Our Raleigh Estate Planning Frequently Asked Questions
You have a million questions about planning for the future after you are gone. Browse our page of Frequently Asked Questions to find the answers. If the answer you need is not there, feel free to give us a call. We are here to meet all of your estate planning legal needs.
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What is a living will?
A living will—a term interchangeable with the phrase advance directive—is a written legal document that allows the creator to outline her wishes for an end-of-life medical decision in three different scenarios. If you’re planning your estate, it’s important you understand what a living will can do, why you might also consider creating a health care power of attorney document, and how an attorney can help you draft each.
Understanding the Living Will
In North Carolina, a living will—not to be confused with a last will and testament, which is used to leave property to beneficiaries—is also known as an advance directive for a natural death and tells your loved ones whether or not to prolong your life in certain events, including:
- Your life will end shortly due to a terminal condition.
- You become unconscious, and doctors conclude that you will not become conscious again.
- You lose significant cognitive ability—due to dementia, for example—and will not be able to regain it.
Without a living will, medical professionals and loved ones could be left to speculate what you may have wanted. Occasionally, wrong guesses can lead to legal disputes and create hard feelings between family members.
In addition, your living will can make clear whether you will allow an autopsy, where you may want to donate your remains, and whether you’d like to be cremated.
A Living Will Complements a Power of Attorney
It’s important to consider drafting a power of attorney document that can work in tandem with your living will. With a health care power of attorney, you appoint someone you trust to make health care decisions for you at the end of your life, in the event you become incapacitated. Additionally, it’s possible to include both a living will and a health care power of attorney in the same document, or both may be drafted as separate documents.
Enlist Trustworthy Estate Planning Help
A complete estate plan is comprised of many legal documents, and a living will is an essential piece of that plan. If you’d like help drafting documents and understanding which estate-planning tools may best fit your situation, contact the experienced attorneys of Pender Estate. You can reach out to us today by filling out the online contact form on our website.
How are revocable and irrevocable living trusts different?
Living trusts can help you better disburse assets after your death and are so named because you create one during your lifetime. However, you may choose between a living trust that is revocable or irrevocable. Each has its benefits, so it’s important you understand which one may be a better option for your estate.
Trusts Protect Your Assets
While planning your estate, it’s important you consider placing as many assets as possible into a living trust. Probate can be time-consuming and expensive, which can deplete certain assets. However, assets in living trusts avoid probate.
Differences Between Revocable and Irrevocable Trusts
Here is the main difference between the two: just as its name implies, a revocable trust is changeable during your lifetime; in contrast, you cannot alter an irrevocable trust once you place assets into it. Each has its own advantages, and an attorney can help you decide which may best suit your needs. Some other major differences include:
- Ownership. While the grantor—the creator of the trust—maintains ownership of assets in a revocable trust until he passes away, the assets placed in an irrevocable trust no longer legally belong to the grantor. Instead, the assets belong to the trust itself. Though the grantor may continue to benefit from assets in an irrevocable trust—for example, living in his house or driving his car—the trust legally owns these items until ownership passes to the new owner, or successor trustee, upon the grantor’s death.
- Estate taxes. When the grantor passes away, assets in her irrevocable trust are not included in calculations of the estate’s total worth during probate. The assets in a revocable trust are part of the estate’s value, since the grantor still maintained ownership until the day she died. This may affect an estate’s federal tax liability.
- Protection. Because the assets in an irrevocable trust no longer legally belong to the grantor, they are protected from creditors and taxes when he passes away. However, because the grantor of a revocable trust still owns the assets within it, these assets may be subject to legal claims.
When You’re Ready to Plan Your Estate, We Are Here
If you’re weighing options for planning your estate, consider consulting with an experienced attorney. The team at Teague Campbell can help you understand your options and what tools may best suit your unique situation. To begin personalizing your estate plan with us, contact us by starting a live chat with one of our representatives now.
What are the pros and cons of probate?
