AVOIDING ESTATE PLANNING?
Many people avoid making an estate plan for various reasons. Some do not want to think about dying. Some think it is a chore to complete (all those questions to answer). Others do not know what to do. Others completed an estate plan at one point and do not want to look at it again. Whatever the reason, it is not a good idea to do nothing. The State of North Carolina has already put together a will for you, it is known as intestate succession (dying without a will) and your property gets distributed according to the North Carolina statutes. Not a good plan.
If it has been more than 2 years since you have updated your estate plan, you should consider reviewing it. Reasons for making changes to your estate plan include:
- You got married or divorced – If you married you may want to change your will or trust to make your spouse the beneficiary of your estate. If you divorced, you may want to remove your spouse. You need to particularly look at any beneficiary designations for life insurance policies or investments. Could be insult to injury after you pass if your money goes to an ex-spouse. If you re-marry you may not want your ex-spouse to get funds that you wanted to go to your new spouse. Proper beneficiary designations cause property to pass outside of one’s estate.
- You had a child – Congratulations! If you are a first-time parent or just added another bundle of joy to the family you may need to make changes to your estate plan. A revocable living trust is a great tool for leaving assets to minor children. Additionally, one of the hardest parts of estate planning is figuring out a primary and secondary guardian for your child or children. Also, will you give all of your property to the guardian to care for the child(ren) or do you want a trust to handle it? Tough decisions for every parent of minor children.
- You turned 18 years old – Welcome to adulthood. You have been wishing for this time for a while. However, naps and snacks may seem more appealing when adult responsibilities take off. If you are now 18 years old, you are responsible for your own healthcare. Your parents may not be able to make medical decisions for you. If you are injured during that crazy ski trip you always wanted to take (the double black diamond trail did not seem that scary after the bunny trail) or during the crazy stunt in college that just went awry. Many teenagers are injured in car accidents. While an 18 year old may not have money to need a will or trust, they certainly need to have a healthcare power of attorney, living will and general power for attorney.
- You started a business – That’s the way to embrace the entrepreneurial spirit! Now that you started it, what happens if something happens to you? Did you incorporate or form an LLC? Do you have partners, other shareholders, or other members? Do you have an operating agreement or bylaws that address the manner of handling the business interest if you or someone else in the business passes away or becomes incapacitated?
- You sold property you listed in a will or trust to go to someone when you pass away – This may be taken care of in your will or trust, but it does not hurt to review your documents to make sure no problems will occur. For example, you counted on a particular item to be the sole property to one family member while the others received cash or other tangible personal property. The left-out family member may challenge the will or trust alleging they should get part of the remaining property as that was your intent to give them something.
- You bought or sold real property – In North Carolina, if a married couple purchases real property and both spouses are listed on the deed, then title is held as tenants by the entireties. This type of title has a right of survivorship component. This means that if one spouse passes away, the real property ownership interest automatically passes to the other spouse. So the real property would not go into the estate of the deceased spouse. However, if something happens to both spouses, then whichever is deemed to have passed first, their interest will go to the other spouse and all of the interest in the estate will go into the second spouse’s estate. Confusing?
- Pets – Some people consider their pet as part of the family or even more important. What happens to your pet when you pass away? What do you want to happen?
This is not an exhaustive list, but some things for everyone to consider. No estate plan or an improper one can lead to nasty, bitter squabbles amongst family members.