Transcript The Benefits of a Will

THE LAW CORNER
Basics of Probate & Estate Planning
8 Basic Steps to Probate
Step 1. Locate Will and Qualify Executor
 Is there a will and where is it?
 If no will, state statute determines who can
qualify.
 Generally, the decedent's spouse or family
members will qualify as the executor.
 Upon qualification, the court, will issue
"letters" which are used to prove the
executor's authority to administer the estate.
8 Basic Steps to Probate
Step 2. Conduct Estate Inventory
 Executor files an inventory statement
with every asset owned by the
decedent at death.
 The value of listed assets on the date
of the decedent's death must also be
provided by the executor.
 The inventories are public records.
8 Basic Steps to Probate
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Step 3. Notify Creditors
Legal notice in newspaper notifying all who
may have any claim against the estate
("creditors") to give the executor notice of
those claims.
Potential creditors have THREE MONTHS to
present their claims.
Further, the executor must mail notice to
those creditors the executor is actually
aware.
NO DISTRIBUTION from the estate (for
bequests, debts, taxes, or other reasons).
8 Basic Steps to Probate
Step 4. Pay Creditors
 The executor should pay all valid
claims.
 If not enough assets, the executor
must prioritize claims for payment.
 Beneficiaries named in the will may not
inherit anything.
8 Basic Steps to Probate
Step 5. Filing of Tax Returns
 The executor files tax returns for
decedent’s estate and pays all taxes
due.
 Those returns may include the federal
estate tax return, the state inheritance
tax return, the federal and state gift
and income tax returns, and the state
intangibles tax return.
8 Basic Steps to Probate
Step 6. Preparing Annual Accounts
 If the probate exceeds one year, the
executor must file an annual account
with court.
 The annual account will detail all of the
receipts and expenditures of the estate
during the year of the account.
8 Basic Steps to Probate
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Step 7. Distribute to Beneficiaries
The executor is responsible for distributing
any remaining estate assets to the
beneficiaries of the estate.
If a will, to the persons named in the will.
If no will or invalid will, the executor will
distribute the assets TO THE PERSONS
DESIGNATED BY STATUTE in the
PROPORTIONS designated in the statute.
8 Basic Steps to Probate
Step 8. Prepare Final Account
 The executor will file a final account
with the court in order to close the
estate.
 The final account will detail all of the
receipts and expenditures of the estate
since the last annual account, or if the
estate is closed within one year, during
the entire probate process.
ASSETS THAT TRANSFER OUTSIDE OF PROBATE
Assets not subject to probate include:
Joint tenants with right of survivorship.
 Tenants by the entirety between husband and wife.
 Life insurance proceeds, retirement plans and IRA
proceeds, unless the estate is named as the
beneficiary.
WHY? These assets designate the beneficiary at the
death of the owner and therefore probate is not
necessary to determine the new owner or to make a
transfer of the assets.
Does NOT include property held as tenants in common.
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Intestate Succession
Spouses Share
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No child or lineal descendant or
parent
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entire estate both real and personal property
No lineal descendant but parent
survives
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½ interest in real property, first $50,000 plus
½ balance of personal property
Intestate Succession
 One
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child or lineal descendant
Spouse takes ½ interest in real property, first
$30,000 plus ½ balance of personal property
 More
than one child or lineal
descendant
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Spouse takes 1/3 interest in real property, first
$30,000 plus 1/3 balance of personal property
Intestate Succession
Share of Others
 Decedent's lineal descendants
Per capita at each generation
 B takes 1/3; D, E, and F take 2/9
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Decedent
A
D
W
B
C
E
F
Intestate Succession
To
parents if no child or grandchild
W
takes ½ interest in real property, plus the
first $50,000 of personal property and ½ any
excess. The balance goes to M.
F
M
Decedent
W
Basic Estate Planning
Basic Estate Planning Package:
North Carolina Will & Testamentary
Trust
 Living Will
 Power of Attorney
 Health Care Power of Attorney
The strange phenomena and statistics.
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THE LIVING WILL
Do you want life-sustaining treatments
or procedures administered to you if
you are in a terminal and incurable
condition or a persistent vegetative
state?
 It is called a "living will" because it
takes effect while you are still living.
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THE LIVING WILL
A North Carolina living will goes into
effect when:
1) your doctor has a copy of it,
2) your doctor has decided that you are no
longer able to make your own health
decisions, and
3) your doctor and another doctor have
determined that you are in a terminal and
incurable condition or a persistent vegetative
state.
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THE LIVING WILL
Defining “life-sustaining treatments
or procedures”
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These are treatments or procedures that are
not expected to cure your terminal condition
or make you better.
They only prolong dying.
Examples are mechanical respirators, which
help you breathe, kidney dialysis, which
clears your body of wastes, and
cardiopulmonary resuscitation (CPR), which
restores your heartbeat.
