What Should a Surviving Spouse Do?

While most of us had a wonderful holiday season and enjoyed time with family and friends, others were dealing with the loss of a loved one.  This was my grandmother's first Christmas without my granddad and they were married for 65 years.  Her Christmas traditions of cooking and wrapping presents and planning for the eleven grandchildren and thirteen great grandchildren were replaced with what steps to take for wrapping up my granddad's affairs and planning for what she would now do without him here.  

The emotional trauma of death is hard enough on people, but the financial uncertainties and transactional headaches that come along with this make things so much more complicated.  For people who just lost spouses, there are several things that need to be done, but there is a timeline I would suggest so that things seem more manageable and not so overwhelming.  

Immediately:  

a.  Notify family and friends and make sure the surviving spouse has constant support.  

b.  Locate insurance policies, will, safety deposit boxes, military records, bank records, etc

c.  Obtain ten copies of death certificates.  There will be several situations where the surviving spouse will be asked for a death certificate, such as banks, insurance companies, DMV, the courts

d.  Contact the deceased spouses' health insurance company or Medicare to find out if there is any coverage for the surviving spouse 

e.  Make sure they know how to keep the household running, which means they will need to access the spouses's bank accounts right away.  Typically, the spouse with have one of three types of accounts:

        1)  Joint Account with Rights of Survivorship, hopefully with surviving spouse listed as the joint                account owner, which means they will have immediate access to the funds

        2)  Payable on death account:  Hopefully, the surviving spouse will be listed as the beneficiary,                so they will have immediate access to the funds once they are able to produce a                                    death certificate  

         3)  Individual account:  If the account is solely in the deceased spouses' name, the surviving                       spouse will need an order from the court appointing them or some other family member the               administrator or executor of the estate in order to access the funds.  This may take some                     time, so the surviving spouse should be prepared just in case this is the only kind of account               available to them.

In the first few weeks after death:

a.  Notify the Social Security Administration because there are some funds that may need to be returned

b.  Contact financial advisors and tax advisors

c.  Apply for life insurance, veterans benefits, pension, social security or any other benefits that the surviving spouse may be entitled to

d.  Apply with the court for the spouses' elective share

e.  Pay essential bills

In the first year after death:

a.  Work with a CPA to file the taxes for the decedent's returns

b.  Find out if the surviving spouse will need to pay estate tax

c.  If there is a trust, have an attorney help administer the trust properly

d.  Make sure surviving spouse has an estate plan

There are so many issues that arise when a spouse or loved one dies, and we need to really think about what kind of plan we will have in place when the time comes.  If you need want more detailed information, please contact your tax professional or estate planning attorney.

What should you do with your will after you execute it?

In North Carolina, if no one can find the will after you die, it will be presumed that you destroyed it and it will be deemed revoked.  Your property will then pass by intestacy, meaning the state of North Carolina will determine who you property passes to.  

Even if every member of your family has copies, the North Carolina courts will require an original.  If there is no original, it’s possible to probate a copy, but the witnesses to the will will have to come forward, which is not possible at times, and there will be a lot of time and costs associated with getting a copy probated.

Where should you keep your will?

With the lawyer—Some attorneys will keep an original on file in their office, although I don’t think this is being done as often as it used to be because it creates liability for the attorney

In a firebox at home--This is a good idea as long as the people in charge of your affairs after you die knows where the firebox is.

File with the Clerk’s office—You can file the original at the Clerk's office, but for a small fee.

In a safe at home—Although these are not always fireproof, this is a reasonable alternative, as long as someone knows the will is located here.

Safety deposit box-- This is not the best idea, as banks in North Carolina will require a death certificate, a fee, and possibly a court official before they will allow a family member to access the safety deposit box.

In a freezer bag in the freezer—the freezer will survive a surprising number of calamities (I’m from Carthage---and you’d be surprised how many people from the country use this method).  Freezing solid eliminates mold and moisture issues.

It's just as important to make sure the people who will be in charge of your affairs when you die known where your will is located, and that this location is a safe place, as it is to execute a will at all.  If you have questions about where to put your will and how to keep it safe, please contact an estate planning attorney.

