Raleigh Estate Planning and Corporate Law Attorneys

Estates and Trusts

What You Need To Know About Wills And Trusts In North Carolina

By

Many people don’t realize that almost everyone has an estate, regardless of their wealth. Your estate is considered to be everything that you own such as vehicles, furniture, bank accounts and even your clothing and personal items.

Although it’s unpleasant to imagine something happening to us, it is a fact of life that accidents happen and we grow older. What will happen to all of your property and personal possessions in the event something happens to you? Planning the final disposition of your estate is wise whether you are young or old and especially if there are children involved. Estate planning is not difficult and an estate planning lawyer can advise you in all manner of wills and trusts and can make drawing up a will or trust simple and easy.

Estate planning begins when you draw out a will or a living trust. If you do not have one when you die, the laws of your state will govern the distribution of your estate, even if you always wanted your 100-year-old porcelain doll, given to you by your grandmother, to go to your daughter. That classic car you have put a lot of love and care into was always intended to be your son’s car one day, but will it?

In North Carolina, any person 18-years of age and older can make a will or living trust, and that will or trust will be recognized by law.

Whatever debts you owe upon your death, whether it is a car loan or fees owed for personal services, this will come from the assets of your estate. Once your debt has been satisfied, if you do not have a will or trust explicitly stating your final wishes, the courts will determine who in your family gets what. Most states split assets between a surviving spouse and any children.

You may have wanted to split your assets between your two children and a trusted lifelong friend, but without your wishes being known, the court usually distributes assets according to the laws of your state. If you have jointly-owned assets, these may not be controlled by your will. For instance, if you have a 401(k) or life insurance policy where a beneficiary has been named, it may transfer directly to your beneficiary without being heard in probate.

Many families and professionals of all types prefer Revocable Living Trusts as this type of trust prevents the court from controlling your assets in the event you are incapacitated by having an appointed trustee act on your behalf according to your wishes. These trusts can be changed at any time, and the person you appoint as trustee can also change.

With a will, your assets are distributed how you have stated you wish them to be and once the wishes of the will have been performed, that is the end of it. With a living trust. if you have substantial wealth or inheritance, your children can inherit your wealth at whichever age you wish them to inherit, in the meantime, your assets are protected by the trusted person you have appointed. Perhaps you have a loved one who is horrible at managing money and you don’t feel comfortable giving them a lump sum of your estate but you want to provide for them. You can appoint any person or entity as your trustee, and that person can distribute payments to them over a period of time or for the remainder of their lives.

There are many different wills and trusts and aspects to them that are designated by you so that you can provide for your family and loved ones or even show your love and thoughtfulness. A few of the things that estate planning can involve besides providing wealth include:

  • Instructions for your care in the event you become unable to manage your affairs
  • Name guardians and trustees for minor children
  • Provide for the transfer of your business
  • Minimize the burden of taxes, court fees or other legal fees on your loved ones
  • Provide for pets
  • Provide for disabled minors so that there is no disruption in their government benefits
  • Name the locations of important papers, passwords and other information of this nature

It is always wise to consult with an estate planning lawyer who has the expertise to advise you in the matter of wills and living trusts. One of our experienced estate planning attorneys can help you navigate the laws of North Carolina and are able to advise you of all the pros and cons of each type of will or trust so that you can find the best option for you and your family.

Do You Need An Estate Plan?

By

Do you need an Estate Plan? The short answer is “Yes, if you are age 18 or older, you need an estate plan.” It doesn’t matter if you are old or young, if you have built up considerable wealth or if you are just entering adulthood —you need a written plan to keep you in control and to protect yourself and those you love.

  • It is important that every adult, regardless of age or wealth, have both a lifetime plan and an after-death estate plan.
  • Planning for incapacity will keep you in control and let your trusted loved ones care for you without court interference – and without the loss of control and expense of a guardianship or conservatorship proceeding.
  • Every adult needs up-to-date health care directives.
  • It is important to leave written instructions to make sure you are the one who selects who’s in charge of when and how your assets will be distributed.

What is an Estate Plan?

Your estate is comprised of the assets you own, including your car, home, bank accounts, investments, furniture and personal belongings. No matter how large or how small your estate, you can’t take it with you when you die, and you probably want certain people to have certain things you own.

