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Do you need an estate plan?

If you own anything, you have an estate, regardless of how much you own. A good estate plan determines how and to whom your assets are distributed after your death and provides instructions for your health and financial well-being should you become incapacitated.

Your estate plan should be tailored to your specific needs and desires. A thoughtful, well-prepared estate plan is an investment worth the time and cost because it is one of the best preparations you can make for your future and the future of your family. It can save your heirs significant time, trouble and expense later. Here are the basic components that make up a comprehensive estate plan:

1. Will. Your will is a document that distributes certain assets to designated loved ones upon your death. Assets controlled by a will are subject to probate in North Carolina, with the exception of any real estate. They are also subject to estate taxes. Probate is the process of administering an estate after someone passes away. The decedent’s will is filed with the court, and the Personal Representative pays debts, distributes remaining assets to beneficiaries and provides accountings to the court. To learn more about probate in North Carolina, see our article “North Carolina Probate: An Overview.”

2. Beneficiary Designations. Assets for which you designate a beneficiary are not governed by your will and are not subject to probate. However, they are subject to estate taxes. Examples of these assets are retirement accounts, investment accounts and life insurance policies. If you do NOT designate a beneficiary for assets in this category, proceeds will be paid to your estate and subjected to probate.

3. Trusts. A trust is a legal entity that holds some or all of your assets and distributes them in a specified manner. Trusts are very flexible and range from simple to complex. There are many uses for a trust. For example, you may want a trust in order to: control distribution or use of a 401(k) or IRA while continuing to defer taxes in large measure, limit an heir’s spending, reduce estate taxes, assist someone with special needs without disqualifying them from government assistance, or provide for a pet. Trusts may become effective during one’s lifetime or after death. They may be either revocable (able to be altered or terminated anytime you wish) or irrevocable (unable to be altered or terminated at will). There are many types of trusts befitting different situations.

4. General Power of Attorney (GPOA). You give authority over your personal, financial and legal affairs to the person named your Agent in this document. Their authority may begin immediately or after you become incompetent to handle your own affairs, and it always ends at your death. You define your Agent’s authority – it can be broad or narrow – and you can have more than one agent, with different assets under their authority.

5. Health Care Power of Attorney (HCPOA). You give authority over your health care and medical decisions to the person named your Agent in this document. You may give broad or limited powers and require, prohibit or suggest various treatments, including life-prolonging measures. You Agent’s authority begins when you are incompetent or unable to communicate your desires.

6. Advance Directive. This document specifically concerns life-prolonging measures and is effective during your lifetime when you are unable to make or communicate decisions. Unless you indicate otherwise, within legal boundaries, your medical providers and health care agent must abide by your advance directive. It can be used in conjunction with an HCPOA and is also applicable in a guardianship situation.

Estate plans are not one-size-fits-all. We can help you determine the documents you need and tailor them for your unique circumstances and concerns. A thoughtful estate plan creates peace of mind.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.