As an Elder Law attorney, it is rare that my clients show up alone. Most have family members (usually their adult children) along, who are there to offer emotional support, moral support, and, often, a safe ride to and from the appointment. The adult children who show up are usually quite intricately involved in their parent’s long term care planning and estate planning. If you are that adult child, you may have legal questions of your own to ask. Shouldn’t you be included in the legal consultation? After all, isn’t it important that you understand the role you may be playing in your loved one’s future?
Please Don’t Be Offended!
There are several reasons why an Elder Law attorney needs to meet with her older adult client one-on-one for at least part of the legal consultation. So please don’t be offended or surprised if you are politely dismissed from the room. In order to stay compliant with the rules and guidelines of the State Bar, attorneys must ensure that proper client protections are followed. Before real legal advice should be given out, the attorney must to do the following things: 1) identify the client; 2) uncover any potential conflicts of interest; 3) protect confidentiality, and 4) determine competency.
Attorneys must make VERY clear to the entire family–who IS the client and who is NOT the client. The “family” or the “situation” cannot be the client. The client is the individual whose interest are most at stake in the legal planning or legal problem. The client is the one—the only one—to whom the attorney has professional duties of competence, diligence, loyalty, and confidentiality. This is especially important in Elder Law, because adult children may be VERY involved in the legal concerns of the older adult and may even have a stake in the outcome. While it is possible, in some circumstances, for an attorney to represent two clients at once (most commonly, a married couple), it is quite rare. By the end of the consultation, the attorney should identify and confirm for ourselves and for all others present, that our client is the older adult… and ONLY the older adult. This is true regardless of who drove the car to get here, who made the appointment, and who wrote the check for the consultation fee.
Conflicts of Interest
Attorneys must actively avoid conflicts of interest. This means that in most situations, an attorney will usually only have one client in a transaction. Often, parents and children will have different interests in the outcome of a situation. It may be in the best interest of the child for the parents to gift them large sums of money or real estate. However, it may not be in the best interest of the parents to make such large gifts and threaten their own financial security and ability to provide for their own long term care. An attorney could not represent both the children and the parents in this situation. Sometimes joint representation is possible, even with potential conflicts of interest, but it is more likely that we will be representing only the older adult whose interests are at stake. I do the best job for the older adult client by representing only him or her. This is especially true if my client wants to discuss a power of attorney, a last will and testament, or planning for long term care.
Attorneys have an obligation to keep information and communications our clients share with us confidential. That means that we cannot share client information with other family members without the client’s approval. Some clients want all information shared and family member actively involved in discussions; some merely want family members to be given general updates; and some want complete confidentiality. A client may not feel comfortable expressing his or her desires regarding confidentiality when others are in the room for fear that they will offend their loved ones. In all cases we strive to keep our clients—and whomever they choose to involve—fully informed of the issues, options, consequences, and costs relevant to their concerns, and to be responsive to their goals and objectives.
Elder Law attorneys often work with clients whose capacity for making decisions may be diminished. Attorneys must treat clients with diminished capacity with the same attention and respect to which every client is entitled. This means meeting privately with the client and giving him or her enough time to explain what he or she wants. We find that the greater majority of older adults who come for legal consultations are able to tell us what the problem is and how we can help. Sometimes we’ll need to ask relatives for details such as addresses or dates or phone numbers, but even people in the early stages of dementia can usually communicate well enough to give us direction. Assessing a client’s capacity to make decisions is part of our getting to know the client. While most clients can explain a problem and discuss concerns and issues, there will be some clients who cannot. Speaking privately allows us to find this out. When family members answer ALL the questions, it makes it difficult for us to determine our client’s level of understanding.
Meeting one-on-one with our clients is essential to making sure that we are protecting our clients’ best interests. Most of the family members and friend who arrive with a client understand the importance of that one-on-one consultation and, when asked to wait in the lobby, do so willingly and respectfully. They know that family and friends who maintain some distance from the legal counseling and document signings are far less likely to be accused by other family members of undue influence. We don’t want our clients’ choices, and the documents they sign, to be undone one day in the future because we allowed family members to be too involved in the consultation and the legal process. That’s a court case we (and you) would rather avoid.
