​Written by Danielle Nodar, Associate Attorney

Estate planning can be a daunting process for many people. Whether it is the stress of making decisions that will impact loved ones when we are gone or avoiding thinking about death or incapacity, many people are hesitant to create an estate plan.  The confusion and anxiety surrounding this process have lead to some pervasive myths relatied to estate planning, which we have addressed below.

1. My estate is not big enough to require any estate planning.  

There is a widespread myth that only the very wealthy need estate plans and that the average person does not have an “estate” to begin with. This is not true!  When someone passes away, all of their assets become part of their estate; there is no minimum threshold of assets that make up an estate. Thus, at death, we all have an estate, it just varies in size and complexity based on the amount and types of assets you have. Oftentimes, people with fewer assets have the most issues during probate and could have really used the help of an attorney.
 
2. Estate Planning only deals with distributing property at my death.
 
Another myth is that your estate plan only deals with who will inherit your property when you pass away. This is also incorrect! A will also allows you to name people who may serve important roles when you pass away. In a will you will name an Executor to manage your assets and distribute them to the beneficiaries in your will at the time of your death. Without a will, you will not have any control over naming the person to manage you affairs at your death. Additionally, in North Carolina, the only way to name a guardian for your children in the event that both parents pass away while the children are still minors is to name the guardian in a Last Will and Testament. You can also name a trustee who is the money manager for inheriting children until they reach a certain age.
 
Additionally, estate planning involves planning for incapacity through durable powers of attorney and health care directives. With a durable power of attorney, you can name an agent to make business, legal, and financial decisions on your behalf if you become incapacitated. You can also name an agent to make healthcare decisions for you in the event that you are incapacitated and include specific instructions for them about your healthcare wishes. There is also the advance directive or “living will,” which includes your wishes relating to the withdrawal or withholding of life support if you are incapacitated and suffering from a medical condition where you will not likely recover.

3. If I have a will, I can avoid probate.  

Having a will drafted will not always prevent your estate from having to go through probate to pass assets to your loved ones. If you pass away with a will, depending on the circumstances, your executor may have to file your will at the courthouse along with the initial probate application and then must comply with all the requirements of the probate process. This includes providing the court with an inventory of all of your assets at the time of your death, providing notice to any of your potential creditors existing at the time of death, handling creditor claims and paying creditors with estate assets, and making distributions of any remaining assets to your beneficiaries. While there are ways to avoid probate (for example, owning property joint with rights of survivorship, the surviving spouse allowance, and utilizing revocable trusts), sometimes merely having a will is not enough.

4. I do not need a will because my spouse will inherit everything.  

In North Carolina, this is oftentimes false. The surviving spouse will remain owner of all joint property or accounts with right of survivorship. Also, every surviving spouse (regardless of the existence of a will) is entitled to a year’s allowance of $60,000 worth of the decedent’s personal property. If there are any other assets, a surviving spouse does not automatically inherit everything according to the North Carolina Intestacy Statute.  For example, if you do not have a will and are survived by a spouse and only one child (or grandchildren, if that one child is deceased), the surviving spouse takes ½ of your real property, the first $60,000 of your personal property, and ½ the remaining balance of your personal property while the child inherits the remainder. If you do not have children but are survived by a spouse and parent(s), your spouse will inherit ½ of your real property, the first $100,000 of your personal property, and ½ the remaining balance of your personal property. Your parent(s) will inherit ½ of your real estate and any personal property remaining after the spouse’s share
 
Thus, without a will, you may be inadvertently leaving your assets to people who do not need them and leave your spouse in need. For example, if your children are minors, you may want your spouse to inherit your full estate to take care of your children. 
 
Overall, all of these options are more complicated and involve more court oversight. It is much easier to create an estate plan with an attorney that ensures that your spouse inherits everything or is adequately taken care of when you pass away.  If you or anyone you know have any questions regarding estate planning, please give Jesson & Rains a call.

​North Carolina has a procedure whereby the surviving spouse can claim an “allowance” when their spouse dies, to be satisfied by only the deceased spouse’s singularly owned personal property.  Most jointly owned property will automatically become the surviving spouse’s. 
 
