Neglecting to update beneficiaries, or failing to name them, may leave life insurance and retirement accounts to unintended recipients, create probate expenses, and cause tax problems. Having a Will does not avoid these issues. The best prevention is having updated beneficiary designations.Continue Reading...
North Carolina estate planning discussions usually put an individual’s assets under the microscope. What trusts would avoid taxes best? How much should be designated for charitable contributions? Are my advance directives up-to-date? Most people are concerned about preserving inheritances for beneficiaries instead of understanding how inherited debt may affect their loved ones.Continue Reading...
Everyone wants to save money, but choosing to cut corners on estate planning in North Carolina may end up costing individuals more than they ever expected. The cost of do-it-yourself estate planning may seem attractive at first, however Consumer Reports released a study that shows most of the DIY will programs have unintended consequences.Continue Reading...
When a baby is on the way, it is a perfect time for expectant parents to complete or update their estate plan to ensure their child’s future care. Some families do not consider the peace of mind a comprehensive estate plan offers until their baby is born. However, during the nine months parents-to-be are decorating a nursery or scheduling routine prenatal visits with their physicians, they can also add meetings with a North Carolina estate planning attorney. There are short-term and long-term events that parents can plan for to prevent court costs, legal fees and wasting of assets, plan for college costs, and secure their baby’s care in the event both parents die or become incapacitated.Continue Reading...
A new study reveals more employers will offer Roth 401(k)s to their employees in 2013. About a third of all employers surveyed by Aon, a human resource services provider, have plans to add a Roth contribution option. Since there are no income restrictions for Roth 401(k)s, the rising trend will catch the eye of many employees.Continue Reading...
Estate planning has always involved a great deal of paperwork. Today, individuals have personal access to online banking, social media accounts, and email that has pushed the industry into a new realm: Digital estate planning.
I came across a recent article in the Yahoo Finance Blog, Half of Americans With Kids Set to Die Without a Will. If you are a North Carolina resident, what happens to your estate if you don't have a will (you die intestate, in legal terms)? Here's a link to the NC law on Intestate Succession: N.C.G.S. Section 29-13 et. seq.
If you have a spouse and children, you might be surprised to learn that your spouse will not necessarily get your entire estate. This can can be especially problematic if you die owning real estate in your sole name and have minor children. Guardianships would have to be established and authority granted from the court before the property would be able to be sold. There are also a whole host of other potential problems that can be avoiding by having a will or living trust.
Bad things happen to the families of good people who die without a will. Don't let this happen to you.
Written by Lord Neaves centuries ago, but true to this day:
Ye lawyers who live upon litigants' fees,
And who need a good many to live at your ease,
Grave or gay, wise or witty, whate'er your degree,
Plain stuff or Queen's Counsel, take counsel of me:
When a festive occasion your spirit unbends,
You should never forget the profession's best friends;
So we'll send round the wine, and a light bumper fill
To the jolly testator who makes his own will.
He premises his wish and his purpose to save
All dispute among friends when he's laid in the grave;
Then he straightway proceeds more disputes to create
Than a long summer's day would give time to relate.
He writes and erases, he blunders and blots,
He produces such puzzles and Gordian knots,
That a lawyer, intending to frame the thing ill,
Couldn't match the testator who makes his own will.
Testators are good, but a feeling more tender
Springs up when I think of the feminine gender!
The testatrix for me, who, like Telemaque's mother,
Unweaves at one time what she wove at another;
She bequeaths, she repeats, she recalls a donation,
And ends by revoking her own revocation;
Still scribbling or scratching some new codicil,
Oh! success to the woman who makes her own will.
'Tisn't easy to say, 'mid her varying vapors,
What scraps should be deemed testamentary papers.
'Tisn't easy from these her intention to find,
When perhaps she herself never knew her own mind.
Every step that we take, there arises fresh trouble:
Is the legacy lapsed? Is it single or double?
No customer brings so much grist to the mill
As the wealthy old woman who makes her own will.
The law decides questions of meum and tuum,
By kindly consenting to make the thing suum;
The Aesopian fable instructively tells
What becomes of the oysters, and who gets the shells;
The legatees starve, but the lawyers are fed;
The Seniors have riches, the Juniors have bread;
The available surplus of course will be nil,
From the worthy testators who make their own will.
