Can I receive income and use the assets in the trust for my own support while also providing for a parent and nieces and nephews? – North Carolina

Short Answer

Yes—under North Carolina law, a trust can be written so one person (such as the person creating the plan) can receive trust income and, if needed, trust principal for support while the trust also makes distributions to a parent and later benefits nieces and nephews. The key is how the trust document sets the distribution rules (for example, “income first,” “as needed for health/education/maintenance/support,” or “trustee discretion”). If the same person will be both trustee and beneficiary, the trust should be drafted carefully to avoid conflicts of interest and to keep the trustee’s power to distribute to themself within permitted limits.

Understanding the Problem

In North Carolina estate planning, the decision point is whether a single trust can be set up so the primary beneficiary can receive ongoing financial support from the trust and still direct benefits to other family members, such as a parent (during the primary beneficiary’s lifetime) and nieces and nephews (often after the primary beneficiary’s death). This question usually comes up when the same pool of assets must cover multiple goals: personal support, helping a parent with changing needs, and preserving what remains for younger relatives. The answer depends on who is trustee, who is a beneficiary, and what the trust says about when and how distributions must or may be made.

Apply the Law

In North Carolina, a trust works the way the trust document says it works, as long as the terms are lawful. The trust should clearly identify (1) who can receive distributions, (2) whether distributions are required or discretionary, and (3) the standard for making distributions (for example, “support” or “health, education, maintenance, and support”). The trustee must follow the trust’s distribution rules and keep proper records, and when there are multiple beneficiaries, the trustee typically must balance their interests in a fair way consistent with the trust’s terms. If the primary beneficiary will also serve as trustee, the drafting should limit any self-distribution power to reduce challenges and administration problems.

Key Requirements

Clear distribution standard: The trust should state whether the primary beneficiary receives “all income,” “as much income as needed,” and whether principal can be used for support (and under what standard).
Defined benefits for the parent: The trust should spell out whether the parent receives scheduled payments, needs-based support, or discretionary distributions, and whether those distributions come before or after the primary beneficiary’s support.
Remainder plan for nieces and nephews: The trust should name who receives what is left (the remainder), when that happens (often at the primary beneficiary’s death), and whether distributions are outright or held in further trust.

What the Statutes Say

N.C. Gen. Stat. § 33B-7 (General duties of custodial trustee) – Describes core fiduciary-type duties for a custodial trustee, including prudent management, separation of trust property, and recordkeeping.
N.C. Gen. Stat. § 33B-9 (Use of custodial trust property) – Addresses when custodial trust property may be paid to or spent for a beneficiary, including using property for the beneficiary’s benefit when appropriate.

Analysis

Apply the Rule to the Facts: With no specific facts provided, the practical takeaway is that a North Carolina trust can be drafted with a “primary beneficiary” who receives income and can also receive principal for support, while also naming a parent as an additional beneficiary during the primary beneficiary’s lifetime and naming nieces and nephews as remainder beneficiaries. The trust document should also state the priority of distributions (for example, the primary beneficiary’s support first, then the parent, then preserve what remains). If the primary beneficiary will act as trustee, the document should limit self-distribution powers and often names an independent trustee or co-trustee for decisions that directly benefit the trustee-beneficiary.

Process & Timing

Who creates/signs: The person setting up the plan (the “grantor/settlor”). Where: Typically signed and notarized as part of an estate planning meeting in North Carolina (not filed with a court at creation). What: A trust agreement plus deeds/assignments to “fund” the trust (for example, retitling accounts or recording a deed if real estate will be owned by the trust). When: Funding usually occurs immediately after signing; timing depends on banks, transfer agents, and county recording processing.
Administration while living: The trustee opens/uses trust accounts, keeps trust assets separate, tracks income and expenses, and makes distributions under the trust’s standard. If the trust provides for both the primary beneficiary and a parent, the trustee documents the reason for distributions and follows the trust’s priority rules.
When the remainder is distributed: Often after the primary beneficiary’s death (or another stated event), the trustee pays final expenses and then distributes the remaining trust property to nieces and nephews (either outright or in continued trusts, depending on the document).

Exceptions & Pitfalls

Trustee-beneficiary conflict: If the trustee can distribute assets to themself without clear limits, other beneficiaries (such as remainder beneficiaries) may challenge the administration. A common solution is to require an independent trustee or co-trustee for distributions to the trustee-beneficiary beyond a stated standard.
Unclear priority between beneficiaries: If the trust does not say whether the primary beneficiary’s support comes before the parent’s support (or vice versa), the trustee may face disputes and difficult recordkeeping. The trust should state priority and whether “support” is needs-based.
“Support” language without definition: Vague standards can create disagreements about what expenses qualify and how much is appropriate. Clear terms and a written process for documenting need and approvals can reduce friction.
Failure to fund the trust: A trust that stays empty does not accomplish the goals. Real estate, financial accounts, and beneficiary designations must be coordinated so the trust actually controls the assets intended to provide support.

Conclusion

In North Carolina, a trust can be structured so the primary beneficiary receives trust income and can use trust principal for support while the trust also provides for a parent and then distributes what remains to nieces and nephews. The trust must clearly state the distribution standard, the order of priority among beneficiaries, and who has authority to approve distributions—especially if the trustee is also a beneficiary. The next step is to draft and sign a trust agreement and then fund it by transferring the intended assets into the trust.

Talk to a Estate Planning Attorney

If you’re dealing with how to use one trust to support yourself while also helping a parent and preserving what remains for nieces and nephews, our firm has experienced attorneys who can help you understand your options and timelines. 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.