Feb42026
Estate Planning Q&A Series

Do I need an irrevocable trust or a revocable trust to set aside money for a child until they reach adulthood? – North Carolina

Short Answer

In North Carolina, either a revocable trust or an irrevocable trust can be used to set aside money for a child until adulthood, but they work differently. A revocable trust keeps the money under the creator’s control during life (with the ability to change terms), while an irrevocable trust generally locks in the terms and can offer stronger separation between the creator and the funds. For a straightforward “save now, child receives at adulthood” plan funded with the creator’s own recurring contributions, many families use a revocable trust or a custodial arrangement, and switch to an irrevocable structure only when they need the added protections or restrictions.

Understanding the Problem

Under North Carolina estate planning, the decision is whether the money should stay under the creator’s control (with the ability to change the plan) or whether the money should be set aside under fixed terms for a minor beneficiary until a stated age. The actor is the person funding the arrangement, the duty is to choose a legally valid structure to hold and manage assets for a minor, and the relief sought is a clear path for the child to receive the funds at adulthood. Timing matters because the arrangement should be in place before recurring contributions begin and because the child’s right to receive the funds typically changes at a stated age.

Apply the Law

North Carolina law allows several common ways to hold money for a minor: (1) a trust (revocable or irrevocable) with a trustee managing the funds under written terms, (2) a custodial account/transfer under the North Carolina Uniform Transfers to Minors Act (UTMA), and (3) in some situations, funds administered through the Clerk of Superior Court or a court-appointed guardian of the minor’s estate. The “right” choice usually turns on control (can the creator change the plan), access (does the child automatically receive the money at a certain age), and administration (who manages the money and what paperwork is required).

Key Requirements

  • Valid structure and clear ownership: The arrangement must clearly identify who holds legal title (trustee/custodian) and who benefits (the child), so the funds are not treated as the child’s property with immediate control.
  • Named decision-maker: A responsible adult or trust company must have authority to manage the money, make investments, and make distributions (if allowed) while the beneficiary is a minor.
  • Defined “handoff” age and instructions: The document should state when the child can take control (often 18 or 21 in custodial arrangements, or any chosen age in a trust) and whether the trustee/custodian can spend money earlier for the child’s benefit.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The goal is to contribute the creator’s own money on a recurring basis and have the child access the funds at adulthood. A revocable trust can accomplish this by naming a trustee to hold and manage contributions and by setting a distribution age; it also lets the creator change trustees, change the handoff age, or change beneficiaries if circumstances change. An irrevocable third-party trust can also accomplish the goal, but it usually makes sense when the creator wants the terms locked in and wants stronger separation between the creator and the assets than a revocable trust provides.

Process & Timing

  1. Who files: No court filing is required to create a typical revocable or irrevocable trust; it is usually created by signing a written trust agreement. Where: The trust is typically administered privately by the trustee; if a guardianship becomes necessary, it is handled through the Clerk of Superior Court in the child’s county of residence in North Carolina. What: A signed trust agreement (and then account-opening paperwork to title accounts in the trustee’s name) or UTMA account titling using the statutory “as custodian for” format. When: Before recurring contributions begin, so each contribution goes into the correct legal “bucket.”
  2. Funding step: Open a bank/brokerage account in the name of the trustee (for a trust) or in UTMA form (for a custodial account), then set up recurring transfers. Consistent titling matters; mixing personal funds and trust/custodial funds can create administrative and proof problems later.
  3. Handoff step: For UTMA, the custodian must transfer the property when the statutory termination age is reached. For a trust, the trustee follows the trust’s distribution instructions and transfers assets when the stated age/conditions are met.

Exceptions & Pitfalls

  • Automatic access at the termination age: UTMA is simple, but it generally results in the child receiving full control at the statutory age. A trust is usually the better fit when the plan needs to delay access beyond that age or stage distributions.
  • Choosing irrevocable too early: An irrevocable trust can be hard to change if family circumstances shift (trustee issues, beneficiary needs, or contribution plans). Many families prefer flexibility while the child is still young.
  • Cross-jurisdiction administration: When the child lives in a different jurisdiction than the person funding the plan, the trust should clearly state governing law, trustee powers, and where administration occurs. Without that clarity, practical issues can arise with account opening, successor trustees, and later distributions.
  • Guardianship/court involvement: If assets end up titled directly to a minor (or payable to a minor without a proper trust/custodianship), a guardian of the estate or clerk-administered funds may be required, which can add reporting and court oversight.

For additional context on planning when the child lives elsewhere, see set up a trust for a minor who lives in a different state. For how trusts can handle the transition to adulthood, see what happens when the child reaches adulthood.

Conclusion

In North Carolina, a revocable trust or an irrevocable trust can both set aside money for a child until adulthood, but the main difference is flexibility versus locked-in terms. A UTMA custodial account can also work, but it typically requires turning the funds over at the statutory termination age. The most practical next step is to choose the structure first, then open and title the account correctly and begin recurring contributions into that account from day one.

Talk to a Estate Planning Attorney

If you’re dealing with setting aside money for a child until adulthood and deciding between a revocable trust, irrevocable trust, or a custodial option, our firm has experienced attorneys who can help explain the tradeoffs and timelines under North Carolina law. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Estate Planning Q&A Series

Author: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.