Individuals engaged in estate planning often get panicky when they hear the word “probate.”  When the term hasn’t been fully explained by a probate lawyer (and sometimes even when it has), it conjures visions of long waits, loss of inheritance, and many other hassles for heirs of an estate.

To calm these fears (and to avoid working with an attorney), many people consider the idea of adding one or more of their children to their bank accounts.  Generally speaking, each “joint tenant” of an account has complete access to the money, but when one dies, the entire amount becomes the property of the other joint tenant(s).

This may seem like a logical way to directly transfer money to heirs without going through the probate process, but a skilled probate attorney in Cary needs to keep clients informed of potential pitfalls of this approach:

• As it has already been mentioned, all joint tenants have access to the funds in the account.  This means that either party can withdraw money at any time.  If the child added to the account is not entirely trustworthy, this can be a devastating reality when the money is used inappropriately.
• Any money received by the child may be considered a gift, which means that it is subject to a variety of gift tax laws.  A Cary estate gift tax attorney will be able to keep you up-to-date on current laws and regulations in our area.
• Creditors for both parties can have access to this account.  That means that if one joint tenant dies (even the one who is not in debt), the other’s creditors can go after the money they jointly held.  Keep in mind that this means that if the child has had credit problems, those creditors may have access to the parent’s money.  This could include not just creditors, but lawsuits and divorce as well.
• Money left in the event of the parent’s death will only be accessible to the other joint tenant(s).  If one child has been responsible for the majority of a parent’s elder care and therefore is on the account, he or she will likely have no legal responsibility to share those funds with other siblings.  Again, trustworthiness is an important issue.  And even if the child wishes to share the funds with his or her siblings, there may be gift tax consequences to doing so.

If you are considering adding a loved one to a bank account as a means to avoid probate, it’s important to at least talk to a Cary probate attorney about your options. You may find that simply giving your loved one power of attorney over the account or holding your assets in trust may be more preferable based on your circumstances.

If you have lost a loved one and are now attempting to close out their estate, we are sorry for your loss and we understand how frustrating the process can be.

The steps to take after the loss a loved one can be overwhelming, but requesting a death certificate is a great place to get started.  You will need a death certificate to complete many of the administrative tasks that you will face in the weeks to come, so it only makes sense to order a copy of this as soon as possible.

While the exact process to order a death certificate can vary from county to county, there are basic guidelines that you can follow to make the request for a death certificate as quick and easy as possible.

Let’s take a look at these guidelines:

I typically recommend ordering 8-10 copies of your loved one’s death certificate. As mentioned above you will need them for many tasks over the next few weeks, so it’s best to have them on hand. The easiest way is to order them through the funeral home, as there is generally a lag time when you order straight from the county recorder’s office.

Make sure to have the following information readily available when filling out the request:

• Full name of the deceased
• The date of death
• The place of death
• The deceased’s date of birth
• The purpose of your request
• Your driver’s license number
• Provide a self-addressed stamped envelope along with your request
• Typing or printing the information is helpful

If you are still not sure how to properly obtain a death certificate for your loved one, or you need to know whether or not you should obtain one based on your responsibilities, contact our Wake County attorney at the Carolina Family Estate Planning  by calling 919-443-3035.

In some circles, “probate” almost feels like a dirty word.  There are plenty of reasons that a person may prefer to skip the probate process, when possible, but it is a fact of wills and trust administration.  The details of probate can vary somewhat from place to place.  For example, probate in California will likely be different than probate here in North Carolina.  There are such differences, in fact, that separate proceedings are necessary for an individual with estates in both states.  This means that involving a probate lawyer from Wake County is usually the best choice for those who are local.

The process of probate is used to ensure that an individual’s estate is being administered in a way that conforms  with probate laws.  This is one of the reasons that a qualified probate lawyer can make such a difference.  He or she can help family members and other heirs navigate the process and ensure that all steps are being completed properly.

Many of those who engage in estate planning do their best to avoid probate by creating a living trust.   This helps to set out their wishes in advance and allows for a trustee to follow through on those wishes when the time comes.  Those who simply have a will and those who have not planned their estates at all will have their assets go into probate.