You had better pay toll when you take to the road,
Than attempt by a by-way to reach your abode;
You had better employ a conveyancer's hand
Than encounter the risk that your will shouldn't stand.
From the broad beaten track when the traveler strays,
He may land in a bog or be lost in a maze;
And the law, when defied, will avenge itself still
On the man and the woman who make their own will.
Thanks to attorney Knox Proctor for bringing this to my attention.
My blog has a function that allows readers to comment on a post. In the vast majority of cases, however, the comments are actually questions by those trying to avoid having to pay a lawyer to assist or advise them. While I sometimes answer simple questions, my standard response is to tell the reader that he or she should consult with an attorney. Of course, you could say I'm biased, given that I'm a practicing attorney, but I normally don't even suggest that the reader chose my firm.
Here's a recent example of a question and my reply:
My dad just died at the age of 89. His will named my mom, age 91, as Executrix. I am handling all of that for her with her assistance. My question: Her will names my dad as Executor of her estate upon her death. Due to his death, that needs to be changed to name me, the only child, as Executor. Is there a way to do that in NC without having to involve a lawyer (and pay) a lawyer?
RESPONSE: Anyone can legally prepare their own estate planning documents, including a will or codicil. However, why take the risk making an expensive mistake? It's well worth paying a lawyer to make sure your assets and family are properly protected, and in many cases, it will save money in the long run.
Many people come in to see me with the notion that all that they need and want is a "simple" estate plan. Generally that means no living trust, and a will with no trust provisions for surviving family members. I think the main motivator for this is lower cost, but probably also the desire to avoid taking the time and energy to comprehend the workings of a more complex plan.
Simple plans are less expensive and easier to understand, but at what cost? If you have children, grandchildren, or others that you care about and wish to see benefit from your estate, a simple plan offers absolutely no assurance that that will happen.
Here's a couple of brief examples:
- Joe dies and leaves all of his assets to his wife Julia. They have one child, Jack. A few years later, Julia marries John, and they buy a house together with Julia's money, and she names John as the beneficiary of the IRA that she rolled over from Joe. Julia then dies, with a Will that names Jack as the sole beneficiary. However, despite what the Will says, John gets the house, the IRA, and under NC law, one-fourth of all other property. Jack is left with little of her estate.
- Lisa has three adult children, Larry, Louise, and Lonnie. Louise and Lonnie each have two children of their own. Her will provides that each will receive one-third of the estate. Lisa dies, and each child receives $200,000. Larry is uses the money to buy a house with his wife. They then divorce, and the judge awards her the house. He is left with nothing. Louise, ambitious but with little business sense, uses the money to start a business. The business fails, and she and her children are left with nothing. Lonnie puts the money in a savings account in his name, but his Will provides that his wife gets everything. Lonnie dies, and a couple of years later his wife remarries. Sometime after that she dies, and the new husband gets everything. Her children, Lisa's grandchildren, are left with nothing.
These types of circumstances occur everyday and impact many, many families. Children and grandchildren are unintentionally disinherited, and in-laws and creditors end up with the family legacy.
How do you prevent these types of things from happening? Talk to your estate planning attorney about using a trust or trusts as part of your estate plan. It will cost a bit more, and take some more time to implement, but the savings and peace of mind can be priceless.
Modern day movies and television commercials (including a recent one by DirecTV) sometimes feature a lawyer reading the will of a deceased testator to his family. Occasionally I even get questions about the ceremony. However, it is the product of a bygone era, and as far as I am aware, never happens anymore.
I have been practicing for 23 years and have not once held a "reading of the will." It was a necessity in the days before widespread literacy and the availability of photocopies, but now we can simply mail (or email) a copy of the will to the beneficiaries. These days, for many decedents the will is not even the primary dispositive instrument - it's a living trust. One never hears about a "reading of the trust."
So, while scenes of the stuffy old lawyer reading the will can be dramatic or comedic, they are certainly not an accurate representation of practice over the last few decades.
