without the expense and hassle of probate court. They can make specific rules on how their assets should be distributed. For example, these rules can protect assets from creditors, provide for vulnerable family members, or minimize taxes. In North Carolina, the grantor must make formal payments to the trust, called trust contributions, and the trust must have a certain dollar amount of assets to qualify for certain tax benefits. The grantor must also monitor and report the activities of the trust. Grantor trusts can be used for many different purposes, such as providing for a special needs child, creating a charitable legacy, or ensuring the smooth transition of assets to heirs. A grantor trust can provide numerous benefits to grantors and their beneficiaries, but they can be complex and require careful planning. Any questions or doubts about a grantor trust should be addressed to an experienced North Carolina estate planning attorney.
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