While most people DO get together with their families for at least one of the upcoming holidays, it is rare that the PLANNED discussion involves estate or long-term care planning. However, I have found in my years of practice, that while these discussions are not usually planned, they often occur nonetheless, rather spontaneously. There are excellent books and articles published about HOW to go about starting such conversations… but I honestly doubt that most such conversations start the way they are planned. Corresponding to these family discussions (whether planned or spontaneous), my estate planning practice usually increases during the holiday season.
Long-Term Care Planning
It is during these family gatherings that the needs and desires of family members come to the forefront. Perhaps you talk to your mom or dad frequently over the phone, but will not see him or her until a holiday gathering is upon you. It is only then that you really see how your mom or dad’s physical, emotional or mental condition has changed since the last time you met face to face. It is often, during the weeks and days surrounding such family gatherings that doctors’ visits or legal consultations are scheduled. The children may initiate these visits out of concern… or the parents’ may initiate these visits while they have family in town who can drive them to appointments and can keep them company at such appointments.
Powers of Attorney and Living Wills
Perhaps you are waiting until a family gathering to discuss roles some family members may play in your estate and long-term care plans. An elderly client might choose to pull aside a son and daughter to discuss naming them as Attorneys-in-Fact in a Durable Power of Attorney or as Health Care Agents in a Health Care Power of Attorney. A young parent may pull aside his or her brother, sister, mom or dad, to discuss with them the possibility of serving as their minor child’s guardian or trustee. And while it is generally no one’s idea of happy mealtime conversation, it is often during such family gatherings that candid commentaries regarding end-of-life care are made. Some commentary may be made with heartfelt sincerity, while other commentary may be made in jest to lighten the mood. Most of my clients’ views on end-of-life decision-making stem from their own recent personal experiences regarding the end-of-life care of a close family friend or relative. While such discussions may start out being very public (around the dinner table or in the driveway), they do often spur insight and more private discussions with the family and friends you choose to be involved in such decision-making for you.
Last Wills and Testaments
Such gatherings also usually bring to mind the family members who may not be present this year. Such family members may be absent due to death, illness, estrangement, or merely relocation for a new job, school or marriage. Talk of such family members may bring to mind just how your family dynamics have changed over the years and what changes may need to be made to your estate plans to reflect the current dynamics. The sister you had previously selected as your Executor may not be able to serve due to illness. The brother and sister-in-law you had previously selected to be the guardian of your children may have gotten separated or divorced. The spouse you had previously selected to receive your entire estate may have developed dementia and may not be able to manage the inheritance he or she may receive from you. In any event, such discussion should spur you to revisit your current estate planning and long-term care planning documents to see if they will serve you as they are currently drafted.
Another Set of Eyes and Ears
Many of my clients wish to amend their estate plans during the holidays because they have family and friends around to review the documents with them. It is not uncommon for a client to bring his or her children, siblings, or friends along for the estate planning appointment. These “guests” offer another set of ears to hear the questions asked and the answers given, but also even serve as scribes, writing down information that may need to be gathered. With the permission of the client, these guests may also ask their own questions to help them better understand the discussion or to bring up a question that the client may be too embarrassed to ask.
If family discussions this holiday season steer you and your loved ones to revisit your current estate plans, then please do not hesitate to give us a call. As your needs change, as your family dynamics change throughout the course of your lifetime, we are here to help you plan accordingly. We are your lawyers, every step of the way.
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.
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.