No matter where you live, it’s important to have a strong estate plan in place. One popular estate planning tool is a living trust, which offers a secure way to store your assets and property so that they can be easily distributed to your beneficiaries after you die. As laws governing probate and inheritance vary from one state to another, the considerations that go into a living trust will depend on where you live. This article explores the living trust creation process for residents of North Dakota.
It’s a good idea to talk to an attorney and a financial advisor as you begin the estate-planning process. Try using SmartAsset’s free matching tool to find an advisor in your area who can help you out.
How to Create a Living Trust in North Dakota
Creating a living trust in North Dakota involves the following these six steps:
- Choose what kind of living trust you prefer. Single people are usually best served by a single living trust. Couples, on the other hand, may prefer to create a joint living trust.
- Take inventory of the property and assets you want in your trust. You can put assets ranging from investments to land to physical property (like jewelry and fine art) in your living trust. Make sure to gather the proper ownership paperwork and identification for your property and assets.
- Decide who you want to be your trustee. Many people choose themselves as the trustee. If you do this you’ll also need to pick a successor trustee to take over for you once you’ve passed away.
- Put together your living trust. For this, you can use either an online service or the help of an attorney.
- Sign the trust document in front of a notary public.
- Place your property and assets in your living trust. An estate planning attorney can be particularly handy during this step.
What Is a Living Trust?
Simply put, a living trust is a legal document that can transfer property and assets to your beneficiaries after you’re gone. You can place just about anything in a living trust, including real estate, investments, jewelry and family heirlooms. You’ll also specify instructions for your trustee (or your successor trustee, if you name yourself trustee while you’re alive). This person is responsible for distributing your assets according to your stated wishes.
Living trusts come in revocable and irrevocable variations. A revocable living trust is more flexible, as you can freely move property in and out of it and alter its terms. An irrevocable living trust is much more rigid. In order to change the trust’s contents, you’ll need the explicit permission of everyone named in it.
Since you technically maintain ownership of the property placed in a revocable living trust, you’ll still be personally taxed. An irrevocable living trust, on the other hand, is taxed as an independent entity.
How Much Does It Cost to Create a Living Trust in North Dakota?
Seeking the help of an attorney to set up your living trust can often cost more than $1,000. If you choose to use computer software or a website to create your living trust, your costs might fall to $200 or less. That said, there are significant risks associated with DIY estate planning, so it’s generally recommended that you work with an attorney.
When searching for an attorney to partner with, try to find one who not only focuses on estate planning, but specializes in trust creation. It’s also important to discuss their legal fees so you don’t feel blindsided down the road.
Why Should You Get a Living Trust in North Dakota?
One of the most attractive aspects of a living trust for North Dakota residents is that it allows your family to avoid a lengthy and expensive probate process, which is used to confirm and execute a will. Since your trustee or successor trustee is in charge of distributing the property and assets in your living trust, there’s no need for probate.
However, North Dakota is one of a few states that uses Uniform Probate Code, which standardizes and simplifies the probate process. Additionally, North Dakota offers simplified probate for estates worth less than $50,000. As a result, a living trust may not be worth it for some residents.
However, avoiding probate isn’t the only reason to create a living trust. They can also make leaving property to a minor much easier; in this situation, the trustee or successor trustee can hold onto property until the minor reaches a certain age. A living trust also means you’ll avoid conservatorship should you become incapacitated, since you’ll already have a trustee in place.
Who Should Get a Living Trust in North Dakota?
While a living trust isn’t for everyone, a common misconception is that only the rich should get them. As a matter of fact, a living trust can make sense for anyone, but they’re typically more useful if your estate is complex or you have several beneficiaries.
Because North Dakota utilizes the Uniform Probate Code, its probate is much more straightforward than in many other states. As such, a living trust may not be as essential, especially if your estate is relatively straightforward. Keep in mind, too, that a living trust can also leave the door for legal challenges open longer than a will.
Living Trusts vs. Wills
It’s important to note that a living trust is not a substitute for a will. This is because a will specifies what to do with property not placed in your living trust. Neither a living trust nor a will should be confused with a living will. A living will is a medical document that gives instructions to follow should you become incapacitated.
Wills also have features that living trusts do not, allowing you to:
- Name an executor
- Establish guardianship for children
- Give instructions on how to handle outstanding debts and taxes
- Select managers for children’s’ property
Overall, a will is easier to create than a living trust. Here’s a comparison of some of the key differences between wills and living trusts:
|Living Trusts vs. Wills|
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in North Dakota
Creating a living trust does not affect your estate taxes one way or another. However, if you’re planning your estate it’s still good to know how estate and inheritance taxes might impact you and your estate. The good news: North Dakota has no estate or inheritance taxes. You should still be familiar with the federal estate tax, though. This is levied on estates that are worth more than $11.4 million; for couples, the tax starts at twice that amount.
In North Dakota, residents with complicated estates should take a serious look at living trusts. However, the fact that the state uses the Uniform Probate Code might make creating a living trust less necessary. Be sure to weigh all your options and the associated costs to see if a living trust is the right decision for you and your family.
Regardless of which way you go, working with an estate planning attorney and a financial advisor is a good idea as you plan your estate.
Tips for Estate Planning
- Estate planning can be an overwhelming and complicated process. That’s why it’s a good idea to work with an estate-planning attorney and a financial advisor as you put together your plans. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- If you’re starting to think about planning your estate, it’s a good idea to make sure that you’re investing effectively so that you have something to leave to your beneficiaries. Use SmartAsset’s free investment calculator to help you reach your goals.
Photo credit: ©iStock.com/RichLegg, ©iStock.com/Oleksii Liskonih