When you schedule an appointment with our office, we will mail you a worksheet to fill out and bring to your first appointment. The information requested in the worksheet will give the attorney an understanding of your needs and concerns. You do not have to make all of the decisions in the worksheet prior to your first appointment, but you should be prepared to discuss the issues.
A Last Will and Testament is a document where you can direct who will receive your assets at your death, and who will handle paying your final bills and distributing those assets. Sarah will work with you to determine the best way to handle this in your unique situation.
A Will is also very important if you have minor children or minor grandchildren you wish to benefit and for choosing a guardian. For minor children, you can choose who you want to serve as guardian of your children by naming he person in your will. The court ultimately has to appoint the Guardian and will look to your will for who you want named.
Further, generally, minors should not own assets. If they do, the court will be involved with the guardian in determining how the funds are spent, and the assets will be turned over to the minor at the age of eighteen. Therefore, Sarah usually suggests that you leave assets for minors in a testamentary trust, which is a simple trust created through your will.
A Will must still go through the probate process (see more information under Probate & Estates), but the process is much smoother if you can specify what you wish to happen, rather than leaving it up to the default in the statutes.
If you wish to avoid probate, see more about Trusts, below.
A Power of Attorney is a document that names someone to be able to sign for you for financial transactions during your lifetime. This document is particularly important in case you ever become unable to handle your own finances.
If you do not have a Power of Attorney, someone will have to file a costly court proceeding to declare you incompetent, which involves serving you by sheriff, court hearings, several attorneys, etc. The guardianship process requires a court appointed person to go and meet with the supposedly incapacitated person (you), and then the court holds a hearing to actually declare the person incompetent. This can become an expensive and emotional ordeal. A guardian is then appointed who must file an inventory of all of your assets and file annual accountings of the money and assets, including receipt of social security checks, payments of basic bills, such as telephone bills, etc., which is quite time consuming for the guardian. This all goes in the public court file for anyone to see. Further, the guardian must ask permission for certain actions, such as the sale of a house, refinancing of a home, etc., even if the guardian is a spouse or family member.
Most people prefer to avoid guardianship proceedings, which is why a Power of Attorney is the second most important document. All Powers of Attorney drafted by this office are durable, which simply means that the document is still valid if you become incompetent (as that is the purpose of the document).
A Health Care Power of Attorney is similar to Power of Attorney mentioned above, except that you name the person who you wish to be able to make your health care decisions for you when you are unable to do so. This allows the person you name to talk to your doctors, and make decisions about doctors, medical facilities, surgery, nursing homes, medical treatment, autopsies, organ donation, etc. A Health Care Power of Attorney is effective to allow someone to make these decisions for you at any time your doctor says you are unable to make or communicate these decisions for yourself. This may be a temporary situation, a long term situation, or an end of life situation.
A Living Will is legally called a Declaration of a Desire for Natural Death. In this document, you can direct whether or not you want artificial life prolonging measures in end of life situations. North Carolina law was updated in 2007 to allow people to be more specific about their wishes and their directions.
There are many different types of trusts. The basic probate avoidance trust is a commonly referred to as a Living Trust or Revocable Trust. For information about more complex trusts, irrevocable trusts, life insurance trusts, etc., please contact our office for an appointment.
The most common type of trust is a revocable trust or living trust, which means that the person setting it up may change the trust, if he or she sees fit. An individual or a married couple can set up such a trust, naming themselves in all of the key roles, and maintaining control of all of their assets, just as they did without such a trust, but avoids probate.
A trust has three key roles: the Grantor or Settlor, the Trustee(s), and the beneficiaries. The Grantor or Settlor is the person(s) setting up the trust, such as yourself. The Trustee is the person legally authorized to handle the assets, to withdraw money, to buy and sell property and investments, etc. In a living trust, this person is usually the same person as the Grantor. The beneficiaries are the people entitled to receive the property, or principal, and income of the trust. Again, in a living trust, the beneficiary is the usually the same person as the Grantor during that person's lifetime. However, upon the death of the Grantor, someone else becomes Trustee to pay bills, manage assets, and eventually distribute the assets to the remaining beneficiaries as designated in the trust.