What happens if you don't have a Power of Attorney?

Power of attorney documents are executed when the person has capacity to legally designate someone as their decision maker.  However, some people wait too long and don’t have anyone when the time comes that they are unable to do so.  If this happens, loved ones or retirement facilities, or caretakers will have to file a guardianship proceeding to ensure that someone is legally able to make decisions on the incompetent person’s behalf. 

I have had the opportunity to do many guardianship cases.  A lot of them turn out great and mom or dad walk away with their child taking care of them for as long as they are still alive.  However, sometimes things don’t always turn out the way we expected and guardianship proceedings can go very badly.

I distinctly remember one case.  Dad died and mom was left living alone.  She didn’t have a power of attorney or anyone to make decisions on her behalf, but luckily for her, she had six children who all loved her dearly.  Mom was a professor for thirty years, brilliant lady, with a lovely home and many other assets.  She hadn’t planned for the future because she felt like her six children would band together and help her.  She eventually lost her faculties and needed assistance making financial decisions and important decisions regarding her healthcare.  When this happened, since she didn’t have a designated power of attorney, her children initiated a guardianship proceeding.  The children began fighting over mom’s care and wanted control of her money and decision making power about whether or not she would have to move to an assisted living facility.  Because the Court saw the discord and the arguments among these six siblings, the Court decided it was not in mom’s best interest for any of her children to be the guardian and the Court appointed a public guardian.  A public guardian is usually someone with the county’s health and human services program who serves as guardian when there is no one appropriate to serve. 

Now, keep in mind, mom has six children who love her, who knows her wants and needs, and who know what would make her happiest.  The public guardian, although possibly very good at their job, has no history with this woman.  Because the children were angry with each other at this point, the public guardian decided it was best that mom not see the children at all because they felt it was stressful for her to be in the midst of their discord.  Mom lived the rest of her life with supervised visits with her kids and very limited time with them. 

My point is not to scare you, but to make you aware that if you don’t have a plan, and you don’t designate someone to act as your decision maker, the county can step in as that person who makes the most important decisions of your life.

  

If you are interested in planning for your care and want a power of attorney, please contact an estate planning attorney.   

Leaving An Inheritance For Your Furry Family Members

For most of us who own pets, our pets are members of our family.  This is exactly how celebrity Leona Helmsley felt about her dog, Trouble, when she left $12 million for his care.  Unfortunately, she was not well advised and none of the instructions she left in her will were followed....the Court eventually reduced Trouble's inheritance to $2 million.  Leona, along with so many other pet lovers, are not well prepared and their dearly beloved pets are left behind uncared for for many reasons such as conflicts with other pets, allergies, and failed promises by family and friends.  

Estate planning for pets is a relatively new concept and estate planning attorneys are not asking clients about their pets as part of their routine intake questions.  As a pet owner and lover myself, I hope that one day, this will become a routine question since the law views pets as property and most people don't think of listing their pets as beneficiaries of their estates or trusts.

You may have received advice to list instructions or wishes in your will for someone to take care of your pet, but this is not enough to guarantee your pet's care.  Wills are not immediately effective upon death, so there will be a lag time between your death and the time your will is probated and enforced.  Also, your wishes or instructions are just that....your wishes cannot force your friend or family member to take care of your pet.  Wills also do not allow the disbursement of funds for the lifetime of a pet, so there will be no guarantee that funds will be available as long as your pet is alive.  There are ways, other than a will, to ensure long term care for your pet.  Some states recognize honorary trusts for pets, and fortunately, North Carolina is one of those states.  

The North Carolina Uniform Trust Code provides that a trust for the care of a pet alive at the time of the creation of the trust is valid, that no portion of the principal or the income of the trust may be converted to the use of the trustee or to any other use than for the benefit of the pet designated in the trust, and that the trust terminates upon the death of the animal.   Trusts are set up to provide a long term plan of care for your pet, that can start promptly upon your death and last until the pet is deceased.