One of the biggest concerns about probate is the fact that it is a public affair.  Because the will or estate goes through the court system, the information that arises is available to the public.  While this may not be a major concern for some people, others prefer to keep matters of money, property, and inheritance private.

Another common concern is cost.  Between court costs, executor commissions, legal fees, bonds and other expenses that come up during the probate process, it is not uncommon to see these expenses eat up to 3 to 5% or more of the estate.  For some families, these fees are negligible, but in many cases, these costs significantly affect the overall inheritance.

Finally, if you are involved with an estate that is going into probate in Wake County it is important to be aware that it can be a lengthy process.  An accounting must be done of all the assets, creditors must be contacted regarding any money owed, and assets may need to be sold off.  All of these things take time.

A good probate lawyer can help make this process smoother.  He or she will also understand the concerns of those involved and will keep clients up to date and informed on the status of their case.

At Carolina Family Estate Planning we are here to assist you with your probate and estate administration needs.  It is our goal to make navigating the complicated world of probate as easy as possible and help you carry out the wishes of your deceased loved one.   If you have specific questions or you are not sure how to get started with the probate process, please give our office a call at (919)443-3035.

The death of a loved one, particularly if the deceased is a spouse or parent, is one of the most difficult periods in a person’s life.  At a time when the survivor is already struggling with loss and grief, the administration of the deceased’s trust can be an overwhelming and daunting task. That is why many beneficiaries and trustees choose to “leave things the way they are” and ultimately take no action regarding the administration of their loved one’s estate. This is especially true if the trustee is the same person as the beneficiary.

Again, sheer overwhelm is one reason for this, but beneficiaries and trustees also hesitate to administer their loved one’s estate out of fear they will encounter expensive legal costs, endless probate, or tax situations they may not be equipped to handle. Whatever the reason, people have been known to delay for months, or even years, which can make the eventual administration of the trust far more difficult. Unfortunately, most of these beneficiaries and trustees are unaware of the legal and fiduciary responsibilities of their position.

As a trust administration lawyer in Cary, North Carolina, part of my job is making sure my client is thoroughly informed about what to realistically expect from the trust. Most clients appreciate that assets held in trust are much easier to administer and distribute after death than through the probate process, but they also need to know that the successor trustee is required by law to do many things before the distribution of assets can occur.

As the requirements and obligations for trust administration can vary from state to state, it is important to be conscious of the role and the responsibilities for the beneficiaries and trustees in North Carolina.  Duties include, but are not limited to the following:

• Notifying beneficiaries
• Valuation and Liquidation of Assets
• Paying Debts and Taxes of the Trust
• Filing Tax Returns
• Distribution of Remainder of the Assets to Beneficiaries

Additionally, it is compulsory for the trustee to follow the legal accounting and reporting requirements, and to be responsible for defending the trust against all claims of creditors or excluded heirs. Although the trustee may be unacquainted with all of these duties, an experienced trust lawyer knows exactly what is involved and can prepare forms and guide the administrator through the process.

That’s why for many people, having a lawyer who handles trust administration on their side makes this difficult time go far more smoothly and eases the administrative burden of having to close out a loved one’s estate.   If you are now in this position and would like further information about how Carolina Family Estate Planning can help you, please feel free to give our office a call at 919-443-3035 and ask to schedule a complimentary consultation.

The following article originally appeared in an issue of Planning Partners Press, a free newsletter provided by Carolina Family Estate Planning to Triangle-area financial professionals.  If you are a financial professional that would like to learn more, please click here to request a subscription.

In Part 1 of this series we explained how Joint Tenancy with Right of Survivorship works.  We noted that it is a form of asset ownership where each owner is deemed to own 100% of the asset, and whoever lives the longest gets the whole thing!  We also introduced some of the pitfalls of owning things in this way, and began to explore two more potential pitfalls of joint ownership, and offer a possible solution.

In Part 2, we discussed these two pitfalls of joint tenancy:

(1)  There is no control, and property may pass to unintended heirs.

(2)  There are no planning opportunities.

There are two more problems of which your clients should be aware:

(3)  Probate is at best delayed, not totally avoided.

