There are different ways to hold title to properties if the property is not in a living trust.  When two or more individuals own property together — whether it’s a condominium, a home, or a piece of land — the relationship between the owners is known as “tenancy.”

Tenancy comes in three main forms: joint tenancy, tenancy in common, and tenancy by the entirety. Each has advantages and disadvantages.

Under the joint tenancy form of ownership, two or more individuals jointly own an asset.  When one of the joint tenants dies, the ownership passes to the surviving joint tenant(s), and will eventually pass to the last surviving party.  Tenancy in common has a decedent’s share pass through probate to the heirs of the decedent.

Tenancy by the Entirety is essentially the same as joint tenancy, except that it is available only to a married couple and may only be terminated by joint action of both owners. Upon the death of one spouse, his/her interest automatically passes to the other spouse, as with joint tenancy, but the creditors of one spouse cannot attach the property or force its sale to recover debts unless both spouses consent.

There are several major disadvantages to both joint tenancy and tenancy in common.  First, creditors can attach the tenant’s property to satisfy a debt so if your child gets in a car wreck, the whole asset is subject to the claim. Another is that if a property is held in joint tenancy with a child or someone other than a spouse, the asset is deemed as a gift, and the portion of the gift does not get a step up in basis — as well as may be subject to gift taxes!

Though joint tenancy avoids probate upon the first death(s), it DOES NOT avoid probate on the death of the last tenant named.  Also, the decedent’s estate tax exclusion has literally been “thrown away” and can’t be used.  It also will not allow community property treatment in community property states, as joint tenancy will take precedence over community property rules, thereby receiving a step up in basis on only half the asset.

Holding assets in a good living trust with specific provisions to obtain full advantage is a preferable method of holding title.  It’s far better to keep the asset in the client’s living trust and get a full step up in basis when they die, so the spouse (in community property states) and the children inherit at the market value as opposed to the original cost basis of the parent. This also will protect against creditor claims of the other “tenant” such as a child, allows each spouse to use their full federal estate tax exclusion, and transfers title to the assets without having to probate the asset.

My parents have always raised us with their traditional values and beliefs.  I have been blessed with healthy parents whom are still with me and able to enjoy my daughter and pass along the same traditions to her.

Typically when people think about estate planning they think about the basics: who gets what and how much.  When clients leave my office they know differently.  It is about more than money and “things”.  It is about making certain that your children are continued to be raised with values, traditions and beliefs that, as parents, you want to see they are continued to be exposed to. It is about encouraging your children to succeed and continue to be exposed to religious education and family values.

We are not your typical estate planning law firm.  We work with our clients to determine how to pass along values and traditions by discussing options; what will work best for their family.  We explore guardian options and what specific concerns they may have.

As part of the plan, our clients are provided with a Guardian Letter.  This is a letter from the natural parents to the guardian where the natural parent can express their feelings on how they would like their child raised.  They can express their desire that they attend a certain church because maybe it has been a big part of their lives.  In addition they can express their values regarding volunteering or learning to save or education.  Leaving the guardian with guidance in their own words is invaluable not only to the guardian, but to the children.  It is  leaving a little piece of the past for the future.

Choosing Representation If you are incapacitated, you may not be able to make decisions for yourself. If this were to happen, you would want someone to be able to make decisions for you. In order to plan for this possibility, you need to choose someone to represent you if this were to ever happen. In order to choose someone to make decisions for you, there are a few different steps that you are going to need to take.

Healthcare Power of Attorney and Living Wills One document that you will need to fill out is called a Health Care Power of Attorney, also known as Health Care Proxy or Advance Directive for Health Care. The healthcare documents are a vital part of the entire estate planning process. This is a document that will allow you to appoint someone to make medical decisions for you if you are unable to do so. Even after you sign this document, you will be able to make your own medical decisions as long as you are capable of doing so. When your primary physician decides that you are unable to make decisions for yourself, then the person that you appoint to make decisions for you will start to do so.

Your healthcare documents will be able to make many different types of decisions such as whether you should continue to be fed with a feeding tube or not. The individual should strive to make the decisions that they believe the incapacitated person would have wanted.

Power Of Attorney and Guardianship Have you ever thought about what would happen if you were unable to take care of your own affairs?  If you are incapacitated, you may not be able to handle financial matters, and you need to choose someone to represent you in financial matters. In order to accomplish this, you will need to assign power of attorney to this agent.  Without this vital document, if you become incapacitated, a court will have to appoint someone as to take care of your financial affairs and as guardian – with a great deal of grief, cost and time.

Someone that has power of attorney privileges can do many different things for you financially. This means that they can pay your bills and make sure your needs are taken care of. This agent can also perform real estate transactions for you, sell or purchase securities such as stocks or bonds, file your taxes for you if you are unable to do so, or enter into contracts on your behalf.

If you are a business owner, the person that you provide power of attorney to can actually run your business for you. They will be able to make important decisions regarding how your business operates with the help of other people in your business. With so much power, you need to make sure that you appoint someone that you can trust no matter what.