If you're asked to serve as the executor of an estate, think carefully about the decision before accepting the position. Acting as an executor or administrator of an estate can involve a great deal of work, depending on assets and the complexity of the estate.
| Q. Who Can Be
A. It depends on state law, but you generally must be over the age of 18 or 21. In most states, to be an executor a person cannot have been convicted of a felony or be considered "unsuitable" by the court.
For example, an estate with a large investment portfolio, property in more than one state, and a major stake in a business means far more responsibility than a modest estate.
Many people agree to be named as an executor for a relative or friend - and then find they're left with a task that's more difficult and overwhelming than they expected. What's more, executors are bound by law to observe a strict standard of care in fulfilling their duties. You can be held legally liable for negligent handling of the estate.
Use the list of typical executors' responsibilities below to make an informed decision about whether to agree to be named executor. Here are some possible duties that an executor must fulfill:
Inform various people of the death. This includes family members, employers, business partners, the attorney and accountant.
Cancel accounts. This includes the deceased person's credit cards, utilities, banks and other creditors.
Have the will probated. Usually, this means having a lawyer petition the court to probate (or approve) the will. Once the will has been probated, the executor has the power to administer the estate - in other words, to perform the rest of the duties on this list.
"Marshal" the assets. This means finding all of the deceased person's assets, which may not be easy. (Imagine trying to quickly locate every asset you own right now, such as car registrations, stock certificates, account statements, deeds, pension benefits, mortgage
papers, and IRA papers. Now imagine trying to do this for someone else.)
Advice: To ensure that your own assets will be more easily located after death, it's a good idea to prepare a post-mortem letter. This is a document you can prepare yourself to tell executors and heirs where everything is located to carry out your instructions.
Be sure each asset is valued. Assets need to be valued both for estate tax purposes and to provide heirs with a tax basis. (Under the tax law, the tax basis of an asset in an heir's hands is generally the "date of death value.") Some assets, such as business interests, require an appraisal.
File any tax returns. Depending on the size of the estate, tax returns that need to be filed might include federal and state estate tax returns, the decedent's final income tax return, a final gift tax return, and an income tax return for the estate.
Make an accounting of the assets. You'll need a professional for this. In some cases, you may need to sell some of the assets.
Handle the debts. After determining what the estate owes, an executor pays the debts out of an estate bank account.
Distribute the estate's assets in accordance with the deceased person's wishes. If substantial time elapses before the assets are distributed, you have to manage the assets.
These are just some of the duties an executor may have to perform. Although it is an honor to be asked by a friend or relative to serve as an estate executor, don't hesitate to decline if you aren't sure you can handle the task. Perhaps as an alternative, you could serve as a co-executor with a financial professional or institution that has the expertise needed to handle some of the responsibilities.This post is from an article in my October 5, 2010 eNewsletter.
I came across this article by lawyer and journalist Deborah L .Jacobs, The Case Against Do-It-Yourself Wills, on Forbes.com today.
While I think the article sends an important message, I take issue with some of what Jacobs, and even nationally known attorney Jonathan Blattmachr have to say:
JACOBS' ARTICLE: Much as I dislike DIY wills because of all the problems they can cause, I think estate-planning lawyers are partly to blame for their proliferation. They've gotten into the habit of charging some pretty hefty fees for very routine services. It cost my husband and me $4,500 for a package of basic estate-planning documents--his-and-her wills, powers of attorney, living wills and life insurance trusts--prepared in 1997 after our son was born. By today's standards, we got ripped off. During the past 13 years, the same technology that has spurred the DIY movement has made it much easier for trust and estate lawyers to do their jobs. There's some spectacular software out there that they can now use to prepare clients' wills in minutes. But many lawyers are still charging as if it took them hours.
MY RESPONSE: $4,500 for two life insurance trusts (ILITs), wills, powers of attorney, and living wills is far from a "rip-off." Life insurance trusts are complex, irrevocable trusts designed to remove life insurance from one's taxable estate, and require substantial legal and tax expertise to draft correctly. A botched ILIT could cost hundreds of thousands of dollars in unnecessary taxes.