THE LIVING WILL
Defining “terminal and
incurable condition”
 A terminal and incurable condition is
defined as a condition for which the
administration of medical treatment will
only prolong the dying process, and
without administration of these
treatments or procedures, death will
occur in a relatively short period of
time.
THE LIVING WILL
Defining “persistent vegetative state”
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A persistent vegetative state means
that a patient is in a permanent coma
or state of unconsciousness caused by
illness, injury or disease. The patient is
totally unaware of himself, his
surroundings and environment and to a
reasonable degree of medical certainty,
there can be no recovery.
POWER OF ATTORNEY
What is a Power of Attorney?
 Gives one person the full power and
authority to represent another person.
 Principal, Agent (attorney-in-fact) and
fiduciary duties.
 Must be signed by both the agent and
the principal, be witnessed by two
people and signed in the presence of a
Notary Public.
POWER OF ATTORNEY
Two kinds of Power
A General Power of Attorney covers all
of your legal, financial and personal
decisions except those pertaining to
your medical care and treatment.
 A Limited Power of Attorney only
covers decision-making in areas that
you specify.
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POWER OF ATTORNEY
When do they become effective?
Immediately.
 A Durable Power of Attorney-even in
the event you become mentally unable
to make decisions on your own
(incompetent).
 A Springing Power of Attorney-only in
the event you become incompetent.
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POWER OF ATTORNEY
Use of the Power of Attorney
Nothing to do with mental incompetence.
 Military people
 Overseas contractors
 Spouses or family members who travel
abroad for extended periods of time
Why? They are immediately effective, so their
agent can deposit paychecks, make
purchases, pay bills and otherwise represent
them financially or legally while they are
away or otherwise not available to handle
these matters themselves.
HEALTH CARE POA
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Gives broad powers to make health care
decisions, including mental health treatment
decisions, for you.
This power includes the power to authorize
routine medical tests, scans or surgery,
admit you to a facility and administer
medications.
This power exists only when you are unable
to give informed consent and will allow
timely permission and consent so proper care
can be received.
HEALTH CARE POA
It may be activated if a person is
temporarily unconscious, confused or
unable to communicate medical
desires.
 Must be mentally competent and of
sound mind when signing.
 Utmost confidence in your designated
person.
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NORTH CAROLINA WILL
Common Misnomers
 Wills are just for the wealthy.
 I already have a will from another
state.
 I don’t plan on having anything left
after I die so I don’t need one.
 I am either young or healthy and I’ll
get to it later in life.
NORTH CAROLINA WILL
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Any person 18 years of age or older who is of sound
mind may make a will.
A will is a legal document designating the transfer of
your property and assets after you die, dictate
funeral arrangements and who will care for your
children after you pass away.
It is the simplest way to ensure that your funds,
property and personal effects will be distributed after
your death according to your wishes.
Wills are used to avoid the hassles of intestate
succession and as much as possible, probate court.
Without a will, your estate will be probated and the
state, and not you, decides who is entitled to your
property and granted custody of your children.
NORTH CAROLINA WILL
The Benefits of a Will
 You chose the executor, preferably
two.
 You dictate funeral arrangements.
 You provide general and specific gifts.
 You make plans that benefit you, your
family and the organizations and
causes in which you care deeply.
NORTH CAROLINA WILL
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The Benefits of a Will…continued
You can reduce or even eliminate estate
taxes and save taxes in a survivor's estate.
You can also create trusts to provide for your
spouse, your children and other loved ones.
You name a guardian (caretaker) for your
children and a trustee (who distributes assets
for children until they are mature and
capable of making their own financial
choices).
Right to Dissent
N.C.G.S. §29-30 (Dower) Spouse may
elect not to take share under intestacy
or will. May choose:
1/3 Life Estate in all real estate
or
Life Estate in dwelling house plus fee
simple ownership in household
furnishings.
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Right to Dissent/Support
ELECTIVE SHARE
 Provides protection from disinheritance
 In effect, ignores the will.
 Limited in apllication, have to value the
assets and gifts.
SUPPORT AND MAINTENANCE
 $10,000/yr. plus $2k for each minor
child during administration.
MORE ABOUT WILLS
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HOW TO REVOKE
Subsequent instrument
Physical act, i.e. burn, tear, destroy
Operation of Law-Divorce or
annulment; changes only provisions
for spouse.
HOW TO CHANGE
Codicils
Same formalities
SUMMARY ADMINISTARION
Spouse receives all under the will.
 Petition for summary adm.
 Clerk verifies and signs order that
further adm. is not necessary.
 All assets pass to spouse.
 Estate closed.
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QUESTIONS
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Who?
What?
Where?
When?
Why?
THANK YOU!
The Law Corner
Brian S. Demidovich
211 E. Six Forks Road
Suite 205
Raleigh, North Carolina 27609
Tel: (919) 424-8319
Fax: (919) 424-8320
Web: www.thelawcorner.com
E-mail: [email protected]