Being part of a blended family can make estate planning harder. Therefore, it is important that those in North Carolina and throughout the country who are getting married for a second time review their current plan. Updating beneficiary and insurance forms can help to protect children from a previous marriage. If assets are left solely to a new spouse, there is no guarantee that this person will share them with those children.
According to the American Association of Retired Persons (AARP), individuals in North Carolina and throughout the country should have a trust instead of a will. Trusts are separate entities that hold assets for the benefit of one or more individuals. Therefore, there is no need to go through probate when an individual dies, and there is no possibility of a will contest from a family member or other party.
Trusts can be an important part of the estate planning process for many people in North Carolina. Since they offer greater privacy and flexibility, people may opt to create a trust to handle matters in a way that may be far more challenging when using a will. Trusts are one part of a complete estate plan that can also provide additional discretion for their creators as well as their beneficiaries. Many people want to avoid probate court as it is a public process that can open assets up to scrutiny. In addition, probate costs can be expensive and the process lengthy, especially when significant assets are involved. Trusts distribute assets without going through this process.
When North Carolina residents draft their estate plans, they are sometimes worried that their heirs will be unprepared for a significant inheritance and fritter away assets that they have worked hard all of their lives to accumulate. These concerns may be especially pronounced when heirs are financially inexperienced, have acted irresponsibly in the past or are struggling to overcome substance abuse problems. Placing assets in a spendthrift trust is an effective way to address this issue and protect both estates and heirs.
Parental expectations about their children often determine the structure of North Carolina estate plans. For single parents, the stakes tied to estate planning may be even greater. In cases where a single parent dies leaving a minor child, the child might be forced to leave the area in order to live with the other parent or a different relative. The state of the relationship with the other parent is often a major factor in making planning decisions.
Certain family dynamics can make the estate planning process even more difficult for North Carolina residents. Fighting siblings, spendthrift children and other hostile relatives can raise issues that should be addressed during the actual planning process. Candid conversations during life and a letter of wishes left for reading after death can ease the difficulties. However, many issues can be addressed directly via estate planning instruments.
Individuals in North Carolina who have a high net worth may want to consider creating a trust. Doing so can make it easier to transfer large sums of money in an orderly fashion after passing. However, it is important that an individual choose the right trustee to oversee this document. In most cases, a child or spouse is not going to be the right person for the job.
Families that hold substantial assets in North Carolina typically seek financial and legal advice when planning their wealth transfers. Every person who writes a will, sets up a trust or plans a business succession must grapple with unique issues, but some matters apply broadly to most estate planning situations. These include family dynamics and the selection of executors or trustees.
Individuals who like to collect valuables may have to work a little harder to ensure that their estate plan accounts for those items. This is because payment and other records may not be found on tax returns or other formal statements. Therefore, North Carolina residents and others may want to use computer software to inventory their items. It may also be a good idea to use software to keep track of appraisals or other records related to an object.
An estate planning tool called domestic asset protection trusts (DAPTs) may make it possible to minimize income and estate taxes. The DAPT is a self-settled irrevocable trust, which means that a person can both create it and be a beneficiary. However, the trustee must reside in a state such as North Carolina that allows one to be created. While the trustee is generally a financial institution, it generally doesn't manage the trust's investments.