By Attorney Kelly Jesson
This year, make a resolution to prioritize estate planning. Estate planning allows you to gain control and peace of mind over difficult and unpredictable situations. We have previously written about the difficulties caused by dying without a will in North Carolina and the pitfalls of the probate process in North Carolina; however, many of the “worst-case” scenarios can be avoided with proper planning. Let us help you make 2021 the year you plan for emergency scenarios and protect your business and personal assets for the benefit of your loved ones through estate planning.
Unfortunately, COVID-19 has shown us that there are no guarantees, but it has also highlighted what is most important to each of us: family. Estate planning allows you to plan for what happens when you pass away, including naming a trusted person to handle your final affairs, name guardians for minor children, and distribute your assets according to your wishes. In addition to planning for death, our office drafts durable and health care powers of attorneys, where you can name agents to make both financial and medical decisions for you if you are incapacitated and cannot communicate.
There is no reason to wait to do planning, and as the pandemic continues to be a part of our “new normal,” you should get a plan in place before it is ever needed. If you do become incapacitated or ill, it may be more difficult or impossible to get documents in place, as you must have testamentary capacity to create valid estate planning documents.
Our office has created new procedures due to COVID-19. Our office staff wears masks, and masks are required by every person entering the office. We also social distance as much as possible, with witnesses watching you sign the documents through the conference room windows. We do not share or reuse pens that may be used by clients and we wipe down all surfaces before someone comes in to do a document signing. We are also meeting our clients in the parking lot, where they can remain in the car while signing documents, which limits their exposure to germs in the building. For all appointments prior to the signing appointment, we offer virtual appointments so we can still “meet” our clients while reducing risks of exposure.
Some of our clients delay estate planning because they do not have any friends or family members they trust to serve in fiduciary roles. In some circumstances, members of the firm may serve in these roles for the client if the client feels comfortable. It is better for you to take control and name someone yourself than to have the government appoint someone in an emergency or when you pass away.
We want to help you take CONTROL in 2021! Please call Jesson & Rains if you have questions about getting your estate plan in order or updating an existing estate plan. While You Build, We Protect.
By Associate Attorney Danielle Nodar
With the holiday season upon us, many people are considering how they can give back to their communities, particularly after a year where many have been adversely impacted due to the longstanding impact of COVID-19. Like many industries and people, the pandemic has also taken a toll on nonprofit organizations. Revenue streams have been reduced due to limits on regular fundraising activities and economic hardships befalling individual or corporate donors. This strain on nonprofits is coupled with an increase in demand for many services provided by nonprofits, particularly those combating difficulties caused by the pandemic, such as food insecurity, homelessness, and elder and medical care.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides several provisions that increase tax incentives for charitable contributions by both individuals and corporations, which may be an added incentive for people to make gifts at a time when they may be most needed. The CARES Act provides that individual taxpayers who do not itemize their deductions can now deduct up to $300 for cash gifts made to public charities in 2020. Another bonus to this new change is that it will not expire this year unless the legislation changes; however, to take advantage of it this tax year, all cash or check gifts must be received or postmarked by December 31, 2020. Individuals who itemize their deductions may now deduct cash contributions to public charities up to 100% of their Adjusted Gross Income (AGI), an
increase from the 60% Adjusted Gross Income limit that used to apply before the CARES Act.
For both groups of people, these gifts must be made to a public and not private non-operating foundations, donor advised funds, supporting organizations or split-interest trusts such as charitable remainder trusts. Also, keep in mind, you must provide a receipt to show proof of cash gifts of $250 or more.
Finally, this spirit of giving is not limited to individuals as the AGI limit for cash charitable contributions was also increased for corporate donors with the changes made by the CARES Act. Corporate donors can now deduct up to 25% of their taxable income, an increase from the 10% in previous years.
In order to ensure that your charitable contribution is maximized, you should consult with your tax professional and attorney. For questions about how you can incorporate charitable giving in your estate plan, please contact Jesson & Rains!
By Attorney Kelly Jesson
What happens when you get married, but you don’t update your will?
The good news is that North Carolina law will prevent a surviving spouse from getting nothing with their spouses passes away. In North Carolina, we have what is called “an Elective Share.” That means that a spouse, whether or not there is a will, and whether or not they are omitted from a will, can elect to take a share.
