Estate Planning Myths, Tips, and More with Attorney Bobby Sawyer

This week's blog post is a very special Guest Post and interview with Attorney Robert "Bobby" Sawyer. The podcast is available for download from the iTunes StoreGoogle PlayStitcher Radio, and TuneInYou can also download this episode HERE.  

What’s the number 1 estate planning challenge for most of my clients? The answer depends on the client’s particular situation and stage in life.

Big picture – all of our estate planning goals can be summarized like this: first, we want to control what we have for as long as we are able; second, we want to make sure a trusted person is there to manage affairs when we become unable or pass away; third, we want to make sure our assets go to the right people; and finally, we want to do it as efficiently as possible and with as little government involvement as possible. When the government gets involved, it means taxes.

Where you are in life will dictate the details of each of those goals. For new parents or parents of minor children, the name of the game is making sure there will be a roof over the children’s heads, food on the table, and someone is going to take care of and love them as much as you do. Easier said than done, right? Here is a list of steps that will get the ball rolling.

If you’re on the other end of the spectrum – in retirement and enjoying the golden years of life – then your estate planning goals are drastically different. A big concern for you is how to handle the cost of long-term care. Depending on where you live and the level of care needed, the annual costs of long-term care could easily exceed $85,000. Without long-term care insurance, these costs could quickly eat through your retirement nest egg.

This list gives you some good steps to take in order to get a plan in place to help when a loved one becomes incapacitated.

To address the cost of long-term care, I generally recommend 2 things: a revocable living trust based plan and then a will that contains testamentary supplemental needs trust provisions. All this means is your will contains provisions to create a trust. The net effect of this is that between a husband and wife, when the first person passes away, a trust is created that has several protections and features that a standard revocable living trust does not.

There are several advantages to using a revocable living trust as the basis of your estate plan. One of the primary ones is avoiding the cost, time, and stress of the probate process

Bobby is a partner with the Law Office of Craig S. Johannesmeyer, PLLC, a Real Estate and Estate Planning Firm based in North & South Carolina. Bobby is a United States Army Veteran, an Auburn University graduate, and lives with his wife and three children in Belmont, North Carolina. To order a copy of the book Bobby discussed in the podcast episode click here The Generals by Thomas Ricks or on the link below (The show receives a portion of each purchase made through these affiliate links.)

Have a question you want answered? Send it to me HERE, and we'll answer your question on next week's show.

Click Here to schedule your free Estate Strategy Session with me and for weekly doses of actionable advice subscribe to the FutureSelf Estate Planning Podcast. You can also download our free Estate Planning manual 6 Things to Know Before Making a Will or Living Trust.

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Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.

Named Executor of a Will? Read This Now.

I received a phone call last month from a friend. She was calling to tell me her Grandmother had passed away, and she wanted to make sure the estate was handled properly. These are difficult conversations, and they never get easier, especially when a friend or family member is involved. Every single time I'm reminded of the day when my Grandma passed; the pain I experienced in that moment. I knew she didn't have long, but it was still a devastating blow that I wasn't prepared for. Although my friend's Grandmother's death was not sudden either, the hurt and despair in her voice was unmistakable, and it was heartbreaking. I knew exactly how she felt. 

 Sharing a dance with one of the ladies largely responsible for the man I am today.

Sharing a dance with one of the ladies largely responsible for the man I am today.

When I began practicing law I found these conversations challenging, it felt sleazy to talk business with someone who was so very clearly suffering. At such a time, you would think that "talk with attorney" would be the least desirable item on their to-do list. However, as time went by, I came to learn that these conversations are a vitally important step in the grieving process for many of my clients. In the midst of such despair, these conversations are a beacon of light. The weight of grief is upon their shoulders, and now they are faced with the task of sorting through legal documents and adhering to obscure court rules and guidelines. I am in the unique position to step in during this moment of anxiety and uncertainty and lift that additional burden from their shoulders. Although these conversations will never be a pleasant part of my job, I have come to appreciate my unique ability to provide comfort and counseling in their time of mourning.

"Where's the will? Where do we take it? How do we find out what all the assets are? How do we know if there are creditors? Do we have to pay them? How do we determine which of them gets paid first? How do we split the house three ways? Do we HAVE to sell it?" Most people find themselves learning about the probate process in the aftermath of losing a loved one. This may be the understatement of the year, but that's not the best emotional environment for learning such a dense and daunting body of law. I've seen this scenario play out enough times that I created this Executor's Checklist as a handy quick reference guide to help you get started assembling documents and moving in the right direction. I have tackled the high points, but this post and Checklist are not exhaustive resources, so please shoot me a message or give me a call if you have any questions. 