There are many nuances of creating an honorary trust for your pet, such as reserving certain assets to leave out of probate, so that there are funds immediately available for your pet, naming a caretaker, and naming an alternate beneficiary upon the death of your pet.  Please contact an attorney if you have pets and are interested in ensuring their lifelong care.  

CHILDREN SUING THEIR OWN MOTHER OVER A BEACH HOUSE SHE GAVE THEM? YOU CAN'T MAKE THIS STUFF UP!

The facts of this case are fascinating and can be found in Davis v. Davis, 2015 NCBC 95.

This case caught my eye because I was trying to figure out how the language of a life estate was an issue that was heard in the NC Business Court, but once I started reading, I got much more than what I bargained for.  This case was in front of the NC Business Court because it involved issues dealing with the functions and operations of an LLC.

But, who cares about that?  That's definitely not the interesting part. 

In 2013, Plaintiffs Melvin L. Davis, Jr. and J. Rex Davis filed suit against their mother, Dorothy Davis, over a beach house at the Outer Banks.  Dorothy Davis and her husband, now deceased, purchased the beach house years ago.  From time to time, they would rent the home when they needed extra cash.  Mr. and Mrs. Davis decided they wanted to gift the home to their four children, but in order to satisfy certain other financial obligations, they gifted the home to MKR, LLC.    Plaintiffs, along with their sister Kaye, are the sole members and managers of MKR.  Davis v. Davis., 2015 NCBC 95, paragraph 11.  Plaintiffs hired an attorney to prepare the documents related to the deed from Mr. and Mrs. Davis to MKR.  The deed includes the following language:

    "The Grantors hereby reserve unto themselves, a life estate in the Property, said life estate to be         personal to the use of the Grantors, thereof, and may not be utilized by any other person, nor             may it be reduced to a cash value for the benefit for the Grantors, or the survivor thereof, but             must remain always during the lifetime of said Grantors, or the survivor thereof, available for             their individual and personal use without interference from either the remainder men or any             other person." Davis, paragraph 13. 

The attorney who drafted the deed testified that he drafted this language with the intention that it would prohibit Mr. and Mrs. Davis from renting out the Property during their lifetime.  He testified that he went over the documents with Mr. and Mrs. Davis and that they understood.  When Mr. Davis died, Mrs. Davis entered into a rental agreement with Outer Banks Blue, LLC, giving Outer Banks Blue, LLC authority to rent the property.  Once Mrs. Davis entered into this contract, the Plaintiffs filed suit and alleged that Mrs. Davis is precluded from renting the property based on the language of the deed.  Davis, paragraphs 15, 22, 23.

I mean, who wants renters ruining everything??

The Court cited several cases that reminded the parties of the purpose of creating life estates and the general policies that follow.  "An unlimited restraint on alienation of a life estate is against public policy, and therefore, void."  Davis, paragraph 27, citing Brinkley v. Day, 88 N.C. App. 101 (1987).  The Court agreed that there are certain limited restraints on alienation of life estates, such as indirect restraints on conveyance of a fee subject to a possibility of reverter or a condition subsequent.  Davis, paragraph 29, but in this case, there is nothing limited about the restraint on Mrs. Davis' life estate.  The Court ruled in Mrs. Davis' favor and found that the provisions in the deed are void.  Davis, paragraph 34. 

I think the Court definitely got it right this time.  If Mom gifts her children a beach house, it would seem contrary to public policy and fairness in general to allow the children to stop Mom from renting her property during her lifetime.

What Are The Most Important Things I Should Do Before I Die?

Woody Allen said it best....
"It's not that I'm afraid to die; I just don't want to be there when it happens."  

No one likes to think about their mortality, but in order to preserve our assets and our families' sanity, there are certain documents that we should, while still competent to do so, put in place.  There are many estate planning documents and options, but I typically advise people to, at a minimum, put into place five documents that will make life, and death in this case, much easier for all involved.