In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act, known more familiarly for its unwieldy acronym/nickname, BAPCPA (pronounced “bap-see-pa”). One of the critical, and most criticized, inventions of BAPCPA was the creation of the “means test.” The key principle behind the means test was the idea that individuals with high levels of income should not be allowed to file bankruptcy. In theory, the means test component would eliminate some abusive and unnecessary bankruptcy filings—in practice, the means test served to complicate bankruptcy filings.
Suffice it to say that the means test is one of the more complex aspects of modern bankruptcy practice. A full explanation of the means test is beyond the scope of one blog post—please consider this post a primer on the means test. If you are uncertain about means testing or whether you would be able to pass a means test, the best thing to do would be to contact our office and talk to our bankruptcy attorney. We offer a free bankruptcy consultation, part and parcel of which is consideration of your ability to pass the means test.
The Threshold Question (the CMI Test)
The threshold question for means testing purposes is whether your household current monthly income is less than the median income for a household of your size in North Carolina. This is commonly called a CMI determination. This determination has a couple of nuances: first, figuring out your household size in North Carolina can be tricky. For those households with complex living situations, it can be difficult to determine household size without the advice of an attorney.
Current monthly income is a product of the bankruptcy code, and one which is not necessarily an accurate indicator of your “current” income. Current monthly income considers your gross income over the last six months. For calculation of current monthly income, you do not consider the month in which you are filing, but the six months preceding the month of filing. If your income has fluctuated over that six-month period, the means test requires that you average your gross income over that six-month period and then annualize it for the comparison to NC’s median income for your household size. Median income numbers fluctuate, but you can find the most current numbers here.
Well that Was Easy
Not so fast. It is very common for debtors to fail to consider all sources of income in calculating their current monthly income. It is important to include all sources of income over the last six months, excluding those funds received from the Social Security Administration. Some commonly excluded income sources that should be included are pension/retirement income, support from family members, income of children contributing to the household, child support, 401(k) and retirement withdrawals, self-employment income, dividends or investment income, and rental income. It all has to be included before making your threshold determination for means testing.
My Income is Too High—What about my Expenses? (the DMI test)
If you do not pass the threshold CMI test, you do not necessarily fail the means test. There is a secondary test that allows you to make certain deductions from your CMI to reach a determination as to your disposable income. This is commonly called a DMI (Disposable Monthly Income) test. For a DMI determination, you must reduce your CMI by certain actual and imputed expenses. The actual expenses include income taxes paid, monthly payments for mortgages/rent, monthly payments on vehicles, monthly payments on other secured debt, average monthly charitable contributions, and payments on prepetition priority claims (ex. child support and/or alimony). Imputed/standardized expenses are determined by IRS standards and include deductions for food, clothing, utilities, transportation, healthcare, childcare, and insurance. After taking deductions, if your DMI, multiplied by sixty, is less than $7,475.00, then you have passed the means test.
If your DMI times sixty is more than $12,475.00, than you have not passed the means test and there is a presumption of abuse in the event that you file bankruptcy. If your DMI times sixty is between $7,475 and $12,475, then a third means test section asks whether your DMI times sixty equals more than 25% of your unsecured debts. If it is less than 25%, than you will pass the means test.
If you followed most of the above, you should have a good sense of how the means test works. We strongly discourage, however, completion of means test without the aid of an attorney. Be careful of online means test calculators as well. Every potential bankruptcy filing has intricacies that make means testing variable. Importantly, just because you pass the means test and qualify for a bankruptcy, doesn’t mean that bankruptcy is the best option for you. As mentioned above, our firm offers a free consultation for clients interested in learning more about bankruptcy. Give us a call today to set up yours (336-996-4166).
Probate is the process of administering a decedent’s (deceased person’s) estate. The word “probate” comes from a Latin word, probare, which means “to prove.” After your death, the person who approaches the clerk of court to begin administering your estate must first “prove” either of two things: 1) that your Will, if you have one, was the last one you’d done and that it was validly executed or 2) if you had no valid Will, that he or she can testify, under oath, about the family members you left behind—your heirs at law.
