By Associate Attorney Danielle Nodar
Who Inherits My Property?
As mentioned in the previous article in this series, you are deemed to have died “intestate” if you die without a will. North Carolina’s Intestate Succession Act is the default law that kicks in if you pass away without a will. It names which of your surviving family members are considered your legal heirs in North Carolina (spoiler alert! Not step kids or “common law spouses”) and the order in which they will inherit.
Only the assets that could have passed through a will are governed by this law. These assets are known as a person’s probate property, which is usually all of the assets that a person owns in their individual name and assets that do not pass via beneficiary designations. Some examples of non-probate assets not commonly governed by the intestate succession laws are life insurance, retirement accounts, jointly owned property with rights of survivorship, securities with named beneficiaries, and Pay on Death or Transfer on Death accounts. However, there could be circumstances where these non-probate assets could become part of your probate estate and thus subject to the intestate succession laws, such as if a named beneficiary predeceases you and there is no back-up named or you fail to designate a beneficiary in the first place.
The most common misconception surrounding intestate succession is that your spouse will inherit everything if you pass away without a will. This is sometimes not the case if you have probate property and are survived by your spouse, children, or parents. For example, if you do not have a will and are survived by a spouse and one child (or grandchildren, if that one child is deceased), in addition to receiving the spousal allowance, your surviving spouse takes the first $60,000 of your personal property, ½ of your real property, and ½ of whatever remains of your personal property while the child inherits the remainder.
If you are survived by a spouse and more than one child (or grandchildren in the event of predeceased children), the spouse inherits 1/3 of your real estate, the first $60,000 of personal property, and 1/3 of whatever remains of the personal property. Your children will evenly split the remaining 2/3 of your personal property and 2/3 of your real estate.
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 of 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 do not have full control over where your probate property will go at your death. You may be inadvertently leaving property to people with whom you do not have a close relationship or to family that does not need your assets. You could also be leaving a headache instead of an inheritance if heirs do not get along. For example, if you have a spouse and a child from a previous relationship, they could potentially become joint owners of real estate. If they do not agree on what to do with the property, court procedures may be necessary in order to sell and divide assets. You could also be leaving a family member in need if you do not have a will. For example, if you have a spouse and minor children, you may want your spouse to inherit all of your assets to be able to more easily take care of your children and not leave real estate to minor children.
If you have questions about intestacy in North Carolina, drafting a will, or ensuring that your wishes regarding your property are honored once you pass away, please call Jesson & Rains.
By Associate Attorney Danielle Nodar
If you pass away without a will in North Carolina, there are statutes that govern who will serve as your executor and who will inherit your estate. However, dying without a well-written will can leave your loved ones with a variety of legal hurdles to overcome.
The first article of this series discusses who will be responsible for administering your estate if you pass away without a will and what are some of the issues they may face when trying to get appointed by the probate court. The next article in this series will discuss how property is distributed if you die without a will in North Carolina.
When you die without a will, you are deemed to have died “intestate.” Each state has its own intestacy laws, which are the “default” option that outlines major decisions in the probate process, such as who can serve as your executor and their qualification requirements. The appointment of the executor is the first step in probating an estate. The executor is responsible for collecting all of your remaining assets at death, paying all of your legally enforceable debts and expenses out of those assets, and distributing any remaining assets to your heirs. A court will never appoint an executor who is a convicted felon, incapacitated, or under the age of 18, but generally, if you have a will, you can name anyone, and the court will respect your decision.
If you die without a will, the clerk of court will appoint someone in the following order: (1) a surviving spouse; (2) any heir; (3) any next of kin, with the person who is of closer kinship under having priority; (4) any creditor of the decedent; (5) any person of good character residing in the county who applies therefor; and (6) any other person of good character. The person the court appoints could be someone you don’t particularly want to handle your estate, and you could avoid that by naming them in your will. Also, there could be issues with relatives who are the same degree of kinship arguing over who should serve, which could cause unnecessary delays and expenses if the dispute cannot be resolved without attorneys.
The other issue is that, generally, a bond is required of the executor of an estate. This bond is an insurance policy, and it is required to protect the beneficiaries of the estate in the event that the executor breaches their duties in administering the estate, such as by running off with the estate assets. The executor must be able to pass a credit check in order to obtain the bond and pay the bond premium of out-of-pocket (which can sometimes be quite high) because they will not have access to your assets before they are appointed executor by the probate court.
There are two ways to avoid the bond. First, all of the heirs could sign a document waiving the bond requirement, but this requires them to all be in agreement (which sometimes doesn’t happen) and they all must be age 18 or older and otherwise have capacity. The second way to avoid the bond is to waive the requirement in a will. This makes is easier from the outset for your desired executor to serve. After all, they’re doing a job for your benefit and the benefit of your family.
Lastly, another benefit of having a well-written will is that attorneys can put helpful provisions in the will that don’t otherwise exist under the default intestacy statutes that make it easier for the executor to do their jobs. For example, we can write in the will that the executor can sell a house if needed to pay debts of the estate; whereas, if the same person died without a will, the executor would have to file a motion with the court and having a hearing (costing them money, and likely requiring an attorney) in order to sell the house.
If you have questions about intestacy in North Carolina, drafting a will, or ensuring that a person of your choosing is able to manage your estate once you have passed away, please call Jesson & Rains.
By Attorney Kelly Rains Jesson
Naming a guardian for minor children is one of the top reasons why a parent engages in estate planning. The only way to name a guardian for a minor child in the state of North Carolina is in a will (N.C.G.S. § 35A-1225(a) references “last will and testament” but does not mention any other document). So, making it a Facebook status or writing it on a cocktail napkin before a trip is not going to cut it.
Even though the statute states that the guardian named by the parent is a “recommendation” that serves as a “strong guide” to the clerk, court history shows that the clerk almost always will appoint the guardian named in the will, unless it’s not in the best interests of the child (for example, if the named guardian was a drug addict, felon, or incapacitated). The North Carolina legislature wrote that “[p]arents are presumed to know the best interest of their children.”
We recommend that parents agree on their choice of guardian in the event they both pass at the same time. If they name different guardians in their respective wills, there could be a dispute over who would serve, which defeats the purpose of naming a guardian in the will in the first place. However, a long-surviving spouse may update his/her will after the first spouse passes away. If that is the case, the court will appoint the guardian named in the will with the latest date.
If you or someone you know needs help creating a will and naming a guardian for minor children, give Jesson & Rains a call!
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.
- 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:
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 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”
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