The allowance is a superior claim and will be paid out of the deceased spouse’s personal property before any creditors or other claimants are paid.  The spousal allowance law applies whether or not the deceased spouse had a will.  As of January 2019, the amount of available allowance doubled from $30,000 to $60,000!  Only personal property may be used to satisfy the allowance.  If a deceased spouse had real estate only in his name, the surviving spouse could not use the spousal allowance to get the real estate and would then have to resort to the probate process. 
 
The benefits of the increased spouse allowance statute are clear.  Example: you and your deceased wife own a house jointly and own joint bank accounts, but she had a car in only her name worth $30,000 and a stock account only in her name worth $20,000.  She also had a $20,000 Macy’s credit card bill in only her name.  You can go up to the courthouse with proof of her death and proof of your marriage, fill out a fairly simple form, pay a small fee, and leave being able to transfer those two items to you directly.  There is no need for a costly and time-consuming probate proceeding.  Additionally, Macy’s will not be paid.  
 
It is very important to note that a surviving spouse only has one year to file a claim for the allowance.  There are no exceptions to this rule.  If the deadline had been missed in the above example, the stock would likely have to be sold to pay the Macy’s debt.  Also, there is a $5,000 child’s allowance available for children under the age of 18 or certain children over age 18.

​  By Associate Attorney Danielle Nodar

One of the most important decisions when creating an estate plan is determining what will happen to your assets when you pass away. When thinking of assets, the usual tangible or financial assets come into mind: real estate, bank accounts, cars, jewelry, etc.  However, today as more and more of us are active online, another important and often overlooked asset are digital assets. Digital assets cover a wide range of a client’s assets, from the sentimental and personal items such as photos stored online and email and social media accounts, to assets with a monetary value, such as PayPal accounts, domain names, intellectual property stored on a computer, business information such as client lists, and cryptocurrency.  

Without creating an estate plan that references these assets, state and federal data privacy laws may make it difficult or even prevent loved ones from accessing your digital assets when you pass away.  If no planning has been done, an online provider’s terms of service agreement will likely control what happens to a consumer’s account after death.  As the law slowly catches up to technology, legislation has been enacted to allow the owner of digital assets to protect these assets after death. For example, The Uniform Fiduciary Access to Digital Assets Act has been passed in the majority of states (including North Carolina) and provides that an owner of digital assets can specify who will be able to access and dispose of the digital assets after death.  Therefore, by creating a formal estate plan, your documents can designate a specific person (such as your executor or trustee) to have access to your digital assets when you pass away. You can also include provisions that this person will have the ability to reset or recover any passwords in order to access your data and assets.

After determining who should be allowed access to your digital assets after death, additional steps should be taken to ensure that this person will be able to more easily access any relevant data or digital assets.  During your lifetime, you can create a list of your digital assets so that your loved ones have an idea of where to begin in collecting digital assets. This list should include usernames, passwords, security questions associated with accounts, and instructions on what should be done with accounts after death, such as which accounts should be deleted. As this list contains key information for accessing digital assets, it should be kept in a secure location that can be accessed by loved ones after death. We do not recommend that clients include this information in their wills, as they can be accessed by the public after death.  

In addition to creating an estate plan that plans for access and disposition of digital assets, certain online providers have internal procedures and policies that you can use to protect your digital assets after death. For example, Facebook ‘s privacy and security settings allow you to name a “legacy contact” to handle your account after you pass away. Instructions can be found here: https://www.facebook.com/help/103897939701143?helpref=faq_content.

Google also has an option where you can name an “inactive account manager.” This allows the Google account owner to specify what should happen to the account after it has remained inactive for a period of time.  The account owner can list persons who will be notified that the account will be closed before it is deleted, giving loved ones time to access the account and download any important content before the account is deleted.  Instructions can be found here: https://support.google.com/accounts/answer/3036546?hl=en.

With some basic planning, you can provide your loved ones with access to assets that could have considerable sentimental and monetary value. As society and our lives continue to get more intertwined with the digital world, it becomes crucial that estate plans are comprehensive and provide protection and instructions for our digital assets.