The Basic Estate Planning Documents

1.  Living Will
     Allows you to state your wishes regarding withdrawing life prolonging measures if you are                  terminally ill or permanently unconscious
2.  Last Will and Testament
     Allows you to determine who will inherit your property, who will take care of your children after        your death, and who is in charge of making sure these things are done according to your will
3.  Healthcare Power of Attorney
     Allows you to name someone to make healthcare decisions on your behalf if you can no longer            speak for yourself
4.  Durable Power of Attorney
     Allows you to name someone to act on your behalf in the event of your incapacity
5.  HIPAA Authorization
     Allows medical providers to release medical information on your behalf to the person you                    designated

These are all fairly simple, but important documents that will preserve your wishes, while helping your family cope with your incapacity and subsequent passing.  There are many other more complicated estate documents, and you should consult an attorney experienced in estate planning to help in these matters.

I inherited real property with my siblings....What if one of us wants to sell?

You have heard it said many times over, "Money is the root of all evil."  I know this to be true because I have seen it happen many times.  A beloved parent dies and the siblings are tearing the pictures off the walls, stripping the house of antiques, and fighting over every little item down to the vacuum cleaners and old sheets.  Personal property items are difficult enough to deal with, but when two feuding siblings inherit property as tenants in common, things become more complicated.  If multiple owners of real property cannot agree on whether to keep the real estate or sell it, a partition proceeding may be necessary.  

A partition is a special proceeding in front of the clerk of superior court where the clerk must determine if the real property can be divided or if it must be sold.  

There are two types of partitions:

1.  Actual partition:  This is the physical division of the property among property owners, but this is typically difficult to do.  This type of partition is favored by the law.

2.  Partition by sale:  This is the sale of the real property, where the proceeds are divided among the owners

In order to determine which is the best choice between the two types of partitions, the clerk will consider the nature, character, condition, and location of the land, the ownership interests of each party, and any economic waste that a division of the property would cause.

If an actual partition is chosen by the clerk, three commissioners will be appointed to divide the land.

If a partition by sale is chosen, the clerk will determine if the sale will be private or public, and a commissioner will conduct the sale.    

Although partitions resolve the legal differences between the parties, there are rarely any winners, as the court costs, attorney fees, and commissioner fees can add up quickly and the emotional differences are usually exacerbated during the process.

Partitions can involve complicated legal matters and you should consult an attorney if faced with these issues.

I was named as the Executor of my loved one's will....now what?

Most of the time, your family member or friend will tell you if they plan to appoint you as Executor or Executrix of their will.  Often, you will also be a beneficiary of their will as well, or at the very least, they will let you know you will be in charge of handling their affairs after their death and where the will is located.  

Once your loved one dies, if you choose to honor the deceased's wishes, you will take a copy of their death certificate and go to the Clerk's office in the county where the deceased lived.

How to become the Executor/Executrix

Unless the Clerk finds good cause not to appoint you (criminal record, conflict of interest, etc), you will be issued Letters of Administration, which appoint you as Executor/Executrix of the decedent's estate.  You will have to submit a preliminary inventory of the decedent's assets as of the date of death, so you will need to be familiar with the decedent's bank accounts, real estate, vehicles, personal property, etc.  This can always be amended, but it's good practice to go in with as much knowledge as possible.  You will take an oath where you promise to carry out your fiduciary duties to the estate.  You may also be asked to pay a bond, depending on what the will provides, which acts as an insurance policy should you violate your fiduciary duties by misappropriating funds.

What it means to be the Executor/Executrix

Once you are given your Letters of Administrations, you now how the ability to collects assets of the estate, pay claims, and distribute monies to the beneficiaries under the Will.  Most of these actions can be handled without prior court approval, but sometimes, selling real estate and various other matters require court approval.  

With these powers, come great responsibility.  You are responsible for noticing creditors of the decedent that an estate has been opened.  You must file an inventory within three months from the date you qualified as Executor/Executrix that shows exactly what assets the decedent had at the time of death.  After you have determined all the assets the decedent had, paid all the claims, and costs of administration, you can request commissions (payment for administering the estate), and then file a final accounting, which shows the Clerk's office the records you kept of all monies coming into the estate and all monies distributed.  The Clerk will determine if your accounting balances, and only discharge you from your duties once the final accounting is approved.  

