Charlotte Estate Planning Blog

Acting as executor is a job, and you can get paid

No matter how much you love your family members, you typically cannot control how they handle their affairs. Immensely organized may describe some of them, while others may haphazardly store important items and documents or seem to hoard possessions. Whatever the case may be, if a loved one named you as the executor of the estate, you will have to contend with settling the final affairs, no matter how organized or unorganized he or she may have been.

You may have accepted the role of executor without knowing the full details of your loved one's estate. Now that he or she has passed and you must carry out the necessary duties, you may feel a bit overwhelmed. You may also worry about how much of your time the process will take from you. Because probate proceedings can be lengthy, you may want to look at your obligation as executor for what it is: a job. Fortunately, you can receive compensation for completing this job.

Incentive trusts useful when leaving money to addicted family

Many families in North Carolina have experienced firsthand the devastating effects of the nationwide opioid crisis. When people are addicted to opioids, their main focus seemingly is to secure drugs at all costs, even if it means stealing money for the drugs from other family members. The loved ones of people suffering from addiction are often in the position of having to spend money in the hopes of assisting in the addict's rehabilitation while at the same time protecting the family's finances from the addict's urges to obtain drugs.

Estate planning presents a unique challenge for families who have loved ones struggling with addiction. Instead of leaving a substantial sum of money to a loved one addicted to opioids, these individuals may wish to put conditions on their gifts to loved ones from their estate. They may fear that their loved ones may use all of the money to fund their drug habit or even die from an overdose.

How trusts differ from wills

Those who live in North Carolina or any other state could benefit from creating either a will or a trust. While neither is better than the other, they provide different ways for a person to create an effective estate plan. A trust is considered its own entity that is allowed to own property and transfer it per its terms. If a person has a living trust, he or she can be both the beneficiary and the trustee.

However, it is important to note that since the trust owns the property, it would need to be involved in the sale or transfer of an asset. Trusts can be put into place while an individual is alive as opposed to a will that only takes effect after a person passes on. Trusts can remain in effect after a person passes, or the trustee can settle a deceased individual's affairs on his or her behalf.

Estate planning options for baby boomers

In 2019, the youngest members of the baby boom generation in Charlotte will turn 55, an age when many think more about planning for their future. This can include making detailed plans for retirement as well as considering the eventual distribution of assets to loved ones. Indeed, baby boomers are the single wealthiest generation recorded in American history, with over $30 trillion in assets that will be spent or passed down in the several decades to come. Despite their wealth, however, many baby boomers do not have estate plans in place. According to one survey, 42 percent of people in this generation do not even have a basic will.

While some people do have a will or other estate planning documents, they could be outdated or otherwise incorrect. These documents might not include later personal developments like marriage, divorce or the birth of children. In addition, they may not fully reflect changes to the law such as the widely expanded exemption from federal estate taxes. Trusts, wills and powers of attorney all have an important role to play in distributing assets and providing for a person's loved ones. Another tool that many may wish to consider while developing a plan is life insurance.

Trusts and the pour-over will

People in North Carolina who have created a trust-based estate plan might also want to have a pour-over will. There are several reasons this may be a good idea.

A pour-over will places a person's assets in the trust if they have not already been put there or are not passed down through different means. It does have limitations. For example, assets that are passed on through beneficiary designations would not be included in the pour-over will. The assets that are placed in the trust via the pour-over will still have to pass through probate. This is not the case for assets placed directly in a trust.

What to do if a family member must be disinherited

An estate owner in North Carolina who wishes to disinherit a family member may want to discuss the process with a professional. Simply leaving a person out of a will or even other actions may be insufficient to stop the person from successfully challenging the disinheritance in court.

A successful challenge might be less likely if a trust is used instead of a will to disinherit the person. Wills are often prepared closer to a person's death, and it can be argued that the person was not of sound mind or was unduly influenced by someone else. In contrast, a trust is often prepared years beforehand, and the estate owner might have been managing the trust for some time. This could make a successful claim of incompetence less likely. In some cases, a person might want to leave less to one child than to the others. This partial disinheritance might be accompanied by what is known as a "no contest" clause that threatens disinheritance to anyone who challenges the estate plan.

Siblings can sometimes make estate administration difficult

It is not unusual for many people to consider their relationships with their siblings contemptuous. Years of sibling rivalry may have made it difficult for you and your siblings to get along as well as you may have hoped. Now that your parent has passed, you may have concerns over how your relationships will influence the estate administration proceedings.

Unfortunately, even among siblings, disputes can arise over a loved one's remaining assets and affairs. In some cases, these disputes may even need legal action to resolve. If you have been named the executor of your parent's estate, a considerable amount of contempt may come your way.

What happens to an estate plan if both spouses die

People in North Carolina might be aware that the death of George H. W. Bush, the former president, occurred just eight months after the death of his wife, Barbara Bush. The two were married for decades. It is not unusual for spouses who are married for a long time and who have a close marriage to both die within a short time period. While it is likely that the Bushes were careful in their estate planning, the death of both spouses in quick succession can cause some issues.

What can happen is that when the first spouse dies, much of that spouse's estate passes to the surviving spouse. The other spouse may die just months, weeks or days later. Some estate plans have a provision in place that if the surviving spouse's death happens within a few days or weeks after the first spouse's death, the two estates do not have to go through probate separately. In the case of longer gaps, there could be a qualified disclaimer in place. This would allow the surviving spouse to let some or all assets pass to the next level of beneficiaries.

What to know about federal estate tax laws

Those living in North Carolina or any other state have the right to gift up to $11.18 million without any estate tax implication. The exemption amount was increased from around $5 million as per the Tax Cuts and Jobs Act (TCJA). However, the exemption is planned to return to the old limit when 2025 comes to an end. Therefore, it is important to consider how to take advantage of the new rule while anticipating a potential clawback in 2026.

If money were to be clawed back when the exemption limit goes down, individuals and families could be subject to a 40 percent tax rate. The tax would theoretically be assessed on amounts gifted in excess of the old exemption limit. However, the IRS and Treasury have proposed a rule that would protect gifts made between now and the end of 2025. That rule is undergoing a public comment period.

How to learn from Stan Lee's messy estate planning

Residents of Charlotte, North Carolina, and the rest of the U.S. should consider Stan Lee's story as an example of what not to do when planning an estate. Stan Lee spent the last years of his life dealing with multiple business managers and attorneys, but he still left a complicated web for his family to unravel.

For example, Stan Lee reported that $1.4 million dollars was missing from his bank accounts and claimed over half of it was stolen to purchase a condo. Several months before he passed away, he signed a document that stated his daughter spent too much money, yelled at him and befriended people who intended to take advantage of him. However, a few days after he had this document notarized, Stan Lee backtracked.

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