Once the Clerk of Court has verified that the decedent is, in fact, dead and has verified the decedent’s beneficiaries and/or heirs at law, the administration process begins. If there is a Will, the Executor named in the Will is sworn-in. If there is no Will, an administrator is sworn-in. The Executor or Administrator is swearing (or affirming) to do the following things: 1) find out what assets the decedent had, 2) find out what debts the decedent owed, 3) pay costs of administration of the Estate out of the available assets, and 4) distribute the balance of what remains according to the Will or according to the law of the State.
Categorizing Assets into Probate and Non-Probate
One of the most tedious parts of administering an Estate can be discovering the assets of the decedent. While many Executors or Administrators know about a decedent’s financial affairs because they were once the decedent’s caretaker, that is not always the case. Some Executors/Administrators have very little knowledge of the decedent’s financial affairs and must resort to monitoring the decedent’s mail to see what financial information arrives. One of the first tasks of an Executor/Administrator is not only to discover what assets the decedent had at the time of his or her death, but also to categorize those assets into “probate assets” and “non-probate assets.”
Basically, probate assets are the assets that will be reported to the Clerk of Court, be used primarily to pay costs of administration and valid debts, and then will be distributed among the beneficiaries and/or heirs of the decedent according to the Will or state law. Non-probate assets will generally pass to beneficiaries directly and will not be subject to costs of administration and or debts of the decedent. How do you know which is which?
Which Assets are Non-Probate Assets?
Non-probate assets are those which name designated beneficiaries (either by contract or by law). The most common examples include: a bank account held joint with survivorship with another individual, a parcel of real estate held joint with right of survivorship with another individual, an account which lists a Pay-on-Death (POD) or Transfer-on-Death (TOD) beneficiary, an annuity with a named surviving beneficiary, or a life insurance policy with named surviving beneficiaries. For each of these assets, the decedent, during his or her lifetime, indicated specifically who the beneficiary of each asset would be. As long as the named beneficiaries survive the decedent, the beneficiaries will generally take the assets upon death either automatically or by submitting a beneficiary claim form. These assets will generally not be subject to the claims of the decedent’s creditors.
Which Assets are Probate Assets?
If you cannot prove that an asset is a non-probate assets (i.e., if you cannot prove that there is a named surviving beneficiary) then the Clerk of Court will generally consider the asset a probate asset. The most common examples of probate assets include: a bank account in the sole name of the decedent, a brokerage account in the sole name of the decedent, or parcel of real estate in the sole name or the decedent, an interest in a vehicle (even if shared), and accounts and/or policies which do not have surviving beneficiaries named or which list “the Estate” as beneficiary. Because the decedent, during his or her lifetime, did not indicate specifically who the beneficiaries of each asset would be, the Clerk of Court will oversee the asset, use it to pay administrative costs and debts, and then distribute it according to the Will or state law.
What are Probate Fees?
Since the Clerk of Court must dedicate its courthouse staff to oversee the distribution of probate assets, the Clerk charges what is referred to as a “probate fee.” The probate fee is a small percentage of the date-of-death value of the personal property assets determined to be “probate assets.” In North Carolina, the probate fee is currently 0.4%. With proper planning ahead of time, you can arrange your assets to reduce potential probate fees and reduce your future estate’s exposure to creditors’ claims.
In addition to drafting sound legal documents, such as Last Wills and Testaments, Durable Powers of Attorney, Health Care Powers of Attorney, and Living Wills, a good Estate Planning attorney will also ask you what you own, how you own it, and what beneficiary designations you’ve made (if any). The answers to all of these questions will help you make better decisions about the passing of both your probate assets and non-probate assets to your beneficiaries and/or heirs at law. As your assets, your needs, and your beneficiaries change, a good Estate Planning attorney will be with you every step of the way.
