Strategizing your North Carolina estate plan now can bring peace of mind later

Jackie Bedard
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Estate planning can encompass different things to different people.  It depends on each person’s life status, goals and desires.  For each individual, estate planning may include one or more of the following:

  • Recognizing that although you may be young, disaster can strike at any time and it is important that you ensure that your family and loved ones are as best equipped as possible to handle whatever curve balls life may throw your way.
  • Legally documenting who will take care of your children if you are in an accident.
  • Ensuring that your assets will not get tied up in the court system and that your family and loved ones will be protected and will avoid unnecessary expense, angst and frustration.
  • Passing on not just financial assets, but memories, special family heirlooms, letters, hopes and desires.  Especially for your children, your mementos will be cherished for years and years to come.
  • Making things easier for your family by making sure all relevant information is gathered in one place where your family knows how to access it.
  • Making sure your business is set up in such a way so that it will never be taken from you if you are sued or if you get divorced.
  • Making sure that your business will be preserved after your death in the manner that best suits your desires and your business.
  • Peace of mind that you haven’t just “gone through the motions” by preparing a will, but that you’ve taken the time to make the best decisions for your family so that they can have the most safe and secure life possible.
  • Preserving and managing your assets for your children until they are mature enough to manage them themselves.
  • Keeping your family’s assets private from public record and prying eyes.
  • Reducing familiar disputes and confusion, especially in the case of blended families or second marriages.
  • Taking extra precautions in planning for a family member with special needs.
  • Making sure that your pets will be loved and cared for if something should happen to you.
  • Acquiring adequate life insurance to provide for the needs of your family.
  • Planning to reduce or eliminate estate taxes, gift taxes, income taxes, court fees and/or administrative fees.
  • Leaving a legacy to a foundation, university, religious institution, or other non-profit entity that is near and dear to your heart.
  • Taking control of who will manage household affairs on behalf of you and your family if an accident should occur.
  • Appointing a person to make your health care decisions if you become unable to.
  • Making sure family keepsakes and heirlooms are properly preserved and are not sold to cover administrative expenses.
     
  • Protecting yourself, your spouse and your assets if you either of you should require nursing home or long term care due to a health decline.


Depending on the needs of you and your family, Carolina Family Estate Planning will help you come up with a plan that works for you and addresses all of your concerns.

What aspect of estate planning is most important to you?  Call us to discuss: (919) 443-3035
 

Foundational Documents

The most basic foundational estate plan consists of a Will, Health Care Power of Attorney, and Durable Power of Attorney.

Wills

A Will, or Last Will and Testament, is a legal document that gives you the power to control how your property passes and to whom it passes at your death. For example, a Will may be used to specify who will receive your home or other real estate, your automobile, furniture, jewelry, bank accounts and more. If you have minor children, a Will may be used to designate a guardian to care for your children at your death.  A Will also gives you the power to designate a personal representative, sometimes referred to as an executor, to handle the affairs of your estate at your death.
 

Health Care Power of Attorney

A Health Care Power of Attorney is critical for anyone who wants to protect their own well-being and wants to spare their loved ones from likely pain and aggravation.  A Health Care Power of Attorney allows you to name the person (your agent) that you want to make your health care decisions if you are unable to make those decisions yourself. It also allows you to let your agent know how you want your health care decisions to be made.  The Health Insurance Portability and Accountability Act (HIPAA) strictly protects who may access your medical records.  A Health Care Power of Attorney should include the appropriate language to ensure that your appointed health care agent will be able to access your medical records so as to be better equipped to make an informed decision regarding your treatment.
 

Financial Durable Power of Attorney

Finally, a Financial Durable Power of Attorney (often referred to simply as a Durable Power of Attorney) allows you to appoint a person (referred to as your agent) to make financial decisions on your behalf, access your financial records, and take appropriate action to handle your financial affairs.
If you become incapacitated, your loved ones may not be able to access the appropriate assets and records to manage your financial affairs. Especially in the event of long-term incapacitation, it is crucial that you have appointed an agent to handle your finances.
The Durable Power of Attorney will allow your agent to use your assets to pay for the day-to-day expenses of you and your family, such as paying the mortgage or rent, utilities, medical bills, and so on.  It will also allow your agent to collect, on your behalf, any income which you may be entitled to such as Social Security, disability insurance benefits, or other benefits.  The Durable Power of Attorney will also allow your agent o file and pay your taxes, manage your stocks, bonds, retirement accounts and so on.  And, while your agent has broad powers, the agent is required to act in your best interests.
 