To make sure that happens, you need to provide written instructions stating who you want to receive your assets and belongings, what you want them to receive, and when they are to receive it—that is the essence of an estate plan. If you have young children, you will need to name someone to raise them in your place and to manage their inheritance.

Without an estate plan, state law will govern who your assets will go to and how your estate is handled, and this can often lead to a surprising and undesirable result for your loved ones.
A properly prepared estate plan also will have instructions for your care (and the management of your assets) if you become incapacitated, even for a short time, due to illness or injury. Without the proper documents in place, your family will have to ask the court for permission to use your assets to take care of you and to oversee your care. That process is out of your control and it takes time and costs money, making an already difficult situation even more difficult for your family.

Having a plan in place is very important even for families of modest means because 1) they can least afford to pay unnecessary court costs and legal fees and 2) state laws, which take over in the absence of planning, often distribute assets in an undesirable way.

It is important to have the counseling and assistance of an experienced estate planning attorney who knows the laws in your state and has the expertise to guide you in making difficult decisions such as who will raise your children and who will look after your care at incapacity. Contact the attorneys at Wilson Ratledge to discuss any estate planning questions that you may have.

Estate Planning in North Carolina and How It Affects Your Family

By

No one likes to think about leaving our loved ones. Unfortunately, dying is an inevitable part of life. Preparing for this day will not only give you peace of mind but will ensure that your assets are divided as you wish. If you have minor children, it also ensures that they are taken care of.

Estate plan basics

An estate plan is a plan to be used in the event of your death. It basically consists of everything you own. This includes bank accounts, homes, automobiles and your personal belongings. Any insurance policies are also included.

There are many details that are specific under an estate plan. Your wording can make the difference in how your estate is handled. An estate planning lawyer can help you create a plan to ease your mind.

What estate plans cover

An estate plan covers different topics that are important to you and your family. One such topic is to appoint a guardian for your children. This means the person you choose will be able to make decisions on your children’s behalf for things like financial or health decisions. Inheritance protection is also included to protect the children’s inheritance from individuals like creditors.

An estate plan also covers disability, legacy, tax and insurance planning. You will be able to dictate what will happen to you in the event you become permanently disabled. You also will be able to figure taxes and know what will come out of your estate to cover these when the time comes.

Another great feature of having an estate plan in place is deciding who will take care of your pets after you are gone. Your pets are family, and you want to ensure that someone you trust will take care of them.

North Carolina laws on estate plans

In the state of North Carolina, it is best to have an estate plan in place before you die. If not, intestate laws fall into place. This means your assets will automatically be passed to your heirs regardless of who you wish to receive them.

For instance, any minor children who are to receive assets or money will be controlled by the court system until they are 18 years old unless you have an appointed guardian for them. In other words, the courts determine how the money is spent and where your children will reside after you are gone.

If you have a spouse and no children, the spouse receives everything. If there is no spouse but there are children, the children receive everything. If there are both, the assets will be divided.

Let an estate planning lawyer help you

It is best to have an experienced estate planning lawyer sit down and work out the details of your estate. It’s never to early to get your plan in place because you never know what tomorrow holds. Give us a call, and we will create a plan specifically for you and your family.

What You Can Do To Minimize The Likelihood Of Someone Contesting Your Will

By

Estate planning is a serious undertaking that, in most cases, requires a professional to make sure you and your family get the best result. Since death is inevitable and the likelihood of unfortunate situations like mental incapacitation cannot be ruled out in life, it is only prudent to have a trustworthy estate planning attorney at your side. Contrary to the belief of many, estate planning does not only begin and end with a last will and testament you want to make. A lawyer in this field assists you in avoiding estate taxes, drafting living trusts, or even developing a tax mitigation plan. Moreover, they work to ensure that both your assets and savings get to the intended beneficiaries after your demise.

Keeping It Private

A safe way of keeping cases of will contesting at bay is keeping the content of your will or trusts to yourself and your estate planning attorney only. As a result, in the event of changing your mind, no one will know your previous estate provisions. To keep the whole process in the light and open to your family, all you need to do is to give them our firm’s details and your attorney’s contact information and details of where your estate planning documents are located. However, certain circumstances may necessitate that you provide a notice of your estate plan provisions, for instance, designation of the guardians of your dependents, especially children with disabilities.

