As the end of the year approaches, many of us are focused on the holidays, family gatherings, and preparing for what’s next. It's a busy time, but it's also the perfect time for a critical task: taking control of your financial and legal future. If you’re creating your first estate plan or updating an older one, a few simple steps now can help ensure that your family is protected, your assets are secure, and your legacy is in order before the new year begins.
This guide will walk you through five key estate planning tasks to complete before December 31st.
The Urgency of a Year-End Review
Estate planning is not a "set it and forget it" task. Your life changes, your family changes, and the law changes. That plan you created years ago may no longer reflect your current wishes, and if you have no plan, you are leaving your family unprotected.
Why the End of the Year Matters
The end of the year is an important deadline for a number of legal and financial reasons. It is your last chance to take advantage of annual tax-saving opportunities and to make sure your documents are in place before any potential law changes go into effect in the new year. Taking these steps now can help you start the new year with confidence and peace of mind.
Avoid the Cost of Delay
Waiting to create or review your plan can have real consequences. Having no plan at all means North Carolina law will decide how your assets are distributed. An outdated plan can lead to assets being distributed to the wrong people, family conflict, or costly and time-consuming probate court battles. Taking a few moments now can save your family a great deal of stress, time, and money later.
Your 5-Step End-of-Year Checklist
Here are five key tasks to add to your year-end checklist.
Task 1: Create or Review Your Foundational Documents
If you don't have a will, a power of attorney, or a healthcare power of attorney in place, these are your most critical tasks. These documents are the foundation of any estate plan and are the first step to protecting yourself and your family. If you do have a plan, now is the time to pull out your will, trusts, and powers of attorney. Have any of the following events occurred since you signed them?
- A marriage, divorce, or remarriage.
- The birth or adoption of a child or grandchild.
- The death of a family member, particularly a beneficiary or a named executor.
- A significant change in your assets or net worth.
If you answered yes to any of these, it is a sign that your plan needs to be updated. For parents of minor children, this is also a crucial time to confirm your chosen legal guardian is still willing and able to serve.
Task 2: Check and Update Beneficiaries
This is one of the most common and costly mistakes. Your beneficiary designations on accounts like your 401(k), IRA, and life insurance policies are not controlled by your will. They supersede it. A common error is for someone to update their will after a divorce but forget to change the beneficiary on their life insurance policy, leading to an unintended payout to a former spouse. Take a few minutes to log into each account and ensure the listed beneficiary is the person or entity you intend.
Task 3: Use Your Annual Gift Exclusion
You can give a certain amount of money to as many people as you wish each year without using up any of your lifetime federal gift tax exemption. For 2025, that amount is $19,000 per person. If you are married, you and your spouse can give a combined $38,000 to a single recipient. This is a powerful, tax-free way to transfer wealth to your children or grandchildren. This exclusion resets on January 1st, so any unused portion is gone forever.
Task 4: Address Your Digital Assets
In North Carolina, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), N.C. Gen. Stat. § 36F, gives fiduciaries the legal authority to access, manage, and distribute digital assets. However, you must first give a clear directive in your estate planning documents. Your list of digital assets might include cryptocurrency, online bank accounts, email accounts, and social media profiles. Take time to create a document that lists these assets and their access information, and give your executor or trustee the explicit legal authority to manage them. Do not simply list usernames and passwords in your will.
Task 5: Learn More and Get Professional Help
The final and most important task is to educate yourself about these topics and take action. The new year often brings tax and legal changes, such as the potential for the federal estate tax exemption to sunset at the end of 2025. This could significantly impact families with estates over an estimated $7 million, a change that could bring many more estates into the federal tax system. Now is the time to get informed and understand how these changes might impact you.
What Happens if You Wait?
Outdated Plans and Unintended Consequences
An outdated or incomplete plan is often worse than having no plan at all. It creates a false sense of security and can lead to expensive and stressful legal disputes. If you have no plan, your family is left to guess at your wishes and must rely on North Carolina's intestacy laws to divide your property. Without an updated power of attorney, a family could find themselves in court seeking a guardianship or conservatorship if a loved one becomes incapacitated.
A Look Ahead: The Federal Estate Tax Sunset
North Carolina does not have a state estate tax, but all estates are subject to the federal estate tax. For 2025, the federal estate tax exemption is $13.99 million per person. Under the One Big Beautiful Bill, signed into law in mid-2025, the federal estate tax exemption will be $15 million per person beginning January 1, 2026, and starting in 2027, it will be indexed for inflation. While this is reported as a “permanent” change, tax laws are never truly permanent, and future legislation could always adjust the rules again.
The Financial and Emotional Cost of Inaction
A proper estate plan provides peace of mind. Without it, your family is left to guess at your wishes and deal with a potentially expensive and public probate process. The stress and emotional toll on loved ones during an already difficult time can be devastating.
What to Do Next: Your Path to a Secure New Year
Taking on these tasks can feel like a heavy lift, but you don't have to do it alone. The best way to ensure you've covered all your bases is to get professional guidance.
Register for a webinar or in-person workshop where we discuss the key secrets to protecting your family's future. For those outside North Carolina or those who prefer to learn online, you can register for our webinar. For those in the Triangle area, join us in person.
To discuss your specific situation and take action, schedule a case assessment or call us today at (919) 443-3035.
Frequently Asked Questions
Q: Does North Carolina have an estate tax?
A: No. North Carolina repealed its state-level estate tax in 2013. However, your estate may still be subject to the federal estate tax if its value exceeds the federal exemption.
Q: What is a "power of attorney" and why is it important?
A: A power of attorney is a legal document that gives a person you trust the authority to make financial or medical decisions on your behalf if you become unable to do so. Without one, your family may have to go to court to get this authority.
Q: What happens if I die without a will in North Carolina?
A: If you die without a valid will, North Carolina's intestacy laws will determine how your assets are distributed. This often leads to your property being divided in a way that you would not have chosen, and can create conflict among family members.