What if you cannot submit a sufficient final accounting or if you violated your fiduciary duties to the estate?

The Clerk will not discharge you from liability until you can submit a final that will be approved.  The Clerk may require you to attend a show cause hearing where you will be able to give an explanation of why you cannot submit a proper final accounting.  If you do not appear at the hearing or file a final, the Clerk may issue an order for contempt and you could be jailed until you comply with the order.  

Being an Executor/Executrix is a title that is a privilege, because your loved one put that trust in your hands, but it also comes with great responsibility.  There are potentially complicated matters in many estates, and it is advisable to consult an attorney if you are appointed the Executor/Executrix in an estate.

A NON-RESIDENT DIES OWNING PROPERTY IN NC---WHAT TO DO

When a decedent has an estate administered in another state, but has property in North Carolina, an ancillary administration will allow the assets in North Carolina to be administered.

Black's Law Dictionary defines Ancillary Administration as "probate taken out in a second or subsequent jurisdiction to collect assets or to commence litigation on behalf of the estate in that jurisdiction."

Procedure Generally

Once the Clerk's office determines that an ancillary administration should be set up in North Carolina, the Clerk's office must also determine if the will meets North Carolina probate requirements.  In order to pass title to real property to the beneficiaries in a decedent's will, the will must be admitted to probate pursuant to the laws of North Carolina.  An ancillary personal representative will appointed to administer the assets of the estate.  Once an Ancillary Personal Representative is appointed, the estate will be administered just as an estate originally opened in North Carolina.  

Ancillary Personal Representative

Once the Clerk determines that an administration should be set up in North Carolina, someone will need to be appointed to handle the affairs.  

If there is a will, an Ancillary Executor will be appointed, and an Ancillary Administrator will be appointed for all other personal representatives.  

If there are multiple people who want to be the Ancillary Personal Representative, the statute governs this priority:  a) executor named in the will b) personal representative already appointed in the state where the decedent lived c) any other person who is not disqualified if 90 days have passed since the decedent's death, or 60 days have passed since the qualification of the personal representative in the state where decedent lived, whichever is shorter.  

When is Ancillary Administration not required?

a.  If there is no estate opened in the state where the decedent lived, a non-ancillary full estate administration or any other option that is appropriate that is not a full administration may be opened in any proper county, per the venue requirements, in North Carolina.

b.  If sixty days have passed since the decedent's death an no estate proceedings are pending in North Carolina, any resident of North Carolina that is in possession of a non-resident decedent's personal property may deliver the property to the Personal Representative in the state in which the decedent lived.  

If it is determined that an ancillary is required, an attorney should be consulted to ensure that nuances of distributing assets and accounting issues that are unique to Ancillary Administrations can be properly addressed.

CAN I MAKE SURE MY WILL IS VALID WHILE I'M STILL LIVING?

Probating ones' estate after death can be a lengthy, time consuming process that has the potential to financially and emotionally drain the family members of the deceased.  Until recently, wills and codicils to wills were not declared valid or invalid until after death.  Recent changes by the North Carolina Legislature to the statute provides that a testator (the person executing the will) can now ask the court to declare, prior to their death, that their will is valid.  This process is only available in a few states and is now available in North Carolina through Senate Bill 336.  

Who may file?  

Anyone who is a resident of North Carolina and who has executed a will or codicil may file a petition with the Clerk's office.  The person who files to have their will declared valid is called the Petitioner.

How does it work?

The Petitioner must provide evidence to the Clerk of Superior Court to establish that the will or codicil would be admitted to probate if the Petitioner were deceased.  If an interested party contests the will or codicil, the Clerk will transfer the matter to superior court as if it were a caveat proceeding.  If no interested party contests the validity of the will or codicil and if the Clerk determines that the will or codicil would be admitted to probate if the Petitioner were deceased, the Clerk will enter an order stating that the will or codicil is valid.  

Where should the Petitioner file?