Furthermore, if you are seeking to change your will, our estate planning attorneys can help you in drafting another will and an entire restatement of your trust. All this is done at a reduced cost, with minimal additional expenses. In turn, it extends you an essential protection such that after your death, no one will gain knowledge of your previous will or trust.

Creation Of A Revocable Living Trust

One of the first steps in most estate planning situations is to help you create a revocable living trust. It becomes a tall order contesting it if it has been in play for quite a long time. It is difficult to prove that cases of duress, fraud, or undue influence have been taking place over all these years or that there was lack of testamentary capacity for all these years.

Activate The ‘No Contest Clause’

Not every beneficiary of a will is left happy with its testament. Upon the realization of this, the law has provided for a ‘no contest clause’ for every will and trust. This provision states that anyone who dares to contest your will or the heirs will get nothing if they challenge what your estate plan commands. However, despite being an excellent preventive measure, someone with little or nothing to lose, maybe one who has been disinherited or another who is determined to get more than outlined in the will can contest it.

Fairness

Showing discontent in the case of unfair treatment is human. Children will expect to receive the same inheritance without looking at their current financial position. To avoid instances of a will contest, we recommend that you hold a joint family meeting irrespective of your relationships and agree or else consult our estate planning lawyers for the various options at your disposal to avoid unfairness.

Seek The Service Of An Experienced Estate Planning Attorney

In estate planning, one wrong word or a missing signature can alter the entire intent of a will or trust. Utilizing the services of one of our estate planning attorneys ensures that drafting and execution mistakes are eliminated.

Our estate planning attorneys have gone through years of mentoring, education, and building experience, and they understand how to handle and advise clients on matters concerning wills and trusts. In addition, they make it clear to you from the very beginning that estate plans rarely go unchallenged, but they work to ensure that the chances of its happening are minimized. More importantly, our lawyers break down the process and make it worthwhile for anyone with estate planning issues.

Expectations & Reality – Long Term Care

By

A joint venture between the Associated Press (AP) and the NORC at the University of Chicago (if you’re curious about what NORC means, visit this page, and anticipate confusion) released the results of a national survey it conducted related to the population’s understanding of long-term care and the impact it has on families.  This is a follow-up to a survey it conducted in 2013 related to peoples’ understanding of long-term care.

The results of the survey may be surprising to some, but not to folks that have experienced a situation related to the care of a loved one.  Some key points from the survey:

  1. The US Department of Health & Human Services estimates that 70% of people who reach the age of 65 will need some form of long-term care.
  2. Six in 10 Americans aged 40 or older have experience with long-term care, either as caregiver, recipient, or person paying for care.
  3. Americans aged 40 or older who have experienced long-term care issues are more likely to be concerned with planning for long-term care for themselves and not relying on family.
  4. One-third of Americans in that same age bracket are very concerned about not doing enough planning to provide for their own care, but two-thirds indicate that they’ve done little to no planning.
  5. Americans lack information about ongoing living assistance, but what information they do have the tend to get from friends, family, or co-workers, even though they place much more trust in the information they receive from professionals.

There are additional critical points in the survey, including how the nation will pay for the growing care needs of its aging population.

But the big takeaway for me, as an elder law attorney, is this: there are professional sources of information on these issues, from attorneys to elder care groups to financial planners, that can be tapped for often-times minimal or no cost to provide education and understanding related to these issues.  There is no reason to face these problems without planning or direction.

Some basic points to consider:

  1. Have you talked about your long-term care desires with your family?  If so, have you talked about how to pay for them?  For example, if you want to stay at home, have you advised in which order assets should be consumed, and which ones should not be (if any)?  Or if you’d like to move into an independent or assisted living home, have you discussed paying for care?
  2. Do you have the basic estate planning documents in place that will allow family to make decisions on your behalf?  Power of Attorney?  Health Care Power of Attorney?  Living Will?  Have you explained your wishes to your family?  If not, DO SO.
  3. Have you considered long-term care health insurance?  Many insurance companies nowadays offer policies that are long-term care/whole life insurance combinations, meaning you can get more than just care coverage from your investment.  Many long-term care policies also include home-health riders, allowing coverage for in-home care.  Talk to an insurance professional about these options.
  4. Have you considered planning to protect assets in the event you need long-term care?  As the survey indicates, 72% of the folks that have received some sort of long-term care have incomes of $50,000 or less.  Our experience has shown that many of these people do not have the types of long-term savings or assets to pay for ongoing care, and when the assets they do have run out, they’re normally left needing Medicaid assistance.  The laws related to the Medicaid program allow for planning to preserve some of your assets.  Talk to an attorney (like me) that understands these rules and what can be done.
  5. Finally, don’t wait until you’re faced with a crisis situation to do something.  We deal with these situations regularly, and they’re never good.  So, if you’re reading this blog, make an appointment with an attorney to talk about things.  The consultation fee is worth the peace of mind.

