Do you have a plan for the future? Have you thought about what will happen to your home when you become incapacitated or who will take care of your children upon your death? How can you be sure those special family heirlooms wind up in the right hands? What about all of that money you have saved in your rainy day account?
There’s alot to consider, and it can be overwhelming to face all the what-ifs, but avoiding the inevitable and neglecting to plan for it can leave your loved ones in a tough spot.
Less than half of Americans have an estate plan. This means that the majority of Americans are leaving the management of their assets up to the state. Put differently, most Americans are unprepared in the event of death or incapacitation, meaning they’re leaving their assets in the State’s hands.
Here, we provide an overview of estate planning: what it is, why you need it, and how it will give you control over your assets and protect your family when you are unable to.
What is an Estate Plan?
Think of an estate plan as a roadmap for your assets and your family. In the event you become incapacitated or die, your estate plan says who you want to get what and how you want your family taken care of. It can identify who you want to care for your minor children when you are unable to, how you want your personal property distributed, and it can even layout important healthcare decisions for when you are unable to speak for yourself.
While you may automatically think of a will when discussing estate planning, a complete estate plan also includes a revocable living trust, a durable power of attorney, a healthcare power of attorney, a living will, HIPAA authorizations, and guardianship paperwork. Life, long-term care, and disability insurance policies may also be included as part of an estate plan.
Here are a few options:
Will – used to transfer assets to beneficiaries, name guardians for minor children, name an executor of an estate and reduces administrative barriers at your death
Revocable Living Trust – similar to a will, allows individuals to transfer property and assets
Durable Power of Attorney – gives individuals the authority to act on your behalf in managing day to day affairs, finances, and make non-medical decisions
Health Care Power of Attorney – authorizes individuals to make decisions about medical treatment and personal services on your behalf
Living Will – also known as an advanced health care directive, the living will says what medical treatment(s) you wish to receive or decline
HIPAA authorizations – gives access to your medical information
Guardianship – authorizes named individual(s) to care for you, your children, or your pets and assume all appropriate responsibility and authority required to do so
Do I Need an Estate Plan?
Everyone has an estate (of varying sizes), so it follows that everyone should have an estate plan. Your estate includes everything you own from your home to your vehicles, furniture, bank accounts, and even personal belongings like your clothes. An estate plan is the only way to ensure that your assets are distributed the way you want them distributed.
In North Carolina, any person eighteen and older can create a will or living trust that is recognized by law. An estate plan is the only way to prevent the state from controlling your assets upon your death. It is the only way to name a guardian for your minor children and to name the responsible parties for making sure your plan is honored.
In short, an estate plan means peace of mind. In creating an estate plan, you can rest assured that your family will be taken care of the way you want, that your assets will be handled the way you want, and you do not need to worry about a financial burden falling on your family or friends to settle your affairs in the event you become incapacitated or die.
What If I Don’t Have an Estate Plan?
If there is no roadmap to lay out your wishes, generally decisions about how to handle your estate will fall to the state through intestate laws upon your death. This means your estate would be subjected to the probate process, whereby the court would appoint an executor to identify your assets and heirs and determine how your assets should be distributed under the law.
Without an estate plan, your minor children could end up in protective custody, your assets could be withheld from your loved ones, and you may not have enough life insurance to care for your loved ones when the time comes. If you become incapacitated without an estate plan, your loved ones will likely end up in court seeking guardianship before anyone will be able to access your estate.
Should I Update My Estate Plan?
As often as life changes, you should review your estate plan and update it when appropriate. While it is important to review your estate plan regularly, it is worth taking an extra look after significant life events like the birth of a child, a job change with significant financial impact, or divorce.
Can I Challenge A Will?
Generally, any interested party can challenge a will. The will must be contested within three years of the application of the will for probate. Wills are often contested by potential heirs if the decedent is believed to have lacked the capacity to create the will or if the decedent is believed to have been improperly influenced in creating the will.
Experienced Wilmington Estate Planning Attorneys
The estate planning process can be overwhelming. Before making critical decisions about your estate, be sure to contact an experienced Wilmington estate planning attorney for guidance.
At Rountree Losee, our estate planning attorneys understand our clients’ desires to protect and preserve their family legacies. We are here to answer your estate planning questions. Contact us today for a consultation.