In spite of the concerns already discussed, some advisors continue to recommend joint tenancy!  Why? The major reason given is because joint tenancy property bypasses the entire probate process.  But this is not entirely true.

With married couples, joint tenancy does not avoid probate—it only delays it.  Because joint tenancy passes outside all will or trust planning, it does avoid probate—on the death of the first spouse.  When the second spouse dies, however, there will be a probate.  In situations where both spouses die together, there will be at least one probate and perhaps two.

(4) For non-spousal owners, unintentional gift taxes and death taxes can be generated.

When non-spouses create joint tenancy, they often create a gift tax as well.  Frequently, an older parent designates a son or daughter as a joint tenant on bank accounts and/or other property.  The moment this is done, the transfer of property is often considered by the IRS to be a gift, and if the value is abouve $13,000 (in 2011) it will have to be reported to the IRS.  In some cases, a gift tax may be immediately due.

When a non-spouse joint tenant dies, the surviving tenant gets the property.  If a parent with three children makes one child a joint tenant (on the house, for example), then that child inherits the property, no matter what the parent’s will or trust says.  The result is that (1) if the child is selfish, he or she may legally keep the entire property or (2) if the child is generous and shares the inheritance, he or she may have to pay a gift tax.  Joint tenancy makes estate tax planning extremely difficult and may rob clients of the ability to reduce the estate tax burden imposed on their loved ones.

For many clients, the solution to all of these concerns is the creation of revocable living trusts, and the transfer of title to trust ownership rather than joint tenancy.

The following article originally appeared in an issue of Planning Partners Press, a free newsletter provided by Carolina Family Estate Planning to Triangle-area financial professionals.  If you are a financial professional that would like to learn more, please click here to request a subscription.

In Part 1 of this article, we introduced the mechanics and the dangers of owning assets as Joint Tenants with Rights of Survivorship.  In this installment, we’ll begin to take a look at each of the potential pitfalls in more detail.

(1)  There is no control, and property may pass to unintended heirs.

Joint tenancy property passes to the surviving joint tenant and no one else, no matter what you do.  If it is your intent to leave your property to your spouse and then to your children, joint tenancy is not for you.

Joint tenancy provides no means of ensuring that your property will pass to whom you want.  For example, if your spouse remarries, your children may inadvertently be disinherited.  Or, against your wishes, your spouse may choose to disinherit some or all of your children after your death.  If you and your spouse die together in an accident, significant questions may arise as to who is going to inherit your property.

While joint tenants are living, they can sell their interest in the joint property and they can give their interest away.  In this respect, joint tenancy is similar to other forms of ownership.  It is only on the death of a joint tenant that its unique features come into play.  In North Carolina, joint tenancy between a husband and wife is called tenancy by the entirety.  It works exactly like joint tenancy with right of survivorship, except that it is more restrictive.  While both spouses are alive, the approval of both is necessary before the property can be transferred.

A joint tenant has the authority to take all the money from a bank account and has significant control over other types of property.  This “control” can be dangerous, especially since a deceased tenant would have had no opportunity to leave any instructions restricting the use of the joint tenancy property.  Even though property is titled in joint tenancy, the joint tenant who dies is presumed to own 100 percent of the property.  As a result, the deceased tenant’s family not only loses the property (which passes to the surviving joint tenant) but also must pay all of the death taxes.  Joint tenancy between non-spouses can create the worst possible tax scenario: full taxation on property one doesn’t even own.

(2)  There are no planning opportunities.

What if your spouse or children need assistance in managing the property you left them?  Joint tenancy cannot help.  What if you want to leave instructions for your loved ones as to how, when, and why your property is to be used?  Joint tenancy offers no opportunity for instructions of any kind.

If you become disabled, your joint tenancy property may be tied up in a living probate while you desperately need it for your own or your loved ones’ care.  If your spouse is disabled when you die, the probate court will “inherit” the joint tenancy property and determine how and when it is to be used for your spouse’s benefit.  More pitfalls and possible solutions next time in the final installment of this series.