- By Jesson & Rains Associate Attorney, Danielle Nodar

The beginning of a new year lends itself to reflecting on the year that has passed and setting goals for the future. Come January, we are bombarded with information about New Year’s resolutions and implementing plans to help us transform our resolutions from lofty dreams to our reality.  From health goals relating to diet and fitness, financial goals such as saving for retirement or paying off longstanding debt, even decluttering our homes--there is no shortage of information about what we can do to improve our present and plan for our future.
 
However, one area of planning that many people seem to put off is creating an estate plan. Estate planning involves meeting with an attorney to discuss things like your assets and debts and how they could impact your estate plan; how you want your property distributed at your passing; who will administer the probate of your estate; who will handle your financial affairs and medical decisions if your become incapacitated and are no longer able to make those decisions on your own; and other important decisions that could make a lasting impact on your loved ones.
 
Even if you have an estate plan in place, you should meet with your estate planning attorney every three to five years to review any life changes or changes in the law.  Some reasons to update an estate plan are:
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• Births – When you have children, you should update your will and/or trust to 1) appoint a guardian for minor children in the event that you pass away before they reach the age of 18, and 2) provide a plan for your children to inherit your assets. Otherwise, under the law, children can inherit all assets once they reach the age of 18. It is also important to make sure you that are not inadvertently leaving out a new child or grandchild from your estate plan.
• Deaths – You may need to replace any deceased beneficiaries, executors, trustees, powers of attorney, and guardians. This not only applies to all your estate planning documents, but also includes documents where you name a beneficiary, such as retirement accounts or life insurance policies.  If a contingent beneficiary is not named for those products, the money will go into your estate, making it available to creditors.
• New disability or illness – If a beneficiary of your estate plan becomes disabled or ill, special planning can be implemented into your estate plan to ensure that these people are cared for and still retain benefits.  
• Marriage – If you are married, you may have to update your estate plan to include your new spouse. It is a common estate planning myth that when a spouse dies without a will, the other spouse will inherit everything.  Instead, a portion of the estate may go to the deceased’s children or the deceased’s parents instead of the spouse.  We also assist in retitling property in an effort to avoid probate.
• Divorce – If you become divorced, make sure your ex-spouse and his/her family is not inheriting or playing any other role in your estate plan. This also includes reviewing your beneficiary designations, such as retirement accounts or life insurance policies.
• Moving to a new state – If you have moved to a new state, does the new state have beneficial laws to incorporate?
• Buying real property in a second state – You may want to upgrade to a trust to avoid multiple probates in multiple states.
• Changes in assets or debts –For example, if your assets have dramatically increased, you may need to see if estate taxes are now an issue. If your debts have increased, you may need to come up with a different plan to shield your assets from creditors.

 
If you have had any major life changes or just want to ensure that your estate plan is in order, make it a goal for 2019 to plan for your future and the future of your loved ones with estate planning. We can help you to ensure that your property is distributed how and to whom you want it to be distributed and to ensure that you are leaving your family unburdened. 

                                                                        By Danielle Nodar

Yes! When helping clients formulate an estate plan, we oftentimes have questions on whether there are any alternatives to passing property to loved ones without having to go through the court-regulated formal probate process. Depending on the types of assets and beneficiaries, formal probate administration is not always necessary. For example, formal probate administration is not always required at the death of the first spouse. Real property owned by spouses as tenants by entirety passes without regard to creditor claims, and the surviving spouse allowance allows a surviving spouse to obtain up to $30,000 in personal property of the decedent spouse free and clear of creditor claims. There are also forms of informal probate, such as summary administration and administration by affidavit, which apply to certain kinds of estates and are described in more detail below.

Summary administration is available for surviving spouses. This procedure is available only if the surviving spouse is the sole heir (intestate, meaning that the decedent died without a will) or the sole devisee (testate, meaning the decedent died with a will) of the decedent. An order of summary administration will permit the spouse to proceed with the collection and distribution of the decedent’s property without the formality of regular administration. By obtaining the order, the surviving spouse assumes all liabilities of the decedent to the extent of the value of the property received.