Probate is the legal process by which property of a decedent transfers to his named beneficiaries, and the court approves every action during this process. Additionally, probate provides a court-supervised method to pay final debts and taxes.
If you’re planning your estate, it’s important you know both the pros and cons of probate so you can make the best possible decision for your situation.
Benefits of Going Through Probate
Especially for small estates or in cases where the decedent has passed without possessing a will, probate can provide advantages for estate management as a whole, including:
- Protecting assets. During probate, the court makes sure that creditors and named beneficiaries receive their allotment of the estate.
- Providing structure. Especially when no will or named executor exists, probate allows debt and tax payments, inheritance disbursement, and filing of proper paperwork to occur within an organized structure.
- Allowing for safe disputes. If no will exists, or if a family member contests the validity of a will, a probate judge can mediate and help two parties come to a fair agreement.
Probate Has Disadvantages, Too
Some assets can avoid probate. However, if probate is necessary to close an estate, the process can become complicated and tedious. Among the most common criticisms of the probate process are these:
- Probate takes lots of time. Probate can last anywhere from six to 18 months—and during this time, and estate’s administrator must sit through meetings with lawyers and court officials, fill out paperwork, and appear in court. Additionally, if the executor must liquidate an estate to pay its debts, it takes time to sell real property and other tangible assets.
- Probate takes lots of money. Often, some assets aren’t eligible to pass to beneficiaries outside of probate, and when this occurs, a large percentage of assets may be lost to taxes and fees—up to 10 percent.
- Probate exposes private business to public view. During probate, information about an estate’s contents becomes public record, so the details of a person’s finances and wishes are open to everyone.
Quality Legal Help at Your Fingertips
If you are ready to begin planning your estate or have questions about how to act as an executor for a loved one, we’re here to speak with you. The experienced legal team at Teague Campbell can help you plan for your future, understand the steps of probate, and file paperwork properly. To get in contact with us, start a live online chat on our website today.
Why must an estate pass through probate?
Probate is a court-supervised procedure that ensures a deceased person’s taxes and debts get paid, that his family is provided for, and that his beneficiaries receive their inheritances. Depending on the size of the estate and the types of assets it holds, probate can be complex, time-consuming, and expensive—or it might be a minor formality.
Why Probate Is Necessary
No law requires every estate to pass through probate. In fact, there are a few ways to avoid probate entirely. However, probate is necessary in some cases to transfer legal ownership of assets to beneficiaries.
Generally, the probate process is necessary…
- When the decedent—the person who has died—has outstanding debts.
- When the decedent has property or bank accounts titled only in his name.
- When the decedent has valuable personal belongings, like jewelry or art, not listed in his will.
- To protect the assets of the deceased.
- To verify the will and distribute property fairly.
Some Assets Bypass Probate Completely
If you’ve been thinking about forming an estate plan—or you’re now in charge of disbursing someone’s estate after his passing—it’s important you know that some assets need not pass through probate, including:
- Property or money in a revocable trust. During his lifetime, a person (called the grantor) can deposit assets into a revocable trust at will; he can also withdraw assets, if his plans change. After he dies, those assets will pass directly to the named beneficiary.
- Jointly owned property. Property owned by both the deceased and another person, such as a spouse, passes directly to the surviving owner upon the other’s death.
- Life insurance policies and retirement accounts. Since these have named beneficiaries, the assets contained in a life insurance policy and retirement accounts pass directly to those survivors.
- Bank accounts with payable or transfer on death policy (POD or TOD). When planning an estate, a person can open bank accounts with POD or TOD clauses. The funds in those bank accounts will pass directly to the named beneficiary after the owner dies.
Get Help With Your Estate
If you’re planning your estate or have questions about how to handle an estate as an executor, we are here for you. At Teague Campbell, our estate planning team can assist you during the probate process and help you understand why probate may be necessary in your case. To get started, fill out the online contact form on our website today.