Gifting, Taxes, and Long Term Care

By

One of the more common concepts that clients get confused about is taxes on gifts to children or grandchildren, and how it all works together when you’re thinking about planning for Medicaid or long-term care.  This normally happens with our older clients who are getting to a point where paying for care is a concern.  The conversation normally goes something like this:

Client: “I want to give my kids $50,000.00 each.  I know I can give some amount away each year to my kids and the government won’t count it, right?”

Me: “You’re allowed to give $14,000 to an individual without incurring any gift tax liability.”

Client: “So they can’t come back and get it if I need to go into the nursing home?”

And this is where the confusion begins.  Many clients confuse the rules related to taxes on gifts with the rules related to gifts related to the Medicaid lookback, or they assume that one rule covers everything.  Unfortunately, this isn’t the case.

The website “The Motley Fool” has a good, succinct article about when a person should consider making gifts to heirs.  The article, which can be found here, has as straightforward an explanation of gifts and taxes as I’ve seen.  It also raises a good point, namely, have you considered how you are going to pay for long-term care after you’ve made these gifts?

The important points to remember are:

  1. Gifts made for tax purposes are not always protected from the Medicaid lookback rules, if such gifts are made within five years of applying for Medicaid assistance.  This five year period is also called the “lookback” period, and it is what it says.  Social Services is looking back through your financial history to determine whether you have made gifts of assets that should have instead been used to pay for your long-term care.  There are certain situations in which you may be able to overcome this presumption, but the safe rule of thumb is that Social Services will count those gifts against you.
  2. If you have your cost of care covered, either with long-term care insurance, or with other assets, remember to take into consideration the assets you are gifting.  Gifts of stocks or real property can result in adverse tax consequences down the road for the recipient.  Why?  Because generally speaking, gifts during the life of the donor (donor is the person making the gift) retain the basis of the donor in the hands of the donee (the person receiving the gift).  In English?  OK, OK.  Let’s say I bought 5,000 shares of stock in ABC Corporation for $1.00 each 20 years ago.  My basis in these shares is $5,000.00.  If today they are worth $10.00 per share, and I sold them, I would have a taxable gain of $45,000.00.

If I give the shares away to my sister when they are worth $10.00 per share, my sister’s basis would not be $50,000.00, it would be what I paid for them: $5,000.00, meaning that if my sister were to sell the shares, she would be taxed on the $45,000.00.

If I retained my shares, and gave them to my sister via my Will when I died, she would receive the shares with the basis “stepped up” to the value of the shares the day I died.  So if when I died, the shares were worth $100 per share, my sister’s basis would be $100 per share.  If she sold the stock that same day, she would owe no taxes on the money received from the sale.

So what does this mean?  If you’re going to make gifts, think about the type of asset you’re giving.  If it’s something you didn’t pay much for but is worth an awful lot now, consider holding onto that asset and passing it at death, or consulting with us regarding better ways to plan for tax consequences.

Where does this tie in with the Medicaid lookback rules?  If you’re worried about protecting assets for long-term care and/or Medicaid eligibility, but want to make sure that your beneficiaries retain the advantages of a stepped-up basis in the asset, consider estate planning that will do both.  There are several different ways to ensure that assets will not be subject to estate recovery should you need Medicaid assistance, while retaining the step-up in basis provided by an on-death transfer.  Irrevocable trusts and gift deeds reserving life estate are one common way of doing this, but it needs to be done properly, and it needs to be part of an overall plan that will leave you with the assets you need and access you need to be able to live comfortably during retirement.

If you have questions about these issues, or need advice about planning for long-term care, talk to an attorney who deals specifically with these matters.