Nance and Overbey Attorneys at Law
Consider the following statements:
I don’t have anything to leave anyone.
It’s too expensive to make a will.
I don’t need a will; my spouse will get everything when I die.
If you agreed with any of these, you are probably incorrect and your mistake could cost your loved ones time, effort and money.
When people hear about estate planning, writing a will or preparing a power of attorney, they tend to believe that such planning is too expensive and not worth the cost. There are several reasons why this isn’t true.
A will, which can cost as little as a few hundred dollars, can save your heirs a great deal of grief. A will allows you to select who will handle your final affairs; without a will, unless your spouse is living, any heir can qualify. This can lead to expensive conflict between the heirs and result in a relative you don’t want handling your affairs having control over your estate. Wills also allow you to nominate certain people to care for minor children or other dependents, rather than leaving that up to chance at your death.
Wills also allow you to transfer property, like real estate, to specific people. Real estate held in your name alone can, without a will, have title split among many heirs (even if there is a spouse). This can increase costs in the event of sale of the property and fighting heirs can even force division of the property or its sale in some circumstances.
The alternative to a will is the North Carolina Intestacy Statute. This does not simply give all your property to your spouse: It distributes property based on the relationship of heirs to you and based on the dollar amounts available.
A spouse, for example, only receives a one half interest in real estate not jointly owned if there is one child, and if there are two or more children, the spouse only receives a one-third interest. Personal property distributions are also dictated by statute and depend on living heirs, marriage, etc.
If you choose to make a will, or even if you have made one in the past, it’s important to consider updating that will every three to five years or whenever a major life event (divorce, new child, death of heir, etc.) occurs.
Taking the time to get a will written and to keep it up to date can save time and money and guarantee that your final wishes are carried out after you pass away.
Another important planning document that is often overlooked but well worth the cost and time is the Power of Attorney. A power of attorney allows you to appoint someone who can act on your behalf to make certain decisions.
Powers of attorney come in two main varieties: medical and financial. A medical power of attorney allows you to appoint someone to make medical decisions on your behalf when you are not able to make them yourself.
The power of attorney allows you to choose that person yourself on your own time, so the decision of who can make decisions on your behalf doesn’t have to be made during an emergency situation. The alternative to selecting your own person to make medical decisions for you can, in some instances where a spouse isn’t available, require a guardianship proceeding before the clerk of court, a time-consuming and potentially expensive undertaking.
A financial power of attorney, which can be made to become effective when you become unable to handle your own financial affairs, allows you to grant a person of your own choosing the ability to take care of your finances.
This sort of power of attorney is very flexible ó you can customize the powers granted to the person you select based on your own circumstances. If the power of attorney is recorded in the register of deeds, certified copies can be obtained at need to ensure that your wishes are carried out even if the original document is lost.
If you decide at a later time that you don’t want the person you originally selected to be your attorney in fact (the person you appointed in the power of attorney to handle your affairs or medical decisions), you can revoke the power of attorney or execute a new power of attorney giving someone else the authority to assist you in handling your finances or medical decisions. It is important to consider naming different people to be your attorney in fact on your financial and medical powers of attorney to avoid potential conflicts of interest.
An additional planning option is the living will. This document allows you to express your wishes about having your life prolonged by life support in the event of a medical emergency. Like the will and the power of attorney, this document allows you to ensure that your true wishes are carried out, saving a great deal of trouble and money for you, the people who assist you during your life, and your heirs after you pass away.
As a final note on planning your affairs after death, make sure that your estate is not the beneficiary for any life insurance policy you may have.
You should select an adult beneficiary to receive those funds; otherwise, creditors of your estate can collect money from any benefits paid by your insurance company. Also, be aware that if you leave money to a minor via life insurance, that money is deposited with the clerk of court’s office and is not released until the 18th birthday of that child. If you need money to be available during childhood, consider making other arrangements in terms of a beneficiary.
All of the planning tools described above allow you to choose how your property and your affairs are handled in the event you become incompetent or at the time of your death.
The documents listed give you the opportunity to save yourself and your heirs a lot of hassle. All of these options are affordable and it is very likely that you would have a benefit far in excess of the cost for at least one of these planning options. No two situations are the same, and you should strongly consider talking to an attorney, an accountant or a financial adviser about your planning. The time and money spent will be well worth it.