We often receive questions from clients who are thinking about loaning money to a friend, family member or business associate, or are thinking about co-signing a loan with them. Sometimes our clients are thinking about “seller-financing” someone else’s purchase of real estate or a vehicle they own. In these situations, our clients are putting themselves in the position of a traditional bank or other lender and their questions revolve around “Should I do it?” and, if so, “What should I do to protect myself?” Our advice in these situations is always the same: “If you’re going to be the ‘bank’ in this transaction, you have to do things the way a bank does them.”
When we tell folks they should “do the things that a bank does” we’re telling them to approach the potential transaction from an objective, business-like perspective. Banks make decisions about extending credit based on the likelihood that they will be repaid in full and with interest, and they evaluate potential borrowers based on what the bank believes is their ability to repay the loan (this is the foundation of credit reporting and scoring). This evaluation process includes gathering information about the borrower, checking credit reports, asking for references, etc. Another part of the evaluation process is determining if the potential borrower has enough equity or “skin in the game” in a potential transaction to ensure that they won’t walk away from an obligation to repay borrowed money. For instance, if a borrower doesn’t pay a down payment on the purchase of a vehicle and borrows the entire purchase price, if soon after the purchase they decide to walk away from the vehicle, they have nothing to lose.
Once a bank has made a decision to make a loan, they use legal documents which help protect the bank from the risk that the borrower will stop repaying or “default” on the loan. These documents include promissory notes (contracts to loan and repay money), and security instruments, which make personal property or real estate “collateral” or “security” for the loan (these can include liens, deeds of trust, security agreements, etc.). An individual who makes the decision to loan money, co-sign, seller finance, etc. needs to use the same type of documents to protect themselves. Our firm can help you put these documents in place so that you have the best possible chance of being re-paid.
Ask Yourself: “Why Are We In This Situation?”
Keep in mind that, if you are in a situation where someone is asking you to take a financial risk to help them, it’s likely because they are unable to borrow on traditional terms from a traditional financial institution. With very few exceptions (mainly young adults who haven’t yet established credit), this is because a bank views the individual as too much of a credit risk to make the loan. Be sure to think long and hard about whether you are willing to take a risk that a bank is unwilling to take. Often the situation is made more complicated due to some close personal relationship between you and the potential borrower. While it’s difficult, we suggest that you try to be as objective as possible in these situations. If you’re in such a situation, please don’t hesitate to call Coltrane, Grubbs & Orenstein to help you navigate the decision-making process.
In North Carolina, there are many statutory and common law protections in place that help a debtor keep their wages and property, even in the face of claims by credit card companies or other creditors. North Carolina has stringent restrictions on wage garnishment, about which you can learn here. Even outside of the wage garnishment context, North Carolina exemptions can help you keep real and personal property from the reach of your creditors.
What is an Exemption?
The legal term “exemption,” in the creditor-debtor setting, is a fancy term for “protection.” North Carolina General Statute § 1C-1601 protects property from the claims of creditors up to a certain value. The rationale for this protection is that all North Carolina citizens are entitled to certain real and personal property as a matter of right. Importantly, exemptions do not necessarily protect the value of that property, but rather, the amount of equity you have in the property. This can be very important when you have a valuable asset which has a lien or security interest on it—you still can protect that property as exempt as long as the equity you own falls within the statutory guidelines.
If you have not already gathered, determining whether your property is exempt can be a difficult and complicated exercise. There are many variables that can affect exemptions, including instances where property is co-owned, where property is owned with a spouse, where property has been recently acquired, where property is not a residence, and various other examples. Here is a grossly oversimplified, and non-exhaustive, list of those exemptions which are commonly used in North Carolina:
Real Property can be exempted up to $35,000 in equity. There are various caveats to this exemption, which is commonly called the “homestead” exemption. Importantly, you must be residing in the real property to use the homestead exemption. If you are (1) sixty-five or older, (2) hold the property as a joint tenant or tenant by the entirety, and (3) the surviving spouse has passed, then this exemption is increased to $60,000 in equity. Property owned as tenants by the entirety is exempt without any equity limit with respect to the debts of one spouse (ex. your spouse has a judgment against her for a credit card debt but you are not listed on the judgment and the property is owned by the entirety). In the event that the debt is joint, you are permitted to each use your $35,000 exemption, which means that you can protect up to $70,000 in equity in your primary residence.
