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 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
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!
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