North Carolina Estate Planning: Basic Understanding

7

Click here to load reader

description

Knowing not only why estate planning is important, but why it's important for you to begin planning as soon as possible, will help you as you and your attorney go about the estate planning process.

Transcript of North Carolina Estate Planning: Basic Understanding

Page 1: North Carolina Estate Planning: Basic Understanding

NORTH CAROLINA ESTATE PLANNING BASIC UNDERSTANDING

CHERYL K. DAVID

North Carolina Estate Planning and Elder Law Attorney

Knowing Not Only Why Estate Planning Is Important, But Why It’s Important for You to Begin Planning

as Soon as Possible, Will Help You as You and Your Attorney Go About the Estate Planning Process

Page 2: North Carolina Estate Planning: Basic Understanding

North Carolina Estate Planning – Basic Understanding www.cheryldavid.com 3

Estate planning is one of those

areas of the law that very few

people have direct experience

with. It’s also an area that deals

with some potentially

uncomfortable topics and

questions, many of which people

can be reluctant to think about.

Combining these two factors means that there aren’t a lot of people who

have a good idea of what estate planning is all about, much less understand

why it’s so important.

In this first of two discussions on foundational estate planning topics, we

are going to take a look at some essential issues that everyone should

understand. Knowing not only why estate planning is important, but why

it’s important for you to begin planning as soon as possible, will help you as

you and your attorney go about the estate planning process. If you

understand what is going on and why, you will be much more likely to get

more out of the process than you would if you are a passive participant.

ESTATES AND ESTATE PLANS

The first concept about estate planning that everyone should understand is

that everyone has an estate. Whether you are a young adult who is just

starting out in life, raising a family, nearing retirement, or anyone else, you

have an estate whether you realize it or not.

Page 3: North Carolina Estate Planning: Basic Understanding

North Carolina Estate Planning – Basic Understanding www.cheryldavid.com 4

A lot of people are surprised to learn this because they incorrectly equate

the term “estate” with the idea of a large home or extensive land holdings.

In legal terms, an estate is not a large piece of property. Rather, it’s the

property left hind by a deceased or incapacitated person.

Let’s say, for example, that your grandfather is diagnosed with Alzheimer’s

disease. He quickly loses his ability to make choices, express himself, and

manage the property he owns. That property is known as his estate. If his

condition worsens and he should die, the property he leaves behind is

known as his estate.

Estate planning, therefore, is simply a process in which you look ahead to

the future and make decisions about how you want your estate to be

handled.nt differences.

ESTATE PLANNING ISSUES

Every capable adult has the ability to make an estate plan. You can, for

example, make choices about how you want to leave inheritances, who you

want to manage your estate after you die, or who you would like to manage

your affairs in the event you become incapacitated. However, you have to

make each estate planning choice in a legally recognized manner.

CHOICES

Let’s use the example from above. Your grandfather, who now has

Alzheimer’s disease, told you a few years ago that he wanted you, his only

child, to receive half of his property should he die, while the other half he

Page 4: North Carolina Estate Planning: Basic Understanding

North Carolina Estate Planning – Basic Understanding www.cheryldavid.com 5

wanted to give to his church. Your grandfather made this statement in the

presence of you and several other family members, and was completely

healthy at the time he made his wishes known.

A few months from now, your grandfather dies. Does this mean that you

now are legally entitled to inherit half of your grandfather’s estate, while the

other half will be inherited by his church?

Absolutely not. Even though your grandfather might have made his wishes

clear, unless he took the time to create an estate plan that recognized his

choices in a legally enforceable manner, his wishes will have nothing to do

with how his property is actually transferred as an inheritance. In fact, the

state of North Carolina already has laws that determine who inherits

property when someone dies without an estate plan. It is these laws, and

not your grandfather’s wishes, that will actually determine who inherits his

property.

CAPACITY

We can also use the example

of your grandfather to

illuminate another vital estate

planning concept, the

question of capacity. In other

words, who is capable of

making an estate plan? How

do you make one? When can you make one?

Page 5: North Carolina Estate Planning: Basic Understanding

North Carolina Estate Planning – Basic Understanding www.cheryldavid.com 6

As long as you are a mentally capable adult, you have the ability to make a

comprehensive estate plan whenever you like. It doesn’t matter if you are 18

or 80, it only matters if you are capable of making decisions and have

reached the age of majority.

In the example we have been

using, your grandfather

could have made an estate

plan as long as he remained

healthy. However, because he

was diagnosed with

Alzheimer’s disease, a disease that affects a person’s ability to make

decisions, his ability to make an estate plan probably disappeared once he

became ill, or some time thereafter.

In other words, while you can make an estate plan, you can only do so while

you are mentally capable. If you lose your ability to make choices, you also

lose your ability to take control over your estate.

ESTATE PLANNING REQUIRES GUIDANCE AND ADVICE

This brief discussion of some basic and essential estate planning concepts is

not intended to give you a comprehensive understanding of what the estate

planning process is like. Instead, it is designed to allow you to be more

comfortable with the process as you and your estate planning lawyer go

about creating a plan that fits your individual circumstances.

Page 6: North Carolina Estate Planning: Basic Understanding

North Carolina Estate Planning – Basic Understanding www.cheryldavid.com 7

The reality is that no one can create a plan on their own as effectively as

they would by seeking the advice and guidance of an experienced lawyer.

Even though many of the estate planning tools you and your lawyer will

create are relatively simple, that doesn’t mean you can create a plan without

assistance. There are numerous topics and issues running throughout the

estate planning process that can be very difficult for most people to get a

good understanding of in a brief period of time. Not only that, but new

laws, tax rules, and court decisions are constantly changing things.

If you want to create an estate plan, need legal advice, or simply have

questions you want answered, you should contact the Law Offices of Cheryl

David as soon as possible.

Page 7: North Carolina Estate Planning: Basic Understanding

North Carolina Estate Planning – Basic Understanding www.cheryldavid.com 8

ABOUT THE AUTHOR

Cheryl David is a graduate of UNC-Chapel Hill, the

University of Baltimore School of Law, and the

prestigious Trial Lawyer’s College presided over by

Gerry Spence. A former Administrative Judge, Cheryl

is certified as an Estate Planning Law Specialist by the

ABA accredited Estate Law Specialists Board, Inc. She

is also a member of the American Academy of Estate

Planning Attorneys, Medicaid Practice Systems and

the National Academy of Elder Law Attorneys.

In 2008, Cheryl received the honor of becoming a Fellow with the American Academy of Estate Planning Attorneys. The Fellow program recognizes Academy Members who demonstrate advanced expertise and significant practical experience in the total estate planning, trust, tax planning, guardianship, probate and estate administration fields. In order to maintain this advanced expertise, Cheryl takes over 36 hours of continuing education in Estate Planning, Elder Law, and Taxation each year. Also a Financial Planner, she holds the Series 7 and 66 Investment Licenses in addition to both Insurance and Long Term Care/Medicare designations.

Her professional capabilities, together with over 25 years in practice, have combined to bring positive change to the lives of over 4500 clients and their families.

528 College Road Greensboro, NC 27410 Phone: (336) 547-9999 Fax: (336) 547-9477

WWW.CHERYLDAVID.COM