In North Carolina, you can claim an exemption up to $3,500 in equity in a single vehicle. Please keep in mind that this exemption may not apply if you have purchased the vehicle within 90 days of claiming the exemption.
Household goods can be exempted up to $5,000 per debtor. You are permitted an additional $1,000 per dependent of the debtor (for up to $4,000 extra) as well. Household exemption typically includes clothing, furnishings, appliances, books, and other household items that are used as part of everyday residential existence.
In North Carolina, most retirement savings accounts are 100% exempt. All tax exempt retirement accounts are fully exempt, including 401(k), 403(b), and simple IRAs are exempt under NC statute. State and federal employee retirement contribution plans typically receive full protection as well. This is why we typically discourage our debtors from withdrawing or taking loans against 401(k) accounts, absent extenuating circumstances.
Wildcard Exemption and Other Exemptions
There are other relevant exemptions too numerous to name here, including property such as the following: tools of the trade, life insurance, personal injury compensation, prescribed health aids, public benefits, and alimony/child support payments. There exists what is called a “wildcard” exemption under the North Carolina statutory scheme, as well, which allows you to claim up to $5,000 in any property, provided that you have used less than $30,000 of your homestead exemption. This can be a helpful tool for allowing flexibility in developing your exemptions.
When Do I Need Exemptions / Why Should I Worry about This?
If you are a North Carolina resident, it is important to know how you are exposing your assets when you contract for a debt. Specifically, though, these exemptions are most important in the event that you have been served with a lawsuit or a Notice of Right to Claim Exemptions. Exemptions are also important in the Chapter 7 bankruptcy context, because they dictate which assets are available to the bankruptcy trustee for sale to your creditors. In the event that you have been served with a Notice of Right to Claim Exemptions, you typically have 20 days to respond before waiving your right to claim exemptions. It is essential that you talk to an attorney about the potential ramifications of a Motion to Claim Exemptions. Give Coltrane Grubbs & Orenstein a call to set up a consultation today (336-996-4166)!
When a marriage ends through separation and/or divorce, two of the primary issues the spouses have to deal with are custody of minor children and dividing marital property and responsibility for marital debts. But what about beloved family pets? For many of us our dogs, cats, fish and other pets are an important part of the family. What happens when you and your spouse can’t agree on what happens to Fido or Felix?
Are Pets Property or Family Members?
Courts usually to take one of two approaches to how to handle custody or possession of pets during a divorce. Some states view custody of family pets the way they view custody of minor children: they analyze the needs of the pet and determine what is in the pet’s best interest and then award custody and/or visitation accordingly. Other states, including North Carolina, view family pets as marital property to be included in the overall process of classifying, valuing and dividing the marital estate.
How Do North Carolina Courts Handle Pets in a Divorce?
In North Carolina, family pets are lumped in with other marital assets such as furniture, bank accounts, jewelry, vehicles, etc. which are first classified as either “marital” or “separate” property, and then each given a value, the total of which is then usually equally divided between the parties. In classifying a pet as martial or separate property, a court will look at whether one of the parties owned the property before the marriage or whether the pet was acquired during the marriage. If acquired during the marriage, the pet is then valued based upon replacement cost to acquire a pet of a similar breed, age, condition, etc. Intrinsic, emotional, or sentimental value is not taken into consideration in valuing the pet. Since the pet can’t be divided in half, possession of the pet will be awarded to one spouse or the other, and the spouse not receiving the pet will offset the pet by receiving other marital property of equal value.
What If I Don’t Want a Judge to Decide Who Gets Fido?