Another option for small(er) estates is to have a “collector” appointed instead of a personal representative. A collector may file a small estate affidavit to administer the estate of a decedent with a small(er) estate.  This procedure is available for decedents whose personal property, less liens and encumbrances thereon, and less the spousal allowance, is valued at $20,000 or less.  If the surviving spouse is the collector, and they are the sole heir or devisee of the decedent, the value of the personal property less liens and encumbrances and the spousal allowance can be valued at $30,000 or less. 

Unfortunately, these informal probate procedures are unavailable if singularly-owned real estate is part of the decedent’s estate and heirs intend to sell the property within two years of the decedent’s death.  Full probate administration is necessary to pass clear title because an executor must be appointed to publish notice to creditors. If the real estate is sold within those two years and notice to creditors has not been published, the sale will be void as to creditors.  N.C.G.S. § 28A-17-12.  If the real estate is sold after two years and notice has not been published, the estate still owes the debts to creditors (if the applicable statute of limitations has not expired), but the creditors cannot pull the real estate back into the estate to sell to satisfy their debt.

Another way probate may be avoided is if assets are titled joint with rights of survivorship. For example, if you and a loved one hold a bank account as joint with rights of survivorship, you both own 100% of the account’s assets jointly during your lifetimes. When one of the joint owners passes away, the surviving owner will own 100% of the account individually.

Finally, one of the most important means of estate planning outside of the probate process is the use of beneficiary designations and transfer on death designations for certain banking or brokerage accounts, securities, life insurance, retirements accounts, and 401(k)s. As you can imagine, the bulk of many people’s assets are contained in these accounts.  These assets will pass to who you have listed as your beneficiary outside of probate, regardless of what your will says. This means that the money will get to your beneficiaries quickly and that it will not be accessible to any of your creditors at the time of your death.

Thus, it is critical to make sure that all of your beneficiary designations are up to date for primary and contingent beneficiaries.  We have seen people fail to update these after death or divorce, causing the money to go into the probate estate, which will cause a delay in distribution to your loved ones and will open those funds up to creditors.  

If you need assistance with any of the above planning, please give Jesson & Rains a call.

​- By Jesson & Rains Associate Attorney, Danielle Nodar

Anthony Bourdain, acclaimed chef, television host, and travel writer, encouraged people to explore the world and continues to do so after his death. When Bourdain’s will was probated in New York, it was revealed that he left most of his estate to his eleven-year-old daughter. However, according to The New York Times’ Page Six, Bourdain bequeathed his frequent flier miles to his estranged wife. Bourdain stated in his will that she should “dispose of [them] in accordance with what [she] believes to have been my wishes.”
 
Considering Bourdain’s jet set career as the host of CNN’s Parts Unknown, this gift is likely a substantial amount of frequent flier miles. While most of us have not racked up a similarly significant amount of miles, Bourdain’s estate plan still calls into question what kind of property we can leave to our loved ones and how.
 
Every airline and credit card company has a different policy for their points or rewards programs. When a customer signs up for a loyalty program, they are entering into a contract and must abide by the company’s terms and conditions.  Some programs specifically indicate that rewards points are not property of the rewards member. In these cases, the rewards points are neither assignable during lifetime nor inheritable at death. Other loyalty programs may allow rewards points or accrued miles to transfer to a person through a will or divorce decree. However, even in these cases, it is sometimes up to the discretion of the airline whether to honor a transfer of miles.
 
If you are interested in leaving a loved one your accrued airline miles or rewards points after your death, you should read the terms and conditions to determine (1) if you they are transferable and (2) if they are, how to transfer them properly. 
 
“Travel isn’t always pretty. It isn’t always comfortable. Sometimes it hurts, it even breaks your heart. But that’s okay. The journey changes you; it should change you. It leaves marks on your memory, on your consciousness, on your heart, and on your body. You take something with you. Hopefully, you leave something good behind.”
― from “No Reservations: Around the World on an Empty Stomach”