The amount of the share is determined by statute. I will not go into specifics here, but if a spouse is omitted from a will, they can take a percentage of the deceased spouse’s estate (not just their probate estate, but everything, including life insurance proceeds, stocks and bonds, etc.), and the percentage is based upon the number of years they have been married.
So this is good – if you have a will and you get married, but you pass away before you can revise your will, your surviving spouse will not be left out in the cold. However, if you intend for your spouse to inherit 100% of your estate, you may need to revise your will.
Now, let’s say you have a will, you’ve left property to your spouse, but then you get divorced:
What happens if you do not update your will after a divorce?
Well, there’s good news here, too. In North Carolina, the divorced spouse will get nothing under the will, and if you have the spouse listed as an executor, trustee, or guardian, the spouse will not be permitted to serve as one of those, either. However, we still recommend that a divorced person revise their will. There may be other provisions in the will indirectly
impacted by the divorce that are not automatically revoked. For example, maybe your wife’s sister was to serve as your successor executor, and you’d prefer someone from your own family to serve now? Maybe you had provided for your husband’s step-child in your will and you would like to remove the step-child? These provisions are not automatically revoked upon divorce.
So, as you can see, North Carolina law does a great job protected spouses from unintentional disinheritance and from their ex-spouses inheriting. However, a revised Will will do an even better job at making sure your wishes are carried out. Give Jesson & Rains a call if you need to draft or update your documents!
By Attorney Kelly Jesson
At Jesson & Rains, we review our estate planning clients’ assets and liabilities in order to provide them with a thorough consultation as to the treatment of their assets and liabilities upon death.
Essentially everything a person owns when they die is included in their “estate,” including assets that pass outside of probate. This is also called your “taxable estate.” A “probate estate” consists of assets that go through court-supervised probate before getting to beneficiaries. During the probate process, the decedent’s will is filed, assets are collected, bills are paid, and then whatever is left goes to the beneficiaries per the will. Probate assets are singularly owned real, personal, and business property without rights of survivorship and without a beneficiary designated.
However, a lot of assets pass outside of the probate estate upon death. Life insurance or retirement plans with named beneficiaries, jointly owned property with rights of survivorship, and any other accounts or securities with pay on death or transfer on death designees (POD or TOD) are not included in the probate estate (unless the decedent names the estate as the beneficiary or the beneficiary has predeceased the decedent without a successor named).
Why does this matter? How assets pass at death determine whether a person could benefit from a will or trust. Sometimes, it’s necessary for attorneys to retitle assets in order to achieve estate planning goals and ease of transfer at death.
Each client is different. Some have complex interests in various types of property, some own property singularly or are not married, and some have a lot of debt that is cause for concern. Without a thorough consultation, your estate plan may not be complete. It is important for the attorney to get a complete picture in order to tailor your estate plan to your needs and wishes. Give Jesson & Rains a call for more information!
By Associate Attorney Danielle Nodar
National Estate Planning Awareness Week runs from October 19 through 25th and was created in order to increase public awareness about the importance of estate planning for financial and personal wellness. According to the National Association of Estate Planners & Councils, it is estimated that 56% of Americans do not have an up-to-date estate plan! In honor of this week, we are reminding you of the importance of having an estate plan in place and working with an estate planning attorney to create a plan that is tailored to your specific needs and goals.
There are many myths associated with estate planning that can be answered and addressed if you work with an estate planning attorney. Some of these include:
These myths, coupled with the discomfort that often accompanies thinking about incapacity and death, prevents many people from prioritizing their estate plan. However, by working with an estate planning attorney, you can address these concerns, gain control over an incontrollable life event, and leave with the peace of mind knowing that your loved ones will be taken care of when you pass away.
The purpose of estate planning is to develop a strategy that will maintain your financial security during your lifetime and create a plan for transferring your property at your death. A good estate plan considers a variety of circumstances unique to each person, including family dynamics, overall assets and debts, and the costs associated with transferring assets at death. Estate planning goes beyond making decisions relating to where your property goes when you pass away. It also includes naming individuals who will help implement your plans when you pass away, such as naming the executor who will administer the probate of your estate, a trustee who will manage property for the benefits of your named beneficiaries, or a guardian who will have custody and care of any minor children. Comprehensive estate planning also creates a plan for who will take care of you in the event that you become incapacitated during your lifetime. This includes naming agents under a durable power of attorney who will act in your place as to financial, business, and legal decisions if you are no longer able to manage your affairs and naming an agent under a healthcare power of attorney who will make medical decisions for you in the event you cannot speak for yourself. There are even ways to make plans for end-of-life medical decision-making in the event that you do not want life support if you are suffering from serious or terminal medical conditions.