JACOBS' ARTICLE: "Lawyers have to lower their fees, or self-help products, which prepare a will for less than $100, will continue to lure clients who view wills as a commodity, says Jonathan G. Blattmachr, a retired partner of Milbank, Tweed, Hadley & McCloy, who founded the Melbourne, Fla., company, InterActive Legal, to provide estate-planning software to lawyers. Clients want "a competently prepared document done as quickly and as cost-efficiently as possible."
What's a reasonable price? After an initial learning curve, a lawyer can use the InterActive Legal software to do a simple will in three minutes or less and should spend another half hour re-reading it, Blattmachr says. That, plus counseling the client, should bring the total elapsed time on the matter (again, assuming no complexities) to about two hours. With fees for trust and estate lawyers running between $300 and $1,000 per hour, it should therefore be possible, paying on an hourly basis, to get an expertly drafted will and legal advice for $600 at the low end, he says.
MY RESPONSE: While it is certainly true that software makes an estate planning attorney's job easier, time is not all that is involved in setting fees. Fees also compensate for expertise, training, risk, expense of technology, value to the client, etc. Other professionals charge this way as well. Take laser surgery for eyes for example. Such surgery takes only a few minutes, but costs a couple of thousand dollars.
Furthermore, a simple will is only appropriate for persons with simple situations, not those in second marriages, with estates over $1 million, with disabled family members, etc. Also, durable powers of attorney, health care powers of attorney, living wills and HIPAA authorizations should be a part of every estate plan - in some cases they are more important than the will. Finally, a good estate planning attorney provides advice beyond the documents themselves - on how to title assets and name beneficiaries of life insurance and retirement accounts, etc.
All of that being said, I charge much less than $600 for a simple will alone, and just slightly more than that for a complete simple plan for a single person. However, the fees rise substantially as the complexity of the plan and the expertise required to properly implement it increase.
This year, of course, there is no federal estate tax. However, many Wills and Trusts drafted in the past contain formula clauses based on the existence of the federal estate and/or generation-skipping transfer tax. These convoluted clauses were generally designed to maximize tax savings.
In 2010 there is no federal estate tax. So what happens if a persons with such a Will or Trust dies this year? How is the formula to be interpreted? Well, recent changes to North Carolina law (N.C.G.S. Sections 31-46.1 and 36C-1-113) help provide certainty in the interpretation of the formula clauses. NC law now provides that the clauses are to be given effect as if the federal estate and generation-skipping transfer taxes law as of December 31, 2009 were in effect.
Executors or trustees, or an affected beneficiary, if they believe the testator would not have intended such a result, may bring a proceeding for a court determination.
Effective January 1, 2010 North Carolina law required (1) that a Will prepared by an attorney contain the name of the attorney as the drafter; and (2) that an attorney who drafts the will of relative with a bequest or devise to the attorney must attach an affidavit stating that he or she is in compliance with the law that prohibits drafting such wills unless the testator is a relative.
These laws are repealed as of July 1, 2010.
As worded initially, it was not clear if failure to comply with the statutes invalidated the Will. This has been clarified - the law now provides that failure to include the drafting attorney's name or the required affidavit does not invalidate the Will.
NC General Assembly Considering Bill to Address Issue of Outdated Wills and Trusts of Those Dying in 2010
With no estate tax in 2010, the prospects of reinstatement diminishing daily, and the ever more probable $1 million exemption in 2011, my staff has been working hard to notify our existing clients that they should come to have their wills or trusts updated.
Many older wills and trusts contain formulas or distribution schemes based on the existence of the federal estate tax, and will not work as intended if the testator/grantor dies this year.
The Revenue Law Study Committee of the NC General Assembly has produced a draft bill that will alleviate this problem by providing that the the will or trust provisions would be interpreted as if the 2009 estate tax was still in effect.
However, even if the bill passes, it should not be viewed as a panacea - any person or couple with assets in excess of $1 million should have their estate plan reviewed as soon as possible. I have already had at least one client die with the outdated language still in place.
The following is a guest post by Chris Birk of SuretyBonds.com, which also publishes the Surety Bond Insider:
If your list of New Year’s resolutions seems thin, look no further than your estate plan — and make sure you’ve included a waiver of bond for the executor.