Children's Safeguard Plan

If you are a parent, then a Children's Safeguard Plan is a crucial component of your estate to ensure maximum protection of your children.  Click here to read more about the Children's Safeguard Plan.

Living Trusts

Many people believe living trusts are only for the wealthy, but trusts are about more than just the size of your estate.  Trusts serve many uses and are an effective tool for parents to protect your children and know they will be taken care of when parents are no longer able to be there for them.

Here are some of the reasons parents may wish to consider including one or more trusts in their estate plan:

  • Privacy. A will is subject to the probate process and is therefore a matter of public record.  Anyone with prying eyes can learn the details of the size and recipients of your estate.  By comparison, a trust is a private document that is not subject to probate, so you don’t have to worry about nosy people snooping in your family’s personal affairs.
  • Simplicity. Spending a little time with your attorney now can save your family time and aggravation after your death.  The probate process can be expensive, time-consuming and an administrative headache.  A trust, on the other hand, can be a cost-effective solution that saves your family from unnecessary aggravation in their time of mourning.
  • Access. If something happens to you, your family’s access to funds for necessary living expenses could be limited.  A properly drafted trust can ensure that the funds will be available when you family needs them.
  • Divorce. Let’s say you execute a will while your children are young, put it in the safe, and forget about it.  Several years down the road, you die and your assets pass to your adult son who is married.  A few months later, your son’s wife files for divorce and as part of the divorce settlement, she walks away with a substantial share of your son’s inheritance.  This situation could have been avoided if a trust had been used instead of just a will.
  • Lawsuits, bankruptcy or creditors. Similarly, if a trust is carefully drafted it can offer your family protection from losing the trust assets to bankruptcy, creditors or in a lawsuit.
  • Control. No one knows your family better than you.  A trust can give you more control over how your assets are distributed to family members.  This can be especially important for younger or less financially responsible children.  For some, receiving a large inheritance brings the temptation to spend it on luxury items or brings the risk of long-lost family and “friends” asking for handouts.  Statistics show that regardless of a child’s age or the size of the inheritance, most inheritances are spent within 18 months of their receipt.  A trust allows you to appoint a responsible trustee to manage the assets of the trust and ensure that assets are not frivolously wasted.  A trust also gives you power to control the timing of distributions and the circumstances under which distributions will be permitted.
  • Continuity. Especially for estates that include real estate, business interests or stock portfolios, a trust can provide continuity of the management of the asset without disruption or risk of sale in the probate process.
  • Taxes. For larger estates, trusts have the additional benefit of permitting planning to reduce or eliminate potential estate tax liability, thereby preserving more of your hard-earned assets for your family.  When estimating the value of your estate, it is important to remember that real estate, bank accounts, stock portfolios, life insurance policies, retirement accounts, business interests and all personal property are included in determining the value of your estate for tax purposes.  When you factor in items such as large insurance policies, the size of your estate may be larger than you realize.
  • Ease of creation, use and amendment. Trusts are easy to set up and can easily be updated from time to time.  Trusts are also legal in all states, making them highly portable if you move out of state.
  • Reduced likelihood of attack. Due to their private nature and the law, trusts are less likely to be challenged in court, and if they are challenged, the lawsuit is unlikely to succeed.
  • Asset management. For family members that are less astute at managing finances, a trust allows you to appoint a trust to manage the assets on behalf of your family.  This can also be useful for managing assets located in a state different from the state in which your family resides, such as real estate or business interests located out of state.
  • Subsequent marriages. If you have children from a prior marriage, a trust can ensure that your current spouse will be provided for adequately through regular distributions, but that the trustee will preserve the remaining assets so that they pass to your children rather than your spouse’s family.  Similarly, in the event that your spouse remarries after your death, a trust can be used to ensure that your assets are passed to your children rather than the new spouse.
  • Take Care of Yourself. By setting up a trust during your lifetime, you can also arrange for your own well-being if you become incapacitated or incapable of managing your affairs.

To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.