Avoiding Probate If your estate is large enough to have to go to the probate courts to pass your assets to your heirs, then you should have a revocable living trust to avoid the probate courts.  Having your assets in a living trust allows you to appoint who you want to take care of passing your assets to your heirs swiftly and reasonably, without the unnecessary expense and time of attorneys and the courts.

Call to Action A properly drafted trust and documents prepared for you would include all of the documents discussed above and will help you avoid the problems and pitfalls associated with a problem-free transition if you should become incapacitated or pass away.  Ask me how I can help. Contact our offices at (704) 843-1446 for your complimentary telephone consultation.

He had surgery, had it removed and is finally recovering to almost 100%!

What gave my father peace of mind (and mom and all three children) was that we knew what he wanted if God forbid something went wrong during surgery.  He had a Health Care Power of Attorney already written and signed ready to present to the hospital when we checked him in.  He was given the hospital’s form of a Health Care Power of Attorney, but those are only valid for the particular stay and procedure, and are very limited.  And of course, are generally done under such stressful situations, that the patient is often not aware completely of what he is signing or the effect of his signature.

We are happy that dad is better now and getting back to his normal self and comforted that his wishes will be carried out if the need ever arises.

If more than $13,000 is gifted to one individual in one year, the person making the gift (the donor) must file a gift tax return in that year.  As long as he has reached his lifetime amount, no tax is due.  The amount of the gift reduces the federal estate tax exclusion amount by the amount of the gift ultimately.

Our Firm has created a concise detailed report, covering over 200 items that should be included in every Revocable Trust.  We will review your Revocable Trust and provide you with details regarding clauses that should be included in your Revocable Living Trust that are not included in your current Revocable Living Trust, as well as make recommendations on any changes that may need to be made.  The fee of $250 is credited to the client if the client moves forward with our Firm to create a properly well drafter Revocable Living Trust.

Contact us to receive this invaluable review.

I have listed 3 of the most common (I believe) myths about North Carolina Estate planning below.

1. I don’t think I need a will or a trust because my wife or husband will get what I have. North Carolina has statutes in place that will divide your property at your death if you do not have a will or trust in place. How your property is divided depends on who is alive at the time of your death. Your estate could potentially be shared with your spouse, children and parents…it may not necessarily all go to your spouse. The best thing to do is to plan out the distribution of your estate ahead of time through a will or a trust so that your wishes are upheld.

2. Having a will eliminates the need for a probate proceeding. Probate is the process which allows for the distribution of your assets.In actuality, having a will gives the court the ability to supervise your estate distribution. This supervision occurs through the probate process. The one way in which to avoid a probate is to have a trust. Your best bet is to go over your options with an attorney.

3. I’m not going anywhere for awhile, all this stuff can wait. We never know what life is going to bring our way. It’s better to be prepared and plan for the benefit of your family and loved ones. In difficult times, you don’t want your thoughts to be consumed with worrying about what happens to your family.

Did you know that without a will or trust you cannot protect the assets you live your children past the age of 18? The lack of planning will more than likely mean that your 18 year old could potentially have a significant amount of money available to him without any restrictions. It’s best to speak with a North Carolina estate planning attorney to address these issues sooner rather than later.

Take the initiative to address your estate plan with a North Carolina estate planning attorney. Getting your affairs in order is a “gift of love” for both yourself and your family.

In a nutshell, probate is a legal process that takes place after someone dies. Here are some common issues that I have seen come up in probate administration:

-proving in court that a deceased person’s will is valid
-identifying and inventorying the deceased person’s property
-paying debts and taxes, and
-distributing the remaining property as the will or intestacy laws direct.

In general, probate administration involves filing paperwork and court appearances by lawyers. Lawyers and court fees may be paid from estate property.

So how does the North Carolina probate process work?

In North Carolina, probate usually proceeds as follows: Upon the death of a family member, the executor of the will, or, if the person dies without a will, the executor appointed by the court, files the requisite papers in the local probate court. The executor provides evidence of the validity of the will and outlines the nature and extent of the property, debts, and how the estate is to be distributed.

Part of the executor’s job is to find and manage the decedent’s assets during the probate process. Based on what the will says and the extent of any outstanding debts, the executor may have to make decisions about selling real estate or other property.

In some instances, immediate family members may ask the court to release support funds while the probate proceedings are under way. The court will grant the executor authority to pay debts and taxes and divide the rest among the people named in the will. Finally, the property will be transferred.

Avoiding Probate

Once someone in your family has died, you as the surviving family member (in an administration) or named executor (in a probate) have the obligation to see that the estate is handled in the appropriate legal manner. There really is no way to avoid a probate or administration.

Probate and administration procedures are set out in NC Statutes. There are always costs associated, time constraints to follow and statutory guidelines that need to be followed.

It can be difficult to navigate all of this with out the guidance of an attorney. Your best bet is to talk with a North Carolina probated and administration attorney. Find out what your options are, and if hiring a North Carolina probate lawyer makes sense for you.