The Petitioner must file in the county where the Petitioner lives.  

What should the petition say?

1.  a statement that the Petitioner is a resident of NC and specifying the county of the Petitioner's residence

2.  a statement that the Petitioner had testamentary capacity at the time the will was executed

3.  a statement that the Petitioner was not under undue influence and duress

4.  a statement identifying the Petitioner and all interested parties

What is the effect of a declaration by the Court?

If the Court enters a judgment declaring that the will or codicil is valid, this is binding on all interested parties.  All parties will be barred from challenging the will or codicil in a caveat proceeding when the will or codicil is entered into probate after the Testator's death.  

This change to the statute is a great tool to make a preemptive move to streamline the probate process for the Testator's family.  There are many other estate tools that will serve to make the probate process more manageable, and an experienced estate attorney can make these tools available.

 

THE DEFENDANT IS AVOIDING SERVICE...WHAT DO I DO?

Filing your lawsuit is hard enough and getting it served in North Carolina should be a straightforward process, but savvy defendants have found ways to dodge your attempts so far. You attempted certified mail, and got no signatures back. The sheriff said they are unable to serve, and you have already spent too much time and money sending the sheriff out. You have thought about posting an ad in the newspaper, but sometimes legal ads will not achieve the remedy you desire or deserve. An experienced creditors’ rights attorney knows how to assist you in finding appropriate options for serving your defendant.

Please consult an attorney before considering your next step.

I HAVE A JUDGMENT...NOW WHAT?

Someone owes you money. They don’t pay. You take them to court. You win your case! You think, “Great! We’ve reached the end. Victory!” Unfortunately, it’s not that simple.

The fact is, a judgment can be the beginning of a long and frustrating road for a lot of people. Here’s why:

When you win your case against someone who owes you money, you come away with a legal, public document called a judgment. This public document serves as an official record stating who owes whom and by how much. It’s an important document to have if you ever hope to collect, but it isn’t enough to enforce the actual collection – and that’s an important distinction to remember. Nine times out of ten, a debtor doesn’t come forward willingly, and in those cases, the plaintiff will have to take additional steps to recover the debt. There are several legal mechanisms an attorney who is experienced in creditors rights will be able to use in order to collect on your judgment. These include attaching the judgment to the debtor’s bank accounts, forcing the sale of the debtor’s personal property, and possibly sometime in the not-so-distant future, the garnishment of wages – an option that current isn’t available in the state of North Carolina.

Your best bet – prepare yourself for the wait. These are complicated legal processes and you should always consult an attorney prior to considering these options.

My Minor Grandchildren Reside with Me…is Legal Guardianship Appropriate?

This question comes up frequently in the context of school-aged children who may live with a grandparent or aunt, uncle, or someone other than their natural parents. Schools will often send grandparents, etc. to the courthouse to file for guardianship so there is some proof on record as to who has decision-making authority over the child’s well-being. Unfortunately, this often results in a wasted trip and confusion.

In North Carolina, a “guardian” is someone who is appointed by the Clerk of Superior Court to make decisions for an incompetent adult. Once the court has determined someone incompetent, the court refers to this person as “the ward.” There are three different types of guardians for incompetent adults.

A Guardian of the Person makes decisions about the ward’s personal welfare, such as their living arrangements and medical plans and decisions.

A Guardian of the Estate can make decisions about the ward’s finances, such as paying bills, investing monies, etc.

A General Guardian is a combination of both the Guardian of the Person and the Guardian of the Estate, and has authority over both the ward’s personal and financial decisions.

North Carolina guardianship procedures do not provide for the needs of minor children, except in very limited circumstances. A minor cannot be appointed a Guardian of the Person or a General Guardian, unless 1) both natural parents are deceased, or 2) the court has terminated the parent’s parental rights. However, the Clerk of Superior Court may appoint a Guardian of the Estate for a minor child in cases where the child requires a guardian to manage an inheritance or life insurance proceeds from a deceased family member.