The following article originally appeared in an issue of Planning Partners Press, a free newsletter provided by Carolina Family Estate Planning to Triangle-area financial professionals.  If you are a financial professional that would like to learn more, please click here to request a subscription.

Joint property, also known as joint tenancy, is nothing but a planning pitfall.  Although joint tenancy has been assailed for years by many estate planning experts, it remains—unfortunately—a very popular form of property ownership.  Joint tenancy is a pitfall because you cannot control where such property passes after your death.

In joint tenancy, each person owns the entire asset, not a part of the asset.  This legal fiction of two or more people owning 100 percent of the same asset is derived from the full name given to joint tenancy: joint tenancy with right of survivorship.  “Right of survivorship” means that whoever dies last owns the property.  The previous joint tenants merely had the use of the property while they were alive.

Joint tenancy property is “uncontrollable.” Even if a joint tenant intends to have his or her share pass to loved ones, the property is not controlled by the instruction in the joint tenant’s will or trust.  Joint tenancy automatically passes to its surviving owners automatically by operation of law.

Property that is owned in joint tenancy can be a trap, because the term itself has nice connotations.  It implies “the two of us,” a partnership, a marriage of title as well as love.  On the surface, at least, it appears to be the right way for people who care for each other to own property.  It’s psychologically pleasing, which for many people is the real advantage of owning their property jointly.

As in many other latent problems, joint tenancy is easy and convenient.  Odds are that when you were married (if you are), one of the first financial actions you and your spouse took was to open a checking or savings account.  The clerk who helped set up your account put it in your joint names when you answered yes to, “Both names on the account?” The same is true of your first house or your first car.  It seems that all of those involved (primarily clerks and salespeople), whether or not they knew what they were doing, took control of your planning and titled your property in joint tenancy.

For most people, the disadvantages of joint tenancy far exceed any advantages.  Some of the more devastating pitfalls of joint tenancy are:

1. There is no control, and property may pass to unintended heirs.
2. There are no planning opportunities.
3. For married couples, probate is at best delayed, not totally avoided.
4. For non-spousal owners, unintentional gift taxes and death taxes can be generated.

In Part 2 of this series, we’ll explore each of these problems in more detail. Our goal is that you, as a professional advisor, will have clear and compelling answers for your clients as to why they should avoid titling assets in joint tenancy.  We also will suggest other ways they might own their property that will enable them to maintain the control they desire.

By Jackie Bedard, Carolina Family Estate Planning

As a Cary probate attorney, I’m often asked, “What are the most important steps I need to take after the death of a loved one?”

While there are undoubtedly a ton of things to do in the days and weeks following a loved one’s passing, I like to advise families to start with 8 specific tasks that will help them get a grip on closing out an estate.  These steps will ultimately help to beat overwhelm, avoid oversights and give families the time they need to grieve, instead drowning in paperwork and government red tape:

1. 1. Secure all property- One of the first things I advise families to do is to secure any property included in your loved one’s estate.  This means immediately removing valuables and locking everything up tight (including garages and sheds!) to keep the property safe from criminals or vandals.  This will also prevent other family members from picking through your loved one’s assets before the proper time.  