Probate bonds can prove a costly headache. Without a will that explicitly waives the need for a probate bond, courts have no choice but to mandate their purchase unless the heirs formally agree that a bond is unnecessary. And even then the court may still deem a probate bond necessary to ensure the estate and its assets are protected and debts are paid.
The absence of a bond waiver ensures that the executor is likely to spend time and money negotiating a financial and legal hurdle in a process that already has its fair share.
Surety companies will also examine the financial and credit history of the executor before issuing a bond. Make no mistake — there’s an underwriting process for these bonds, just like any other risk-management mechanism. There are cases where an executor has failed to qualify for a bond, triggering a new series of legal maneuvers involving the surety company.
The cost of a probate bond depends on the value of the estate and its unsecured debts. For estates valued at more than $1 million, bond premiums could easily run about $2,000 per year depending upon the location.
While the estate can pay for bond costs, think of it more as a reimbursement — you can’t access the estate funds until probate is complete. And sureties won’t issue bonds with an I.O.U. In addition to upfront costs, executors (and administrators) are on the hook for renewals and premiums each year.
These costs and potential aggravations can slow the probate process. They’re also a recipe for confusion and, in many instances, unnecessary expense.
With the new year underway, now is a great time to revisit your estate plan and thoughtfully consider including a bond waiver.
Thanksgiving is less than a week away, but many people currently have turkeys of a different kind - poorly drafted Wills.
If your Will is missing one or more of these features, it's time for an update:
- Waiver of bond for the executor
- At least one successor executor (in case the first named executor can't serve)
- Trust provisions for minor beneficiaries
- Comprehensive powers for the executor and/or incorporation of statutory powers
- Contingent beneficiaries (in case the primary beneficiaries are deceased)
- Self-proving affidavit (witnessed and notarized)
Having these provisions can save a lot of time, money and aggravation in the administration of your estate. And these are just the simplest, most obvious things. Any number of other provisions may be advisable depending on your situation.
Last Thursday's Wall Street Journal's website featured an article on online estate planning programs: Before It's Too Late: A Test of Online Wills. As you might imagine, I'm not a big fan of do-it-yourself estate planning, particularly for those who have substantial assets. Creating a Will and other documents yourself with the help of software may be better than nothing, but it can create a sense of false security, as it did for the author of the article, Jane Hodges.
In the articles, Hodges says: However, in crafting our revocable trust, the program presented a pop-up note indicating that people with more than $1 million in assets might need an attorney due to changing inheritance tax laws that take effect in 2011. (Our joint assets exceed this amount mainly due to hefty life insurance policies and the value of our home, which we don't own outright.) [Emphasis added.]
In this case Hodges did not see an attorney and thus failed to address a huge potential issue - estate taxes. If the federal estate exemption returns to $1 million in 2011 as scheduled, assets over $1 million, including proceeds of life insurance policies, will be taxed at 55% for federal purposes, not to mention any state estate taxes. Saving a couple of thousand dollars on legal fees could cost her beneficiaries hundreds of thousands of dollars in extra taxes. Plus there are a whole host of other issues that can be addressed by an experienced estate planning attorney that websites ignore. Caveat emptor!
Last week was National Estate Planning Awareness Week - I'm sure most of us didn't know that, but awareness about the necessity of estate planning is pitifully low, so anything that can be done to help folks realize that it's important to plan for the future is good.
Here's an article from USA Today - 5 myths about wills, and what you should do. However, I disagree with one thing in the article - that Do-It-Yourself software and websites are fine for basic wills. The problem is that many people think they need only a basic will, but in reality their situation is not so simple. I don't even recommend using a non-specialist for your estate planning. I have seen many poorly drafted "simple wills" that end up complicating probate and costings thousands of dollars in attorney and court fees more than a properly prepared will would have.
Go see an attorney who specializes in estate planning. Your family and property are too valuable to rely anyone but an expert.
This article from WSJ online on the effect on changing estate tax exemptions on what's left for the surviving spouse describes just one reason why.
This article discusses when it might be appropriate to include your parents or grandparents in your will or living trust - generally when you are providing support for them. In most cases, funds should be held in trust for the elder relatives, to protect the assets and preserve Medicaid eligibility.