An alternative to allowing a court to award a pet as part of the equitable distribution proceeding would be to include provisions related to “custody” and/or “visitation” of a pet in a Separation Agreement (learn more about those here). Using this approach, the parties can craft an arrangement where each is allowed to enjoy time with a pet and share in the cost of the care and feeding of the pet. If there are minor children of the marriage, we often counsel our clients to consider having the family pet follow the same custody schedule as the children. Having a beloved companion with them as they navigate a shared custody arrangement is often reassuring for children.
What Should I Do If I’m Worried About Losing My Pets?
If you are in the middle of or thinking about a separation or divorce, and worried about what might happen to your pets, contact our experienced family law attorneys to arrange for a consultation to discuss your concerns.
Veteran’s Pension Benefits
Many of my clients, who are retirees, tell me that their income is derived from sources such as social security and distributions from various retirement accounts and brokerage accounts. Several clients are lucky enough to have pensions from their previous employers (for example, AT&T, Tyco (AMP), Reynolds Tobacco, the State of NC, etc.). Most of these retirees knew before they retired that they would have an income stream for the duration of their lives, which may even be enjoyed after their death by their surviving spouse. I don’t know of a single employee who, upon retirement, had to APPLY for their employer-sponsored pension. Upon retirement, the pension income was deposited into the bank account of the retiree’s choice.
Many U.S. veterans (or their surviving spouses) are entitled to a pension from the Veterans Administration (the “VA”) for their military service. However, the VA is not very proactive about letting these veterans (or their surviving spouses) KNOW that they may be entitled to such benefits. In fact, qualified veterans (or surviving spouses) must submit a lengthy application to the VA and must await approval before their VA pension begins. Many veterans who are eligible never apply, because they either don’t know they are eligible OR they don’t know how to apply.
Eligibility for VA Pension Benefits
In order to determine if you are eligible for pension benefits, you (or your deceased spouse) must satisfy the following requirements:
1. If the veteran entered service prior to September 7, 1980, he or she must have had 90 continuous days of active military service. If the veteran entered service after September 7, 1980, he or she must have had 24 continuous months of active military service.
2. At least one (1) of the days of continuous active military service must have been during a wartime period. The VA provides the following dates for the beginning and ending of various wartime periods:
– World War II: December 7, 1941 through December 31, 1946;
– Korean Conflict: June 27, 1950 through January 31, 1955;
– Vietnam Era: August 5, 1964 through May 7, 1975; (for veterans who served “in country” before August 5, 1964, the wartime period began February 28, 1961 and lasted until May 7, 1975);
– Gulf War: August 2, 1990 through a date to be set by law or Presidential Proclamation.
3. The veteran (or surviving spouse) must be age 65 or older OR have a permanent and total disability which is not related to the veteran’s service in the military.
What Will My VA Pension Amount Be?
The amount of monthly VA Pension a veteran (or his or her surviving spouse) can receive depends on several factors relating to your income, assets, and medical needs. Your VA Pension can help you pay for in-home health care aides, assisted living community care, and nursing home care. If you would like to determine the amount of pension you may be entitled to receive, please do not hesitate to call the office of Coltrane, Grubbs & Orenstein. Julie R. Orenstein is a local attorney, who is accredited with the Veterans Administration. She can help you qualify and apply for the VA Pension you may be entitled to receive.
NC Security Deposits: Rights of Tenants and Limitations on Landlord using Security Deposits in North Carolina
North Carolina has a set of specific rules and laws about use of security deposits—these restrictions are laid out in North Carolina General Statute §42-50 through §42-56. Whether you are a landlord or tenant in North Carolina, it is important that you have an understanding of the rules governing security deposits.
Limitations on Collection of NC Security Deposits
As a preliminary matter, there are some restrictions on the amount of the deposit provided to the landlord. In NC, §42-51(b) provides the upper limits of security deposits depending on the length of the tenancy. For a week-to-week tenancy, the security deposit cannot be more than two weeks’ worth of rent. For a month-to-month tenancy, the tenancy cannot be more than one and one-half months’ rent. If the tenancy is longer than month to month, then the security deposit cannot be more than two months’ rent. Be sure that, before you sign your lease (if you are a tenant) or set your security deposit amount (if you are a landlord), the security deposit is not set a statutorily prohibited level.