1. Request certified copies of the death certificate- A certified copy of your loved one’s death certificate can typically be ordered from the funeral home or you can apply for one through the Wake County here if the death certificate was filed in a different county, visit the Department of Health & Human Services Vital Records website.  You will need this death certificate to claim social security benefits, transfer property, close out bank accounts and handle any other financial affairs.  During the administration of the estate, several certified copies of the death certificate will be required, thus it is generally easier  to request 10-12 copies from the funeral home up front, rather than have to request additional copies at a later time.
2. Freeze financial accounts- You’ll want to take an inventory of your loved one’s financial affairs as soon as possible following his or her passing.  Essentially you’ll want to make sure all automatic debits are stopped and a freeze is placed on all bank accounts and credit cards that are not jointly owned.  It’s also a good idea to stop any automatic deposits scheduled to hit the bank account before you officially close it out.
3. Locate estate planning documents and contact a probate attorney- 99.9 % of the time, families will need to contact an estate planning attorney immediately following the death of a loved one.  That’s because the administration of your loved one’s estate will depend on the legal documents he or she had in place at the time of death.  So for example, if your loved one did not have a will or only had a will in place, you will need an attorney to assist you in filing with the probate court. If your loved one had a trust in place, you may avoid the court process, but will still need to contact an attorney to ensure the trust is administered properly and all expenses of the estate are paid.
4. Relocate abandoned pets- If a loved one died leaving pets alone in the house, you should immediately take steps to place the animals with another family member, friend or local shelter.  You may also want to contact your loved one’s attorney to find out if they had legal plans in place (such as a pet trust or pet caregiver instructions) to care for their beloved friends upon their passing.
5. Contact social security- Social security must be notified following the death of a loved one. You should call them at 1-800-772-1213.  Benefits will be stopped upon notification and you can also inquire about surviving benefits for a spouse or child.
6. Open Benefit Claims- If your loved one had life insurance or was entitled to death benefits from his or her place of employment, union or civic organization, you must contact such organizations in the days and weeks following your loved one’s death to start your claims.  .
7. Consider long-term care for the surviving spouse-  If your loved one left behind a surviving spouse who is elderly and unable to live alone, consideration should immediately be given to his or her long-term care. This may range from moving in with another relative to hiring round-the-clock in-home health aides.  Nursing home care may also be required in this situation, to which I’d advise you to consult with your estate planning lawyer to discuss potential ways to protect your loved one’s assets before making such a move.

Of course in addition to taking the steps above, I always welcome you to contact me, your neighborhood Cary probate lawyer for help.  Our office can assist you in working through the legalities of your loved one’s estate and handling any estate administration needs.

By simply mentioning this article, you can come in for a complimentary Peace of Mind Planning Session (normally $750).  However, we are only able to offer 8 of these sessions per month, so call (919)443-3035 to reserve your space today.

by Jackie Bedard, Carolina Family Estate Planning

Avoiding probate in North Carolina is a very real concern for people who want to make sure certain assets such as stocks, bonds, brokerage and bank accounts automatically pass to their heirs upon their death.

In such a scenario, Transfer on Death Agreements (also known as TODs) can be a very useful and convenient estate planning tool for making sure your loved ones are financially taken care of in your absence.

Essentially, Transfer on Death Agreements allow you to pass ownership of your accounts directly to a beneficiary of your choosing when death occurs. Without such designations, each account would have to go through the probate court before it can be distributed to your desired heirs.

Yet you may be wondering, “What’s wrong with going through North Carolina probate, and why bother with tools such as TODs to avoid it?”

Well for starters, many people wish to avoid probate courts simply because it could take a year or longer before the inheritance you leave actually reach your desired beneficiaries. This is problematic for families who desperately need the assets to pay for burial expenses, outstanding medical bills, mortgage payments, and general living expenses.

Not to mention, the value of your assets passing through probate may be reduced by as much as 3% to 8%, due to probate-related expenses such as executor commissions, attorney fees, court fees, bond premiums, and so on.

Finally, one of the greatest drawbacks of probate is that the value of your assets will be made public for the whole world to see. This aspect of North Carolina probate is especially troublesome for people who do not want every scam-artist or busybody in town knowing what their heirs stand to inherit upon their passing.

However, it is important to remember that while TOD agreements will help you avoid probate for some of your assets, it won’t help you avoid probate on the rest of your personal effects, such as jewelry, collections, family heirlooms, the contents of your home, etc.

TOD agreements also will not protect your assets in the event of your disability or incapacity. Nor will TOD agreements help you minimize the amount of estate taxes your family might have to pay upon your passing.

For these reasons, it’s so important that you speak with a North Carolina probate attorney before making any decisions about your financial or legal affairs. While a TOD is indeed a useful estate planning tool that can help you avoid probate, it may not be the best, and it probably isn’t the only tool your family needs to ensure they are protected should something happen to you.

Fortunately, we’ve made the process of meeting with a North Carolina probate lawyer easier than ever by offering a free Peace of Mind Planning Session (normally $750) to anyone who has taken the time to read this informative article. However, these sessions are limited to 8 per month, so call 919-443-3035 to reserve your spot today.

