Do I have to pay annual maintenance fees or taxes on a revocable trust? – North Carolina

Short Answer

In North Carolina, you do not pay annual court maintenance fees or file annual accountings for a revocable living trust unless your trust document requires it. During your lifetime, a revocable trust is usually a grantor trust, so income is reported on your personal tax return; there is no separate North Carolina trust income tax return while it remains revocable. You will still owe normal property taxes and one-time deed recording fees to place real estate into the trust. After death, the trust typically becomes irrevocable and may need its own tax ID and returns.

Understanding the Problem

In North Carolina, if you create a revocable living trust to hold your homes, do you have to pay any ongoing fees or separate taxes just because the trust exists? Here, you own residential property in multiple states, plan to retitle each home to the trust, and want to know whether there are annual costs tied to the trust itself.

Apply the Law

Under North Carolina law, routine court oversight does not apply to a typical revocable living trust, and trustees generally do not file annual accountings with the Clerk of Superior Court unless the trust says otherwise. For tax purposes, a revocable trust is commonly treated as a grantor trust while you are alive, so trust income is reported on your individual return. Recording a deed to move North Carolina real estate into the trust is handled with the Register of Deeds; after you pass, the trust often becomes irrevocable and may need separate federal and state fiduciary income tax filings.

Key Requirements

• No annual court fees: Trustees of private trusts do not file yearly accountings with the Clerk unless the trust document requires it.
• Grantor tax treatment: While revocable, trust income is typically reported on your personal return; no separate North Carolina fiduciary return is required solely because the trust exists.
• Property taxes continue: Deeding a home into your revocable trust does not eliminate local property taxes; you still pay them as usual.
• One-time recording costs: To fund the trust with real estate, record a deed in the county where the property sits; pay standard recording fees and any applicable transfer taxes based on the transaction.
• Post-death change: After death, the trust may need an EIN and must file federal Form 1041 and North Carolina Form D-407 if income thresholds are met.

What the Statutes Say

• North Carolina Gen. Stat. § 36C-2-208 (Trustee accountings to clerk) – No clerk accounting unless the trust instrument requires it.
• North Carolina Gen. Stat. § 105-160.2 (Income tax on estates and trusts) – NC taxes estate/trust income by residency/source rules for undistributed income.
• North Carolina Gen. Stat. § 36C-6-602 (Revocation/amendment of revocable trusts) – Confirms revocability framework during settlor’s life.
• North Carolina Gen. Stat. § 36C-8-813 (Trustee duty to inform and report) – Trustee informs beneficiaries, not the clerk, absent special terms.

Analysis

Apply the Rule to the Facts: Because your trust will be revocable while you are alive, there is no annual court maintenance fee or required filing with the Clerk of Superior Court. Income from the rental or use of your homes held in the trust flows to your personal return, so you do not add a separate North Carolina fiduciary return while it remains revocable. You will still pay each county’s property taxes, and you will pay one-time recording fees to deed each property into the trust. After your death, the trust will typically need its own tax ID and may need to file federal and NC fiduciary returns.

Process & Timing

1. Who files: You (as owner/settlor) or your attorney. Where: Register of Deeds in the North Carolina county where each property is located; for out-of-state properties, the equivalent recording office in that state. What: Record a deed conveying the property from you individually to “you, as Trustee of the [Your Name] Revocable Trust dated [date].” Include standard notary/formatting for that jurisdiction. When: As soon as the trust is signed, so the trust actually owns the real estate.
2. Register of Deeds records the deed upon submission and payment of recording fees; processing is typically same day to a few days, with stamped copies available shortly after.
3. Update insurance, tax billing address, and (if applicable) your mortgage servicer to reflect the trustee’s capacity; keep proof of recording with your trust binder.

Exceptions & Pitfalls

• Lender and HOA issues: Many mortgages and associations allow transfer to a revocable trust, but some require notice—check before recording.
• Out-of-state deeds: Each state has its own deed form, transfer tax rules, and formatting; use local counsel to avoid rejections or unintended taxes.
• Title wording: Convey from yourself to yourself “as Trustee” of the trust; mislabeling parties can cloud title.
• Funding gaps: Forgetting to deed property into the trust defeats probate-avoidance goals; confirm each parcel is properly recorded to the trustee.
• Post-death filings: Once irrevocable, the trustee may need an EIN and must evaluate federal and NC fiduciary filing thresholds; missing these can cause penalties.

Talk to a Estate Planning Attorney

If you’re dealing with how to title property to a revocable trust and what ongoing costs apply, 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.