North Carolina guardianship practices are primarily geared towards adults, with a few exceptions. The law, however, does address the needs of minors through the custody procedure when minor grandchildren reside with a grandparent, and at least one natural parent is still living.

WHAT CAN YOU DO TO PROTECT YOUR ELDERLY PARENTS' ASSETS?

Did you know that we’re only a few decades away from having the highest number of senior citizens in the U.S. that we have ever seen? According to the Pew Research Center, by 2060 there will be just as many people over the age of 85 as under the age of 5. While this dramatic shift is happening around the world, the trend is far more pronounced in the U.S., largely due to longer lifespans and lower birth rates. Longer lifespans mean ballooning health care costs and depleting retirement savings, and in some cases, these will put additional strain on adult children.

If you have elderly parents, you may be asking – “how can I protect my elderly parents’ assets in the event they are unable to make financial decisions for themselves?”

The simplest safeguard is for aging parents to set up a ‘Power of Attorney’. A Power of Attorney is a legal document in which person A appoints person B to act on their behalf. In the event that one or both parents are incapacitated, a Power of Attorney grants authority to the person of the parents’ choosing to deal with financial decisions. Parents will often appoint a son or daughter to serve as their Power of Attorney. With a Power of Attorney in place, you can rest assured knowing you have the legal authority to protect your parents’ assets should they become incapable of making financial decisions for themselves.

What if your parents are unable to make financial decisions for themselves and don’t have a power of attorney already in place?

You may have to consider petitioning to the Court to be appointed Guardian of the Estate. In North Carolina, Guardians of the Estate are appointed for the purpose of maintaining a person’s property, estate, and business affairs. This process is more lengthy and cumbersome than obtaining a Power of Attorney, but becomes necessary if it is too late to obtain a Power of Attorney. As the Guardian of the Estate, you will have the ability to, among many other powers allowed under the law, receive assets due to your parents, abandon or relinquish rights in property under certain circumstances, take possession of your parents’ assets for their benefit, vote shares of their stock and many others. You will need the court’s permission to be the Guardian of the Estate and the court will require that you provide a regular accounting of all monies in and out of the estate.

Fortunately, you can protect your parents’ assets if they become unable to do so. The key is to have those conversations before situations arise.

AVOIDING PROBATE WITH RELATIVE EASE

One of my favorite legal quotes is by J.J. Childers:

“There’s hell, and then there’s probate.”

While certainly not as hopeless as the Chancery Court portrayed in Dickens’ Bleak House, the probate process required in the absence of a valid and well-designed estate plan is inevitably time consuming, expensive, and stressful for the ones left behind. If you do not have an estate plan, or if your current plan is limited to a simple will, your assets will be subject to the probate process and your loved ones will be left subjecting their time and privacy to the Clerk of Superior Court.

Fortunately, there are several options available that may allow you to avoid probate altogether.

Joint Accounts with Rights of Survivorship

Title(s) to assets held in joint tenancy pass automatically at the death of one joint tenant to the others. The only time there is a need for probate is if all joint tenants are deceased. This is a simple, yet effective way to transfer assets in bank accounts, vehicles, or real estate outside of your estate without having to go through the laborious probate process or pay fees to the office of Clerk of Superior Court.

Payable on Death Accounts (Totten Trusts)

With a Payable on Death (POD) account, any beneficiary can be named, including a minor.  At death, assets held in the POD account automatically transfer to the beneficiary of the account without going through the probate process. One drawback to this tool is that your creditors are allowed to access assets held in POD accounts in the event that probate assets are insufficient to satisfy amounts owed.  During your lifetime, a POD account allows you to draw interest on the account, while leaving the principal intact. The beneficiary of a POD account has no rights to funds in the account until after your death.

Living Trusts

A living trust takes assets owned by a living individual (the “Grantor”) and transfers the title of those assets to the control of the trust. At the time of the Grantor’s death, or at some other time specifically defined by the Grantor in the trust agreement, title of the assets held in trust are passed to the trust’s beneficiaries without having to go through probate. The Grantor, particularly under a Revocable Living Trust, maintains control over the trust, such as in designating the Trustee and in determining when and how assets will be distributed to the beneficiaries.

