Charlotte Estate Planning Blog

Estate planning considerations

Many people in North Carolina put off estate planning, and some people pass away before they ever complete their plans. It is important for people to draft their estate plans sooner rather than later so that their families will be left with fewer burdens.

Good estate planning involves more than simply deciding how assets will be divided among family members. People should also think about other things that can make dealing with their deaths easier on their loved ones. As people draw near to the end of their lives, many want to leave money behind to charity so that they can positively impact the lives of others. This desire may be implemented by establishing charitable trusts.

Changes in the tax law and its effect on legacy planning

In 2017, Congress passed legislation that made significant changes to tax law. For people in North Carolina who are creating an estate plan, the major part of that law that may be of interest is the increase in the estate and gift tax exemption to $11.2 million for individuals and $22.4 million for couples. However, this is set to expire at the end of 2025. Furthermore, while planning to save on taxes is a part of legacy planning, it should not be the first priority.

Legacy planning involves preserving a life's work and helping loved ones achieve their goals as well. A legacy might be left behind in the form of writing, a company or some other tangible or intangible entity. However, a legacy is made up of assets, and this is why tax concerns remain an important if not the central concern in this type of planning.

About trusts

A trust is used to transfer certain assets to a trustee, who will manage or hold the assets for the intended heir. North Carolina residents can use a trust if they want to reduce the amount of taxes on their estate, bypass the lengthy probate process and protect their assets. Individuals who create a trust are able specify to who and how the assets placed in the trust will be distributed.

One of the main advantages of a trust is that grantors can ensure that the assets are handled according to their stated preferences. A trust is also beneficial for the beneficiaries as well as they will not be required to pay court fees or estate taxes, and the assets in the trust generally cannot be touched by creditors of the beneficiaries or lost due to a divorce. Creators of a trust are also able to stipulate to whom the assets should go if a beneficiary dies.

Planning your estate to include a new spouse and stepchildren

Estate planning is important, but not many people realize the value of making these plans until it is too late. This often leaves loved ones with the frustration and confusion of probate without the guidance of a will or other document. You may be among those who have created an estate plan. Even if it is just a simple will, you have taken a bold step to protect your family.

However, if you have experienced major changes in your family since the execution of your will, your family may still be at risk of facing your death with overwhelming confusion. This is because your outdated plan may omit those people who are new in your life, including your new spouse and stepchildren. It may also be inadequate for the protection of your biological children.

Reason to update an estate plan

Some Charlotte residents might want to revise their estate plan given the changes to estate plan exemptions that were part of the tax bill passed in December 2017. The 2017 exemption limit for couples was $10.9 million, and some people might have designed their estate plans to try to avoid or reduce additional taxes. Vehicles such as life insurance trusts and credit bypass trusts might have been created for this purpose. The new exemption limit for couples is $22 million, and most people will no longer need those tools. However, reviewing an estate plan periodically is important for everyone regardless of their income level.

For example, people should make sure they have health care and financial powers of attorney in place and that they are still happy with the people they have chosen for these roles in case they become incapacitated. They might also want to review their beneficiary designations, such as those on retirement accounts and insurance policies.

Choosing trustees

People in North Carolina should give careful consideration when selecting a trustee option. In many cases, it may be necessary to look outside of one's own family to choose the right person to handle complicated estate matters or to have someone within a reasonable distance who can fulfill the duties appropriately.

It may also be beneficial to look outside one's immediate family if there is conflict between children. The burden that comes with being a successor trustee or co-trustee can be difficult to handle even in the best of circumstances.

How to make the role of executor easier to handle

If a North Carolina resident is named the executor of an estate, that person is responsible for overseeing and protecting an estate's assets throughout the probate process. While the job may seem overwhelming, it may be possible to do it properly by staying organized. An important step in settling an estate's affairs is to obtain a death certificate. Typically, multiple copies will be needed, and executors should order more than they think will be needed.

The next step is to locate will or trust documents that the deceased may have created. Ideally, the deceased individual would have mentioned where they were located while alive. Once they are collected, it may be necessary to file letters testamentary to show that an individual has the legal authority to manage the estate. It is also possible that the deceased put assets into a trust, which may mean that probate is not necessary.

Estate planning for everyone

Estate planning is something every North Carolina resident should do regardless of how much money they have or how old they are. If individuals have no legal provisions in place when they die, a variety of fees and court costs can be assessed on any money and other assets that may have been meant for a loved one.

The first part of estate planning is determining who will receive the proceeds of any life insurance policies and retirement accounts. The beneficiary designations should be periodically reviewed, especially after certain life changes, so that a payout is not distributed to an unintended ex-spouse.

Setting up a guardianship for your special needs child

If you have a loved one with special needs, you know that it can be financially, physically and emotionally challenging to provide care. You work hard to provide the support he or she needs, but it is prudent to think about his or her care beyond your lifetime. It is possible that your family member could outlive you, and it is smart to have the necessary legal protections in place to ensure that he or she continues to get the care needed.

There are many ways that North Carolina families can plan for the care of a loved one with special needs. One of these is to set up a guardianship, which allows one person to make decisions on behalf of the ward. There are many situations that could necessitate this step. If you are caring for an adult with special needs or your child has certain disabilities, it is prudent to take the appropriate estate planning steps to put necessary protections in place.

Estate planning is emotional as well as financial

For people in North Carolina, preparing for the future includes an estate plan. Estate planning helps to ease the life of heirs and make a family's emotional pain after the death of a loved one far less complicated, as the distribution of assets is provided for through the use of instruments such as wills, trusts and insurance. However, estate planning isn't only a financial issue that can be used to pass down real and personal property. The estate planning process can also be a time to transfer memories, thoughts and values from elders to their surviving loved ones.

The process of drawing up a will and executing trusts can lead people going through estate planning to think about the scope of their lives and the values they hold most dear. Intangible aspects of life, including memories, stories and experiences that were never shared with one's children, can also be a part of one's property. Going through the process can inspire people to spend more time with their children and other loved ones.

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