Note: The article is written by a Canadian lawyer, so it contains a reference to Canadian governmental benefits. Otherwise it is applicable to U.S. residents.
Beginning January 1, 2010, it will be unlawful for North Carolina attorneys to prepare a Will or Codicil naming the attorney as a beneficiary unless the attorney is within five degrees of kinship of the testator, a present or former spouse of the testator, or a parent, sibling or child of a spouse or former spouse of the testator. If the law is violated the bequest or devise is void. Inclusion in the Will or Codicil as an Executor or Trustee is permissible.
Drafting such a Will is also viewed as unethical by the North Carolina State Bar, which means that an attorney can be disciplined or disbarred for doing so.
If an attorney does draft a Will or Codicil in which he or she is a beneficiary of an allowable family member, he or she must attach an affidavit to the Will stating that he or she is in compliance with the law. N.C.G.S. Section 31-4.1.
Also, on every Will or Codicil prepared after December 31, 2009, an attorney must add a statement with his or her name and business address, stating that he or she prepared the Will. N.C.G.S. Section 31-4.2.
Interestingly, the new law does not mention living trusts, so those desiring to do so could easily skirt the law by preparing a revocable living trust rather than a will. You can tell we don't have any estate planning experts in the North Carolina General Assembly!
Beginning October 1, 2009, when a lawsuit is filed to contest a Will (Caveat), the probate administration will no longer be fully suspended until the caveat is resolved. Only certain actions, such as distributions to beneficiaries and payment of personal represenative's commissions, will be prohibited.
Session Law 2009-131, amending N.C.G.S. Section 31-36.
That's a question we hear frequently from callers to the office. While we like to be able to answer that question quickly and easily, that's not possible. My favorite lawyer's answer applies: "well, it depends." Depends on what, you ask? Here are some of the factors that impact the fee for a Will:
- Are you married?
- Will your spouse be doing planning as well?
- Are you in a second marriage with children from a prior marriage?
- Are you separated but not divorced?
- Do you have a settlement agreement?
- Do you have a prenuptial agreement?
- What are your obligations, if any, upon your death?
- Do you have minor children?
- Do you have any elderly or disabled family member you wish to provide for?
- What's the total value of your estate?
- What are the values of the individual assets?
- Do you own real estate?
- Where's it located?
- Do you own joint property?
- With whom?
- Do you have any life insurance?
- Who's the beneficiary?
- Do you have retirement accounts?
- Who's the beneficiary?
- Do you own a business?
- Have you made large gifts in the past?
- Do you have any debts or other financial obligations that will survive your death?
Then there are other questions to consider:
- Have you considered a living trust to provide privacy and avoid probate?
- What about Durable Powers of Attorney, Health Care Powers of Attorney, Living Wills and HIPAA Authorizations? For some, these documents are more important than a Will.
- Do you want to protect your heirs from creditors, predators and mismanagement of the inheritance?
- What's the best way to handle estate tax planning (looking toward 2011 and a possible reduced exemption of $1 million).
- What's the best way to handle charitable gifts from an income and estate tax standpoint?
- What about advice and counseling about the process and pieces of estate planning
As you can see, it's virtually impossible to quote a one-size fits all fee for a Will (or complete estate plan, for that matter). Any law firm who does that will most likely be providing a cookie cutter Will that doesn't fully address your particular situation. And online and software do-it-yourself Wills are even worse!
My advice is to make sure you have a lawyer who specializes in estate planning assist you with your estate plan. Isn't it worth the time and cost to ensure that you and your family are fully protected?
I recently received the following email, and then had a phone conversation with its author. This is a legitimate documentary, with filming to take place in Montreal over the course of the year. All expenses for the trip to Montreal will be paid. Feel free to contact me or Ms. Ouimet directly. Click "Continue Reading" for the "looking for" message referred to by Ms. Ouimet.
Dear Mr. Herman-Giddens,
I'm a researcher working on a documentary series about people's first-hand experiences with a family will. The project is being produced for a major US broadcaster.
I came across your blog and found your knowledge very inspiring. I was hoping you may have stories to share with me and perhaps help me get in touch with families having dealt with a difficult will story. We would also very much appreciate having you on board as our legal expert to help us make sense of all the legal complexities surrounding wills in your state.