Gifting Assets Prior to Death

As parents age, they often choose to gift assets to their children as a way to avoid the probate process. This approach is favored by those who wish to exercise their authority in determining who gets what, when they get it, and what they do with it. However, the person making the gift is responsible for paying applicable federal gift tax. For the year 2014, federal tax law permits transfers of up to $14,000 each to as many people as the giver desires without triggering any federal gift tax. This option provides a significant annual opportunity to transfer assets to the next generation during your lifetime while avoiding probate and potential estate tax.

DO I HAVE TO ACCEPT INHERITANCE THAT WAS LEFT TO ME IN SOMEONE’S WILL? (RENUNCIATION)

This question does not typically arise when someone finds out they have been left an inheritance. However, some circumstances may make an individual choose to renounce their interest in a person’s will. Depending on the inheritance and what state the decedent lived in, there can be hefty taxes, including inheritance taxes, estate taxes, and income taxes. Avoiding the payment of abundant taxes is just one reason someone may wish to renounce his inheritance. If an individual does not want to accept an inheritance, he does not have to. However, legal steps must be followed to validly renounce those rights.

What Can I Renounce?

A person living in North Carolina can renounce (1) an entire inheritance or part of an inheritance; (2) any interest in or power over property; (3) a fractional share, unless the decedent expressly provided otherwise in his will; and (4) an intestate share.

How do I Renounce?

In North Carolina, the renunciation must: (1) be in writing and name the transferor of the property; (2) describe the interest being renounced; (3) declare the extent of the renunciation; and (4) be signed by the person renouncing. The document typically must be filed within nine months of the decedent’s death in order to be valid. The copy of renunciation may be delivered in a number of ways, such as in person, through first class mail, fax, email, etc. It is also necessary to be aware of the location that the document must be filed, which depends on what type of property is involved.

What is the Effect of Renunciation?

Renunciation is binding in North Carolina. In other words, once a person files a signed copy, he cannot change his mind and revoke the decision. This is a permanent decision that should not be taken lightly. Therefore, it may be a good idea to contact an attorney and discuss all of your options before choosing to renounce your rights to an inheritance.

HOW DO I CHANGE MY WILL?

Major changes in our lives are constantly taking place, whether it be a divorce, the birth of a new grandchild, or receiving a large inheritance. These events tend to cause chaos, but amongst the chaos, it is important to remain practical and consider the impact that these events will have on the future. After a major life event, it is always a wise decision to ensure that your estate plans still match your wishes. If you do find yourself in a situation that requires a revision of your current will, there are a couple of options to keep in mind.

Two Options: Execute a Codicil or Revoke your Current Will

The first option is to execute a codicil. A codicil is a document designed to modify a previously written will. A codicil must meet all the requirements of a valid will. Simply “crossing out” passages or adding new provisions in your current will is not the answer. A codicil is executed similarly to an original will. However, depending on how substantial the necessary changes are, it may be advisable to execute an entirely new will rather than making multiple changes of significant details.

The second option is to fully revoke your will. A will may be revoked only by a subsequently written will or by being burnt, canceled, obliterated, or destroyed with the intent of revoking it. Additionally, a will may only be revoked by the person who wrote the original will. It is necessary to include a section that states that all previous wills are revoked. If this is not done, and there is a misunderstanding concerning which will should apply over the other, and therefore the court may not honor it in the way you intended.  

When Should I Consider Changing My Will?

Take time to consider the following major life changing events when determining whether a will revision is necessary: a recent marriage or divorce; the birth of a child or grandchild; a change to real estate investments, major assets, or financial circumstances; a move to a different state; etc. As mentioned above, the significance of the necessary changes of the will may help guide which of the available options is most pragmatic when changing your will. For example, if various major events have taken place and there are multiple provisions in the will to be changed, it will make more sense to write a new will rather than attempting to change multiple provisions through a codicil. If you are interested in this topic or feel as if this situation applies to you, feel free to contact an attorney with any questions or for further information and guidance.