During the Lease, what can a Landlord do with the Deposit?
In North Carolina, security deposits (in residential tenancy settings) must be deposited in a trust account, held separate from other funds. In the alternative, the landlord can provide the tenant with a bond for these security deposits (which is a rarer approach). This is an oft violated/ignored aspect for landlords who do not regularly service multiple tenancies. There is a further requirement under law that obligates the landlord to notify the tenant of the name and address of the bank where the deposit or bond is held as well.
Once the Lease Term has Expired, What Happens to the Deposit?
After the expiration of the tenancy, the landlord must return the deposit within thirty (30) days. If the landlord keeps any portion of the deposit, the landlord must account for the unreturned portion in writing within the thirty day period. It is possible to provide an interim accounting prior to accounting for the full use of the security deposit under the statute, in the event that repairs to damages occur outside of the thirty-day period. The landlord is only permitted to keep that portion of the security deposit necessary to cover the actual allowable costs. While there still exist some modern leases that include “forfeiture clauses” (where the landlord can keep more than their actual cost), these clauses are unenforceable under the current rules. In other words, a landlord cannot keep the entire security deposit just because there was some damage in the leasehold.
What is an Appropriate Use of a Security Deposit? Can a Security Deposit be Kept to Offset Unpaid Rent?
The statute specifically lays out the permitted uses for security deposit funds:
- Nonpayment of rent or costs for water/sewer/electric services on the premises;
- Damages to the premises;
- Damages as a result of nonfulfillment of the rental period (unless nonfulfillment is the result of Landlord’s breach);
- Unpaid bills that have become a lien on the premises;
- Costs of re-renting the premises after a breach by the tenant;
- Costs of removal and storage of tenant’s property after summary ejectment;
- Court costs; and
- Late fees (to the extent permitted by law).
Importantly, a landlord may not withhold from the security deposit funds used to pay for normal wear and tear. It is difficult to ascertain, sometimes, the difference between “damages” and “wear and tear”—the NC Attorney General’s office suggests that replacement of door handles, oven heating elements, curtain strings, toilet parts, faucet handles, or electrical switches falls into the purview of wear and tear. More substantial changes, like replacement of window screens/panes, cleaning coffee stains on the carpet, fixing large holes in the wall, or cleaning filthy conditions are the type of repairs that would be appropriate for security deposit use. You can learn more from the NC Attorney General’s Office in their Security Deposit handbook, found here.
What do I Do?!!!
Whether you are a landlord or a tenant, if you find that you have questions about how to handle or recover security deposits, talking to an attorney who is experienced in landlord-tenant disputes can be very helpful. Attorneys at Coltrane Grubbs and Orenstein deal with landlord-tenant disputes on a regular basis and would be glad to guide you through the security deposit protocol in NC. Give our office a call today (336-996-4166) to set up an appointment!
What Happens if I Die without a Will in North Carolina? Intestacy and the Need for NC Estate Planning
It is a common misconception that if a resident of North Carolina dies without a Will, the resident’s assets will be taken by the State of North Carolina. While there IS such a thing as the State taking unclaimed assets from a deceased person’s estate (“escheat”), it rarely ever happens.
Intestate vs. Testate in NC
Individuals who die with a valid Last Will and Testament are said to have died “testate,” meaning that they affirmatively described who should benefit from their estate assets. On the other hand, individuals who died without a valid Last Will and Testament are said to have died “intestate,” meaning that they have NOT affirmatively described who should benefit from their estate assets. That being said, an individual can die partially testate and partially intestate. For example, let’s say that Betty, a widow, dies owning a house, a car, and a two (2) bank accounts. If Betty leaves a Last Will and Testament that gives her house to her daughter and her bank accounts to her son, but says nothing about who gets her car, then she will have died “intestate” with respect to the car.
North Carolina Intestacy Law
If you die intestate or partially intestate, making no clear decision as to should receive such assets, the State of North Carolina steps in to make that decision for you. Generally speaking, if you are a resident of North Carolina at the time of your death, state law directs that any and all such assets which have no clear beneficiaries (including your personal property and real estate located in North Carolina) shall be given to your family members. These family members are referred to as your “heirs at law.”
