THE LAW CORNER Basics of Probate & Estate Planning.

THE LAW CORNERTHE LAW CORNERBasics of Probate & Estate PlanningBasics of Probate & Estate Planning

8 Basic Steps to Probate8 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.

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.


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.

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.


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).

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).


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.

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.


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.

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.


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.

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.


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.

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.


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.

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 PROBATEASSETS 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.

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.

Intestate SuccessionIntestate Succession

Spouses Share

No child or lineal descendant or parent entire estate both real and personal

property

No lineal descendant but parent survives ½ interest in real property, first $50,000

plus ½ balance of personal property

Spouses Share

No child or lineal descendant or parent entire estate both real and personal

property

No lineal descendant but parent survives ½ interest in real property, first $50,000

plus ½ balance of personal property


One child or lineal descendantSpouse takes ½ interest in real property,

first $30,000 plus ½ balance of personal property

More than one child or lineal descendantSpouse takes 1/3 interest in real property,

first $30,000 plus 1/3 balance of personal property

One child or lineal descendantSpouse takes ½ interest in real property,

first $30,000 plus ½ balance of personal property

More than one child or lineal descendantSpouse takes 1/3 interest in real property,

first $30,000 plus 1/3 balance of personal property


Share of OthersDecedent's lineal descendants

Per capita at each generationB takes 1/3; D, E, and F take 2/9

Share of OthersDecedent's lineal descendants

Per capita at each generationB takes 1/3; D, E, and F take 2/9

Decedent W

A B

E FD

C


To parents if no child or To parents if no child or grandchildgrandchild

W takes ½ interest in real property, plus W takes ½ interest in real property, plus the first $50,000 of personal property and the first $50,000 of personal property and ½ any excess. The balance goes to M.½ any excess. The balance goes to M.

MF

WDecedent

Basic Estate PlanningBasic 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.

Basic Estate Planning Package:

North Carolina Will & Testamentary Trust

Living Will Power of Attorney Health Care Power of Attorney

The strange phenomena and statistics.

THE LIVING WILLTHE 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.

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.


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.

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.


Defining “life-sustaining treatments or procedures”

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.

Defining “life-sustaining treatments or procedures”

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.


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.

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.


Defining “persistent vegetative state”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.

Defining “persistent vegetative state”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 ATTORNEYPOWER 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.

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.


Two kinds of PowerA 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.

Two kinds of PowerA 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.


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.

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.


Use of the Power of AttorneyNothing 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.

Use of the Power of AttorneyNothing 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 POAHEALTH CARE POA

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.

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 POAHEALTH 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.

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.

NORTH CAROLINA WILLNORTH CAROLINA WILL

Common MisnomersWills 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.

Common MisnomersWills 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.


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.

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.


The Benefits of a WillYou 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.

The Benefits of a WillYou 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.


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).

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 DissentRight 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 estateor

Life Estate in dwelling house plus fee simple ownership in household furnishings.

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 estateor

Life Estate in dwelling house plus fee simple ownership in household furnishings.

Right to Dissent/SupportRight to Dissent/Support

ELECTIVE SHAREProvides 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.

ELECTIVE SHAREProvides 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 WILLSMORE ABOUT WILLS

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

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

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.

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.

QUESTIONSQUESTIONS

1. Who?2. What?3. Where?4. When?5. Why?

1. Who?2. What?3. Where?4. When?5. Why?

THANK YOU!THANK YOU!

The Law CornerBrian S. Demidovich

211 E. Six Forks RoadSuite 205

Raleigh, North Carolina 27609Tel: (919) 424-8319Fax: (919) 424-8320

Web: www.thelawcorner.comE-mail: [email protected]

The Law CornerBrian S. Demidovich

211 E. Six Forks RoadSuite 205

Raleigh, North Carolina 27609Tel: (919) 424-8319Fax: (919) 424-8320

Web: www.thelawcorner.comE-mail: [email protected]

THE LAW CORNER Basics of Probate & Estate Planning.

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Transcript of THE LAW CORNER Basics of Probate & Estate Planning.