Our series explores various, unexpected family issues surrounding wills. We would like to showcase the powerful, true-life stories of family wills, in an effort to create a deeper awareness of the difficult subjects of legal wrangling, conflict, grief and deep-seeded dynamics that can often arise when the will of a loved one is read.
We believe it will help others reach closure on their feelings concerning a past will, and help them make sense of their own experience with a will.
Please feel free to share the "looking for" text pasted below with your clients or on your blog if you wish and/or deem it acceptable.
Thank you, I look forward to hearing from you soon.
CMJ Productions -
The Will (working title) / a ten-part hour-long documentary series
They other day a client came in and said that he had heard that probate in North Carolina was a "breeze." Wrong! While probate here is less expensive than in some states, I still counsel my clients to avoid it in most cases. Here are 10 Reasons to Avoid Probate in North Carolina:
- Court fees can exceed $6,000.
- Accountings must be filed reporting every penny coming into and going out of the estate.
- Documentation of bank accounts and expenditures is required.
- A formal inventory of assets is required.
- Attorneys fees generally far exceed fees in similar non-probate estates.
- All filings are in the public record.
- Notices to creditors must be published in the local newspaper.
- Delay due to court rules and busy Clerks' offices.
- Bond may be required if not waived in the Will.
- Stress induced by court deadlines and requirements.
My office handles dozens of probate matters every year, so we have first hand experience with all types of estates. I recommend avoiding probate to save time, money and aggravation. Generally, a Living Trust is the best way to avoid probate, but there are other methods as well. An experienced estate planning attorney to help you make the right decision about handling you estate.
The North Carolina Court of Appeals' recent decision in In re Will of John A. Jones, Jr. deals with a Caveat against a Will in favor of the decedent's wife filed by the executor of the prior Will, which provided only a life estate for the wife. The court affirmed the lower court's decision that there was no undue influence by the wife.
The Court of Appeals referenced the North Carolina Supreme Court case of In re Will of Turnage, 208 N.C. 130, 132, 179 S.E. 332, 333 (1935) in identifying seven factors that are probative on the issue of undue influence:
1. Old age and physical and mental weakness of the person executing the instrument.
2. That the person signing the paper is in the home of the beneficiary and subject to his constant association and supervision.
3. That others have little or no opportunity to see him.
4. That the instrument is different and revokes a prior instrument.
5. That it is made in favor of one with whom there are no ties of blood.
6. That it disinherits the natural objects of his bounty.
7. That the beneficiary has procured its execution.
If the person who contests the Will (the Caveator) can sufficiently prove some or all of these factors, he or she may be successful in having the Will declared invalid.
Today I came across a question and answer column on the Raleigh News and Observer website called "Ask Holly." The answers are written by a Holly Nicholson, a Raleigh Certified Financial Planner who also has a law degree. The person posing the question about avoiding probate and finding a good lawyer erroneously referred to revocable trusts as "reversible" trusts. Ms. Nicholson counseled her to begin the attorney selection process by asking the lawyer about reversible trusts, and then consider using any lawyer who nicely explains that the term is actually "revocable" trusts.
I must respectfully disagree with Ms. Nicholson's recommendation. I believe that it is best to educate oneself about estate planning terms and techniques before attempting to choose a qualifed lawyer. Purposely acting ignorant serves no useful purpose, is deceptive, and is not a good way to start off what should be a relationship of mutual trust. Any attorney worth hiring will be polite and patient regardless of how much or how little a prospective client knows about estate planning.
As reported in the Lincoln Journal Star, a recent survey by the website LegalZoom found that over 70% of Americans do not have a last will and testament. Surprisingly, almost 75% of parents reported not having a will. Many put off making a will because they could not decide who would be guardians of their children should both parents die. That's consistent with what I see in my practice - many parents tell me they have never done a will because they don't know whom to name as guardian. Of course, by not doing anything, they are leaving it up to the state to decide.
One can purchase a Will and other estate planning documents on LegalZoom and many other websites. However, biased though I am, I do not recommend such do-it-yourself estate planning. Especially when it comes to ensuring the security of your children, it is worth paying a qualified professional to do the job right.