Why Estate Planning Is Important
If you die without the most basic estate planning instrument — a will — your property and assets will face a more complicated process in probate court, where the laws of North Carolina will decide who gets what. When there is no will, the legal term is called “dying intestate.”
Even with a will, your estate will have to go through probate, but you can name a personal representative who becomes the executor of your estate during the probate process and ensures that your wishes are carried out.
Probate proceedings in North Carolina take at least five months, though they can take longer if disputes arise or if there are complex financial entanglements to iron out.
Note, however, that certain assets can be transferred outside of a will and the probate process. A house jointly owned with your spouse will pass uncontested to the survivor. Life insurance and retirement policies with named beneficiaries also pass unobstructed to the person(s) named.
Trusts, Powers of Attorney, and Other Considerations
To make sure your wishes are carried out after you are gone, the basic building block lies in drafting a will, but you shouldn’t stop there. Many other factors and possibilities have to be considered, including your health. This is where other instruments play prominent roles.
The headaches and challenges of probate can be avoided almost entirely through the creation of a living trust, in which you (the grantor) place all your assets and name a trustee to oversee those assets when you are incapable of doing so because of incapacitation or death. The trustee can be a family member or trusted friend. You can modify or cancel this type of trust at any time. Living trusts also avoid the necessity of probate proceedings, but the trustee might still face legal challenges and disputes in administering the estate.
For more complex situations involving large estates or business ownership, other types of trusts, including what is called an irrevocable trust, are also available. Consult with us before starting the process of creating a trust.
Even with a trust, you will still need a will for several reasons. If you acquire assets after creating the trust and neglect to move the assets into the trust, those assets will be covered by your will. Also, if you have children under the age of 18 and you’re the sole surviving parent, you will need a will to name a guardian for them.
Powers of Attorney
You may also wish to grant the trustee a financial power of attorney to ensure that the trustee can exercise full control over your assets should you be unable to do so.
As for your own health and medical treatment should you become incapacitated, your wishes can be conveyed in a legal document known as an advance healthcare directive. North Carolina provides three ways to create an advance directive:
- A Living Will: A living will allows you to state your choices for medical treatment should you be unable to do so, including whether you desire to have life-prolonging measures applied or withheld. It also allows you to name someone to convey your wishes.
- A Healthcare Power of Attorney: This document allows you to name someone to make medical decisions for you should you become unable to do so yourself. The named individual should know and follow your health care choices.
- An Advance Instruction for Mental Health Treatment: This document allows you to state your preferences for mental health treatment and/or name someone to make treatment decisions for you. This document expires every two years, so you have to renew it.
Another factor to consider, should you end up incapacitated in a hospital and relying on a family member or trusted friend to voice your decisions for you, is that the hospital may refuse to release medical records to the person you appointed. They may cite the privacy and security provisions of the Health Insurance Portability and Accountability Act, commonly referred to as HIPAA. To ensure your named medical representative has full access to your health and medical history, you should grant HIPAA authorization to that person.
Trust an Experienced Attorney
The above discussion just covers the basics of estate planning, and depending on the nature and extent of your assets, instruments other than those discussed may be important tools for your unique needs.
Be aware, it may be tempting just to download some “one-size-fits-all” forms and fill them out, but these forms may not cover every twist and turn in your life. You need to discuss your personal situation with an experienced and knowledgeable estate planning attorney to make sure you take into consideration everything you and your family may face going forward. This counseling is an important role of the estate planning attorney.