What is estate planning ?
Estate planning is the process of preparing a Will and Durable Powers of Attorney for making both financial and healthcare decisions. The Will allows you to control the disposition of your assets upon your death as well as choose the person that will act as Executor of your estate. The Power of Attorney allows you to choose a trusted friend or relative to act on your behalf to manage your affairs in the event you are unavailable or incapacitated prior to your death.
What is a Durable Power of Attorney and why is it important?
A Durable Power of Attorney is a document where a principal appoints an agent to make financial or healthcare decisions if they are not capable of making them, such as following a stroke or a diagnosis of dementia or Alzheimer’s disease. A Durable Power of Attorney is one that is valid after the incapacity of the principal and is necessary to avoid the filing of a lawsuit for the adjudication of incompetency and appointment of a legal guardian through the Court. These court actions can be expensive and can be extremely stressful on all parties, especially the subject of the lawsuit. In contrast, Powers of Attorney are generally inexpensive to prepare and usually do not expire. Powers of Attorney are not valid after the death of the principal.
What happens if I die without a Will?
If a North Carolina resident dies without a Will (intestate), the North Carolina Intestate Succession Act will determine the decedent’s heirs and how estate assets will be distributed. These statutes outline the heirs of your estate based on your marital status and family tree. Any heir of the decedent is entitled to apply to be the Administrator, and a bond must be posted unless all parties agree to waive that requirement. Without a Will, you are not free to choose your Executor, make gifts to religious organizations, charities, or other persons you are not biologically related to, including unmarried partners (North Carolina does not recognize common law marriage) and unadopted stepchildren.
Are there any alternatives to a Will for distributing assets?
Many financial assets such as checking and savings accounts, retirement accounts and life insurance policies give you the option to name a beneficiary that will receive the asset upon your death. Also, real estate owned by spouses or with other joint owners with the right of survivorship will be transferred automatically by operation of law at death. However, without these designations, a Will is necessary to distribute assets according to your wishes as opposed to intestate succession.
I am only 30 years old… am I too young to think about estate planning?
No, you are never too young to think about preparing a Will or Power of Attorney. However, the answer to that question depends on many variables, such as the size and nature of assets and family situation. For instance, if you own real property and have minor children, you need to do a Will. A Durable Power of Attorney is useful to have regardless of age or financial situation, as it is important in case of an emergency.
What is probate?
The term probate refers to the authentication and validation of a Will submitted to the Clerk of Court to open an estate. Once the Will is accepted, Testamentary Letters are issued to the Executor named in the Will allowing them to access the decedent’s assets to pay debts and distribute to the heirs. Probate is also used as a general term to describe the estate process, even when there is no Will.
I have been named as an Executor of an estate. What is my next step?
Gather the death certificate and the original signed and notarized Will along with any information you can find about the assets of the decedent. Then contact a North Carolina licensed attorney to begin the process or call the Clerk of Court in the County where the decedent resided if you choose to handle it yourself.
Why do I need an attorney to assist me with Estate Administration?
Hiring an attorney is not required, but an attorney will advise you on your duties and obligations as Executor and will provide competent guidance throughout the process. Attorneys generally assist with preparing and filing the necessary documents with the Clerk of Court such as the Application, Inventory, Publication, Affidavits and Final Accounting of assets. The attorney can also communicate with creditors and beneficiaries to make the process a lot smoother and less stressful for the Executor. Reasonable attorney fees can be paid from estate assets.
I have just inherited property from my parents and I found out there is a mortgage on it – am I now responsible for making the payments?
If there is a mortgage loan against the property (including a reverse mortgage), you do not automatically become personally liable for the debt just because you have inherited the property. However, the lienholder has the right to foreclose on the property if they do not continue to receive payments.
How long does the estate process take?
That depends on several factors, but a full estate administration usually takes from 6-12 months, and can be even longer under special circumstances. Based on the amount and nature of the assets, you may also be able to file a smaller estate, or a spousal allowance can be filed by a surviving spouse.
What is a title search on real estate, and why is it important ?
In North Carolina, drafting a deed is considered the practice of law and only a licensed attorney can provide the title opinion necessary to secure title insurance. The title opinion is prepared after a thorough review of the public records searching for deeds, maps, deeds of trust (mortgages), taxes and judgments. If you are buying a property with mortgage financing, title insurance is required. Even with cash transactions, title insurance is recommended for your protection.
Can I choose my own attorney, or do I have to use the one my realtor or lender suggests?
You always have the right to choose your own attorney to represent your legal interests, whether you are buying or selling. It is not considered a conflict of interest for one attorney to represent both sides of a residential real estate transaction; however, in many instances, it is preferable for each party to have their own representation.
What are closing costs and how much are they?
That will depend on many different variables, but most of all, it depends on whether or not you are obtaining mortgage financing for your purchase. Please consult with your local lender for pricing. Usual and customary legal fees paid in connection with a real estate closing include title search, closing fee, title insurance, recording costs, document preparation and prorated taxes, many of which are contingent on the size of the transaction.