This article was originally included in our email newsletter on August 21, 2009. It may have been edited somewhat from the version that was originally emailed, so be sure to sign up in the upper right corner of our website to make sure you are getting our email newsletter hot off the press!

With all of the health care talk–as well as the debacles left behind by recent celebrity deaths–we’re hearing a lot about these:

• Will
• Living Trust
• Guardianship
• Probate

While this is a great opportunity for the media to educate the public on these important legal issues, the truth is often getting mangled. Furthermore, for most of the public, the information is confusing, stressful and they would just rather not hear about it.

So let me clear up the confusion, as one who deals with this on a *daily* basis…

Let’s start with the basics. Typically, in North Carolina, when a person with assets over $20,000 ($30,000 in certain instances) passes away, their assets will be handled in one of three ways:

(1) If they had no will, their assets will be distributed as mandated by the state statutory law through a court proceeding called probate,

(2) If the person had a valid will, the estate will still have to go through the probate process, but the court will carry out their wishes as stated in their will,

(3) If the person had a valid living trust (and their assets were re-titled in the name of their living trust–this is called “funding”), their wishes would be carried out in private, without the court’s involvement.

So … why does it matter to you?

The answer to this question depends on how much you care about what your loved ones will have to deal with after you are gone and how much control you want to have as to who gets what, and when and how they get it.

If you do nothing, you get no input on any of these questions and the court and one of your eager family members/friend/creditor who petitions the court will make these decisions on your behalf through a process called probate. Why do you care about probate? Often, the probate process can take 9-18 months and can be extremely costly. Your loved ones may have limited control and access to assets, it’s stressful for your family, and the process is completely public. The probate process can often lead to squabbling between family members and airing of the family’s dirty laundry.

If a person leaves a valid will, it will still have to go through the probate process described above and the headaches that go along therewith, but the court will have the benefit of knowing how you want your affairs handled. Instead of relying on the laws of intestate succession (which is the law that distributes your assets to your family members in the order of their relation to you–you can read more here), the court will pass on your assets to the specific people you have identified in your will.

Through a valid will, you can control WHO gets your assets, but you will have no control as to HOW and WHEN they get it.

A living trust (that has been properly funded!), on the other hand, gives you more control and offers significant protection to your family. If you are working with an attorney who has expertise in this field, you can control WHO gets your assets, WHEN and HOW they get it without the court’s involvement. Even better–with a living trust, it is a private administration and can generally be handled in a short period of time. Furthermore, a living trust can incorporate a lot of other great protections including protection from taxes, creditors, predators, medical catastrophe, divorce, remarriage and more.

You may be asking yourself: why would someone ever do a will instead of a living trust? Typically, a person will choose a will over a living trust for one of two reasons:

(1) they don’t know the difference between the two or
(2) the perceived “cost” of doing a living trust.

There are some obvious advantages to doing a living trust over a will, but starting with anything is better than ending up with nothing. If you are not yet ready to make a leap into the world of living trusts, a basic, will-based estate plan is a starting point. In addition to giving the court direction about how you want your assets distributed, every estate plan should also include:

(1) an advance health care directive, which identifies the person(s) that will make health care decisions for you, if you’re incapacitated, and expresses your wishes regarding health care treatments;

(2) a durable power of attorney, which identifies the person(s) that will make financial and legal decisions, when you can’t; and

(3) if you have children, it should also include a Children’s Safeguard Plan, naming both short and long term guardians to care for your children in the event of an emergency, as well as clear and specific directions to those guardians about how you would wish your children to be raised in your absence.

While we all care about what happens to our assets, every person over the age of 18 needs to have an advance health care directive and durable power of attorney (this includes adult children heading off to college!).

I hope this clears up the confusion…

If you’d like to read a little more about these documents, here are some links to past blog articles that go more in depth:

What Is A Trust?

Parents: 13 Reasons Why Trusts Aren’t Just For The Wealthy

What Happens If I Die Without A Will?

Problems With Intestacy

What Is A Will? Introduction to North Carolina Wills

What Is Estate Planning?

Two Legal Documents Every Adult Needs: Part 1

Two Legal Documents Ever Adult Needs: Part 2

We’re here to help!