Heirs at Law
Your heirs at law cannot be determined until you are dead. However, for the purposes of this example, let’s pretend that you have just passed away suddenly. In order to determine your heirs at law, you would need to draw a family tree, including your grandparents, aunts and uncles, parents, brothers and sisters, your spouse, children, and any grandchildren or great grandchildren that you may have, who are still living. Please include both biological and adopted family members, as state law treats them similarly. With this family tree in front of you, you will find it easier to read NC state law about heirs, found here: http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_29/Article_2.html.
When does the State of North Carolina Take your Property?
If after reading the state law, applying it to your own family tree, you do not have ANY heirs at law (meaning that you do not have any living grandparents, aunts and uncles, parents, brothers and sisters, spouse, children, grandchildren or great-grandchildren), then and only then will your property escheat to the State of North Carolina. If you are one of the rare few who have no heirs at law, it is extremely important that you have a Last Will and Testament upon your death, naming beneficiaries that YOU choose. As your family tree changes and as your wishes change, NC Estate Planning attorneys at Coltrane, Grubbs & Orenstein are with you, every step of the way.
Many of our clients have heard or understand that they must be separated for one year before they can obtain a divorce (if not, see our previous post here). Many of them have questions about what to do to finalize their NC divorce once the year has passed.
WHAT IS AN ABSOLUTE DIVORCE?
An absolute divorce in North Carolina is the judicial severing of the marital relationship between husband and wife. Although much of the disentanglement of ending a marriage often takes place through a Separation Agreement, the only way to legally end the actual marriage (besides the death of one of the spouses or an annulment, which aren’t covered by this post) is by the entry by of a Judgment of Absolute Divorce by a District Court Judge or, in some cases, the Clerk of Superior Court. The entry of the divorce judgment has important consequences such as ending the couple’s right to inherit from one another and changing the way the couple holds title to real estate. In many instances, any claims spouses have against one another for alimony, post-separation support and division of marital assets are cut off by the entry of the divorce.
HOW IS AN NC DIVORCE OBTAINED?
An NC divorce judgment can only entered after a Complaint (a lawsuit) is filed by one of the parties. One of the spouses must have lived in North Carolina continuously for at least six months before the case is filed. Once the Complaint is filed, it must be served on the other party. This is generally done by certified mail or by having the Sheriff in the county where the defendant resides delivery a copy to the defendant. Once the defendant has been served with the Complaint, he or she generally has 30 days to file an Answer, admitting or denying the allegations in the complaint. The allegations regarding divorce are usually limited to when and where the parties were married, when they separated, and that they’ve been separated for over one year at the time the Complaint was filed. Women seeking to resume the use of their maiden name upon entry of the divorce should include a request to do so in the Complaint (if they are the Plaintiff) or the Answer (if they are the Defendant).
Once the time to file the Answer has expired or an Answer admitting all of the allegations contained in the Complaint has been filed, either party may request that a Judgment for Absolute Divorce be entered. This Judgment is usually entered by a District Court Judge in open court; however, in certain limited situations, North Carolina law allows the Clerk of Superior Court to enter the divorce judgment. The NC divorce process generally takes approximately 60-90 days to be completed from the filing of the lawsuit to the entry of the judgment. It is important to understand that the divorce judgment must be entered before either of the parties can re-marry. We encourage our clients not to make any plans for a marriage ceremony until their divorce judgment has been entered, because occasionally delays occur which cannot be predicted.
DO I NEED A LAWYER?
It is possible for individuals to represent themselves in divorce proceedings in North Carolina. However, the entry of a Judgment of Absolute Divorce has many important legal ramifications. We recommend seeking the advice of an experienced family law attorney before you make a decision on whether or not you should represent yourself. Many family law attorneys will charge a relatively minimal flat fee if their services are limited to obtaining an NC divorce for a client. If you are interested in learning more about obtaining a divorce, please contact our office to arrange for a consultation.