In this article, you will learn about:
- What estate planning is, and what benefits it offers.
- The role of wills in estate planning.
- When reviewing your estate planning documents is important to.
What Is Estate Planning And Why Do We Need It In North Carolina?
Primarily, estate planning is the process of making the necessary arrangements concerning the future of one’s property and monetary assets for the time following death. Estate planning also involves the protection and division of assets between loved ones, organizations, charities, and others. Asset protection is an important component of estate planning because it provides legal strategies for protecting your assets from premature depletion, attack from creditors, lawsuits, and fraudulent predators. Most of us hold our most valuable asset in the form of our personal residence. Subsequently, most of us would like to pass this asset to loved ones when we die.
There may be a specific situation where a spouse, child, or other family member may have special needs. You may wish to provide support for this person now and after your death. In this case, you might create a special trust for that person, a special needs trust perhaps. Such a trust with a “spendthrift provision” would protect the “corpus” (core asset) of the trust from attack by creditors and other third parties while providing any income production for the caretaking of the beneficiary. The income produced from the asset(s) that are held in the trust will be managed by the ”trustee” for the duration of your life, and after you have passed away. Initially in this scenario, you might be the trustee and you would name a successor trustee to look after the trust after you have passed away.
There will be provisions in the trust delineating how the trust will be used through powers granted to the trustee. There will also be a plan for final distribution of any remaining assets in the trust at the time of the beneficiary’s death.
There are many types of trusts, some designed more for asset protection and preservation, and some designed more for tax advantage purposes.
The most common type of trust is called a “living trust” in which the client places most of hers/his assets to avoid the expense, procedural trouble, and public nature of probate. The living trust becomes irrevocable at the time of death and the successor trustee may distribute the contents of the trust to the beneficiaries immediately.
What Is A Will, And Is A Will Enough On Its Own In North Carolina?
Most lawyers would say that you need a will no matter what. Even with very thorough trust planning, there are important matters that can slip through the cracks. Having a will that is able to address anything that comes into being after trust creation and is not placed in the trust adds a level of protection to your future assets by preventing them from passing intestate. Having a will that has a “residuary clause” that designates uncertain aspects of your estate is a crucial part of estate planning. Not doing this may leave decisions up in the air for the trust attorney and beneficiaries, resulting in a potentially difficult circumstance for everyone involved.
Trusts and wills work together very well. These decisions are of course ultimately up to you and your wishes, and some clients don’t care to go in-depth with their estate planning because there is no need. An important factor to consider while planning your estate is the degree to which you may involve your heirs. Often attorneys will require you to sign a “waiver of privilege” allowing the attorney to talk about your estate with those persons you designate. Involving your heirs/beneficiaries in your estate planning process can add complications to settling the trust or will in the future, and the attorney does not want to be held liable for it. In fact, Dugger Law Firm believes it is highly advisable to keep your estate planning between you and your legal counsel except under limited circumstances.
How Often Should We Be Reviewing Our Estate Planning Documents?
It is wise to review your estate planning documents every time there is a major life event. A major life event varies from person to person and is specifically based on your current circumstances. For example, if an heir dies, a child is born, you lose your spouse, or you have a major health incident or disability occur in your own life or the life of an heir/beneficiary, it may be worth reviewing your estate planning documents accordingly. A proficient attorney will be able to counsel you on when it may be prudent to do so and will guide you through the process of estate planning review. Whatever a major life event looks like to you, it is important to keep the security of your assets in mind as you navigate through that occurrence.
For more information on Estate Planning Law in North Carolina, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (828) 884-5400 today.