A main concern for creating a trust involves the probate and estate administration process mentioned above and described in more detail at our page on Probate & Estates. Some people prefer to pass their assets privately. Further, your Will will have to go through the probate process in every state where you own property, not only the state in which you live. This means dealing with different laws, different courts, and possibly different lawyers. And, you will need to make sure your will complies with each state’s laws. With a trust, you can completely avoid the public probate process, bypassing the paperwork and public listing of your assets.
In utilizing a trust, the Grantors can also restrict how and when the beneficiaries receive the property. A common restriction in a trust is having the property controlled by the Trustee until children or minors reach a certain age designated in the trust, at which time they would then have free control of the assets, or possibly gain control in stages. Other restrictions can also apply to beneficiaries with a disability, or an addiction, where it is unlikely that they would spend the money wisely themselves. Including restrictions in a trust can prevent an immature beneficiary from spending the money all at once, can designate funds to be used only for a specific purpose, such as education or a downpayment on a home, and can also protect the trust property from your children’s creditors or their spouses in the unlikely event they should get divorced.
Further, with a trust, you can choose who will handle your assets for you if you one day become incompetent or unable mentally to handle your own affairs. In setting up a trust, you can name a Trustee of your choosing. Doing so will avoid a guardianship for you as well. When someone becomes incapacitated, without having such a Trust or Power of Attorney in place, a family member generally petitions the court to appoint a guardian to be able to legally handle their financial affairs (see Power of Attorney above (LINK)). With a trust, the person named as trustee to take over in that situation simply takes over, under the conditions you created in your trust. It avoids not only the time consuming and costly legal proceedings, but also the emotional pain these legal proceedings can cause as well.
Trusts are also often very important in a second marriage
Estate tax planning is also an important reason for creating a trust. Living trusts can help married couples that have significant assets to generally pass twice as much to their beneficiaries free from federal estate taxation. With a will, generally one spouse leaves everything to the other spouse, which can be done free from federal estate taxation under the marital deduction. However, when the second spouse passes away, the amount that passes tax free is limited to slightly over $5 million (adjusted each year for inflation). However, through the use of proper planning with a trust, the couple may ultimately pass essentially double that amount, leaving over $10 million in assets tax free. This amount includes real estate, investments, personal property, life insurance, retirement accounts, etc.
Trusts can be a very creative and effective means of passing property. They can avoid lengthy public court requirements, while accomplishing important goals and controlling assets after death. They offer creative ways to handle property (and taxes) after your death and also during your own lifetime. The information contained here only begins to describe what trusts are able to accomplish. Please schedule an appointment to review your unique situation to see if a trust is right for you.
If you have estate planning documents from another state, it is important to have a North Carolina attorney review your documents now that you are a North Carolina resident. Each state has different laws for probate, wills, trusts, powers of attorney, health care powers of attorney, and living wills. It is common that such documents need amending now that you are in North Carolina. Further, your documents from another state may not be valid here. If you would bring your documents by for us to copy prior to your appointment, the attorney can review the documents and advise you which documents are valid, which must be amended, and which documents must simply be redone according to North Carolina law.
Please be aware that estate planning documents generally do not control the distribution of your non-probate assets upon your death. These include life insurance, retirement accounts, jointly assets with rights of survivorship, such as some bank accounts and real estate, payable on death accounts, etc. These assets pass as directed by the account, and not according to your Will. It is important to review the beneficiaries periodically to ensure that your entire estate passes as you intend, and not only the assets that pass through your will. The attorney will review this in more detail during your consultation.
Please note that our office does not currently provide planning services related to Medicaid qualification. Qualifying for Medicaid and government benefits for nursing home care is a specialized field, and is generally outside the scope of an estate planning appointment.