North Carolina Estate Planning Frequently Asked Questions

Wills in North Carolina:

+ What is a Will?

A Will is a legal document, normally prepared by an Estate Planning Lawyer, setting out your wishes for the distribution of your assets after you pass, the appointment of a Guardian for any minor children or pets you may have on the date of your death, the payment of your debts, and the appointment of an Executor to settle your estate. Normally a Will is type-written, signed by you, witnessed by two uninterested adults (people who will not be beneficiaries of your estate), and notarized. This creates what is call a “Self-Proving Will” – meaning the Will itself proves it is legally valid and enforceable.

+ Can I Create My Own Will?

Technically yes, anyone can draft a will. However, drafting your own will is a risky endeavor because you simply don’t know what you don’t know. Creating your own will makes it much more likely that there will be something left out or unaccounted for, or that a legal formality is not followed. It is always best to consult an Estate Planning Lawyer when considering implementing a Will in your estate plan.

Generally speaking, yes, they are legal documents – if they are executed correctly following the required legal formalities in North Carolina. However, while these services may create a legal document, they cannot provide any sort of assistance with the actual planning involved in creating a will – they leave it up to you to know what you want to happen after ou pass. This can be very dangerous and can end up creating very unintended consequences, especially if your family or financial situation changes after you create the will. These online providers create a document – what you need is an ongoing relationship to make sure your plan will always work for you and your family. That can only be accomplished by working with an Estate Planning Lawyer.

+ Can I Handwrite a Will?

Yes, you can. In North Carolina, handwritten wills (“holographic will” is the legal term for it) are valid and enforceable as long as three (3) people can verify the signature and handwriting of the Testator (the person writing and signing the will) after the death occurs. The main problem with handwritten wills is that there is almost always something left out because most people simply don’t know what needs to be included in a will to make sure everything is accounted for. Those gaps in the will are filled by the State’s law of intestacy (default rules for estates in the absence of a will or a provision within a will). For example, if your handwritten will sets out what you want to have happen with your house and bank account, but doesn’t speak to any other property, the state’s rules will apply for all of the unaccounted for property, which is likely not what you intended to happen in creating a will.

Trusts in North Carolina:

+ What is a Trust?

A Trust is a contact between three parties: 1) the Trustor or Grantor (the person creating the trust); 2) the Trustee (the person holding title to the property of the Trustor); and 3) the Beneficiary(ies). Unlike an LLC or Corporation, a Trust is not a separate legal entity. It is essentially a set of rules the set out how the Trustee is to hold the assets for the benefit of the Beneficiary(ies). The Trustor sets the rules.

+ Who serves as Trustee?

It’s entirely up to the Trustor, but normally the Trustor will also serve as Trustee during their lifetime. Once they pass away, a Successor Trustee takes over – that person is appointed by the Trustor in the Trust.

+ What are the Benefits of a Trust?

A Revocable Living Trust has two primary purposes: 1) to avoid probate (see below); and 2) to provide more structure to the distribution of your assets after you have passed. The trust allows all assets titled in the Trustee’s name to avoid the probate process and be capable of use immediately after your death, and it allows the Trustor to put specific rules around how the Beneficiaries should receive the Trustor’s assets and when those distributions should take place.

+ Are there any Tax or Creditor Benefits?

With a Revocable Living Trust, no. The reason for that is the assets are still reachable by the Trustor, meaning he or she can remove them at any time. In order to achieve a tax or creditor protection benefit from a trust, the trust must be irrevocable.

+ Can I Change a Trust?

Yes. During the life of the Trustor, the Trust can be amended or terminated whenever the Trustor wants. That means the Trust can be changed to evolve with your family and financial circumstances. Once the Trustor has died, the Trust becomes irrevocable and generally cannot be changed without a Court Order.

Probate in North Carolina:

+ Does a Will Avoid Probate?

No, unfortunately a Will is quite literally a “ticket to probate” – meaning the Will must be submitted to probate to be followed and for your probate assets to pass to your beneficiaries.

+ Where Does My Will Get Submitted For Probate?

Your will must be submitted to the Clerk of Court in the county where you reside, and have plans to stay for an indefinite period of time, on the date of your death.