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 major life changes or changes in circumstances or assets, including factors like births, deaths, marriages, divorces, illness or disability, or even moving to a new state.
Thus, in honor of National Estate Planning Awareness Week, we want to remind everyone of the importance of creating and reviewing your estate plan to plan for your future and the future of your loved ones. If you have questions about creating an estate plan or potential revisions to your existing estate plan, please call Jesson & Rains!
By Associate Attorney Danielle Nodar
When you pass away, any outstanding debts that you owe, such as medical bills, taxes, mortgages, and credit card bills, continue to live on. This is true regardless of whether you pass away with an estate plan or intestate (i.e. without a will). While different debts are treated differently in terms of how they are secured and paid, the general rule is that any debt that was owed by you at during your lifetime is still owed once you pass away.
Thus, a main component of the probate process is the management and payment of creditor claims. Your personal representative, the person responsible for administering your estate, is required to provide notice to creditors that an estate has been opened to allow creditors to file claims against your estate. North Carolina law provides strict guidelines and timelines for providing sufficient notice to known and potential creditors. This includes providing written notice to known creditors (creditors who have sent bills to the decedent or to the estate) as well as publishing notice to creditors in a local newspaper. Providing notice starts the clock on a 90-day period where creditors must present their claims against the estate to the personal representative or risk the possibility of a claim being rejected for being filed too late.
Your personal representative is not responsible for paying your debts out of pocket; they use estate assets to pay claims made against the estate. If there is not enough cash to pay claims, any estate assets, including real and personal property, can be sold by the personal representative to create funds to pay estate debts. However, depending on the nature of the estate assets and liabilities, some estates may run into issues where there are more debts than there are assets even after available assets are sold.
Estates with insufficient funds to fully pay all of the estate’s obligations, which include debts as well as the expenses involved with administering the estate, are known as insolvent estates. If an estate is insolvent, all of the creditors may not be paid in full or paid at all. To help determine who gets paid first, North Carolina provides a list of the priority depending on the classification of the creditor. This list of priority allows for certain creditors to get paid in full before other creditors are paid and reads as follows:
1. Costs and expenses of administration, such as court fees and attorney’s fees
2. Property liens up to the amount of the value of the property
3. Funeral expenses to the extent of $3,500. Any fees over this amount fall into #10
4. Costs associated with gravestones and suitable burial place to the extent of $1,500. Any fees over this amount fall into #10
5. Taxes, dues, and other claims under federal law
6. Taxes, dues, and other claims under North Carolina state law
7. Judgments made in any North Carolina jurisdiction; liens active on a decedent’s property as of the date of death; and Medicaid claims made by The Department of Health and Human Services
8. Outstanding wages due to decedent’s employees accrued no more than 12 months prior to the date of decedent’s death; medical expenses, necessary drug costs, and medical supply fees accrued in the 12 months prior to the date of decedent’s death
9. All equitable distribution claims
10. All other claims. This is a broad category that includes all other debts such as personal loans or credit card debts.
It’s important to follow this list carefully because a personal representative can become responsible for failing to follow the order of priority. For example, if a higher priority creditor is not paid in full before a lower priority creditor, the personal representative could find themselves liable for the amounts owed to the higher priority creditor if there are not enough estate funds to fully pay both claims.
Even if an estate is insolvent, there are some assets that are exempt from creditor claims, which means that your loved ones will be able to retain the assets or funds regardless of what debts you owe. This includes life insurance or retirement accounts that name your spouse or child as a beneficiary or real estate owned with your spouse as “tenants by entireties” (TBE). If there is a surviving spouse or minor children, the personal representative should also apply for a family allowance, which provides for funds that are given to the family free and clear of creditor claims. These must be applied for within one year of the date of death, so it is crucial that a personal representative petition for these allowances as soon as an estate is open instead of waiting to see what debts come in.
If you have questions about payment of estate expenses or debts or creating an estate plan to help protect your assets from creditors, please give the attorneys at Jesson & Rains a call!
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