+ Who Settles My Estate?

The Executor named in your will, and potentially an attorney of their choosing, will be tasked with settling your estate – i.e., paying your debts and disbursing your assets to your beneficiaries. The Executor will have a fiduciary responsibility to your beneficaries in that endeavor.

+ How Long Does Probate Take?

It can take anywhere from 3 months to several years, depending on the nature and complexity of your estate. The duration will depend on the number of creditors, the types and location of your probate assets, whether there is a dispute amongst your beneficiaries, and whether there is a wrongful death action pending.

+ How Much Does Probate Cost?

There are really three potential costs associated with Probate:

  • The filing and notice fees (usually $120 and $115-130 depending on the paper),
  • The Probate fee (0.4% of probate assets up to $6,000), and
  • The Attorney’s Fee for assisting with the Probate proceeding ($1,000 – $10,000, depending on the matter and the Attorney).

+ How Do I Avoid Probate?

There are three ways to avoid probate:

  • Not owning anything on the date of your death – if you have no assets, your estate will have no assets to probate,
  • Only owning assets in a non-probate designation (see the next FAQ below), or
  • Utilizing trust-based planning to remove assets from your estate.

+ Which Assets Are Non-Probate Assets?

Non-Probate assets are those owned in one of the following manners:

  • Joint tenant with right of survivorship (some joint bank accounts or brokerage accounts),
  • Tenancy by the entireties (marital ownership of a home),
  • Transfer-on-Death designations (IRA, 401k, 403b, some bank accounts),
  • Pay-on-Death designations (life insurance, some annuities and pensions),
  • Beneficiary designations (IRA, 401k, 403b, some investment accounts)
  • Trust assets

+ Which Assets Are Probate Assets?

Any personal property assets owned by you, in your individual name, on the date of your death – without one of the non-probate designations:

  • Individual bank accounts,
  • Personal effects and home furnishings,
  • Cash and uncashed checks earned or paid prior to death,
  • Debts or accounts receivable owed to you on the date of your death,
  • Business interests owned individually (LLC membership interest, corporate stock, or partnership interest – or the business itself if you’re a sole proprieter),
  • Vehicles, motor homes, RVs, boats, etc.,
  • Farm equipment,
  • Any traditionally non-probate assets that are left to your estate.

Guardianship in North Carolina:

+ What Happens to My Kids If My Spouse/Partner and I Die?

If they are minors at the time of the deaths, and if you designated a Guardian for Minor Children in your Will, the Guardian will submit the Will to the Clerk of Court and Petition for Guardianship of the children. The Clerk is required to defer to the wishes of the parents unless the potential Guardian is unfit.

+ What if I Don’t Have a Will?

If you do not appoint a Guardian in a Will, or some other writing executed with the same formalities of a Will, then your family will be able to petition the Clerk for Guardianship – but in that event, the Clerk will have no context or background for your kids or your family, so the person you may not have intended to be the Guardian may end up being appointed Guardian by the Clerk.

+ How Do I Support My Kids After I’m Gone?

You can provide for your kids in a variety of different ways:

  • Leave them assets in your will or trust – to be held for their benefit until they reach a certain age. Likely the guardian or trustee would hold the assets during their minority,
  • Establish life insurance now so that there is money to support your kids after you’re gone, which will pay following your death.
  • Give detailed instructions to the potential Guardian now, or have those instructions written down and kept with your estate plan in the event you pass before your kids turn 18.
  • Make sure that whoever the Guardian will be, they agree with and respect your parenting method and the manner in which you wish for your children to be raised in your absence.

Having a plan well in advance of any unexpected illness or accident is key.

+ What if Only One of Us Die?

If only one parent passes away, the surviving parent will still have legal custody over the children to the extent they had legal custody prior to the death. So, if the surviving spouse is the other natural parent of the children, they already have legal guardianship and custody of the children with or without a Will. But, if the surviving spouse is a step-parent who has not yet adopted the children, the Guardianship appointment in your Will would be used to confirm legal custody of the children to the step-parent (assuming the other natural parent no longer has legal rights to the children).

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