Because this is such a common issue, I developed a system to fix the problem before it starts. Every plan I design includes a training course for executors and beneficiaries to educate them on their respective roles. Executors and beneficiaries also receive a custom reference guide tailored to their specific role. This extra attention up front makes all the difference when life throws you a curveball later.  

Probate Exceptions

The big question on everyone's mind is always "do we need to probate the will at all?" Usually, the answer is yes. However, in certain instances when the estate contains only "non-probate" assets, it may be possible to skip probate administration. Such assets may include: 

  1. Life insurance policies with a named beneficiary;
  2. Retirement accounts with a named beneficiary;
  3. Bank accounts that are payable on death to a surviving beneficiary;
  4. Real estate owned as tenants by the entirety;
  5. Real estate owned as joint tenants with rights of survivorship.

Several narrow exceptions also exist for small estates, persons owing a debt to the deceased, Landlords removing personal property, family allowances, and certain inexpensive motor vehicles.

Administration by Affidavit: This procedure may be used if the estate does not exceed $20,000 after liens, creditors, etc. (N.C.G.S. § 28A-25). Administration by Affidavit is also available if a surviving spouse is the only beneficiary and the estate does not exceed $30,000 (N.C.G.S. § 28A-4-2);

Payment of Debt Owed to Deceased: For debts under $5,000, the debt may be paid to the Clerk of Court. (N.C.G.S. § 28A-25-6)

Landlord Removal of Personal Property. If the deceased is the sole tenant of a residential rental property, the landlord may take possession of the property pursuant to N.C.G.S. § 28A-25-7. This one is more complicated than it first appears. It's not okay to just take the property, there are a number of statutory requirements to be aware of before taking any action. 

Family Allowances. If family allowances meet or exceed the value of the estate, probate administration may not be necessary. A surviving spouse is afforded an allowance of $30,000, and children of the deceased under 18 years old are afforded an allowance of $5,000 (under 22 if a full-time student, under 21 if disabled or mentally incompetent.) (N.C.G.S. § 30-15,17) As an added benefit, family allowances are also shielded from creditor claims. 

Transfer of Motor Vehicles. In certain qualified instances, titles to motor vehicles may be transferred outside of probate administration. This may be accomplished through the family allowance or by using Form MVR-317, a NC DMV form. (N.C.G.S. § 20-77(b))

Notice to Creditors. In some small estates, people may be tempted to forgo the notice to creditors. Sometimes this is fine. However, if any of the heirs or beneficiaries plan to sell, lease, or mortgage any of the real property within two years, a personal representative should publish the notice to creditors. In practice, it's generally a good idea to err on the side of caution and publish the notice to  creditors. (N.C.G.S. § 28A-14-1) It it also possible to publish the notice to creditors without formally probating the estate. However, there are a number of rules and exceptions to be aware of. (N.C.G.S. § 28A-29-1)

For more information download the Executor's Checklist For Navigating Probate here. Keep in mind, this post and checklist are not a comprehensive list of the rules and exceptions, so please shoot me a message, give me a call, or consult with your attorney before making any decisions. 

Download 6 Things to Know Before Making a Will Or Living Trust

 

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Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.

Probate Is Terrifying (Until You Find out What It Is)

With the rise in popularity of the Living Trust, a lot has been said recently on the topic of probate avoidance. So, what is probate? Does it matter? Should you fear it?

Probate is simply the public process of establishing the validity of a will before the court and settling the person’s estate. Probate is nothing to fear, but there are a few issues to consider when choosing an appropriate estate plan, and putting your estate through probate is among them. By the end of this post you will have a better understanding of the probate process, and the pros and cons of having your estate submitted to probate.

1. Public

Because wills are such a personal device, many people expect the probate process to be private. However, since wills are filed with the court, probated estates become a matter of public record. That means anyone can access the information. Outside basic privacy concerns, a public administration process opens your beneficiaries up to potential hassles from financial predators, charities, and will challengers. 

2. Time

While most people would prefer the settlement process to be completed ASAP, probate can take between 4 and 24 months (unless litigation is involved.) For some, this lengthy time delay can create financial and emotional stress. A few of the reasons probate takes so long include: 1) Paperwork. Lots of paperwork. 2) Complexity. Estates with numerous or complicated assets simply take longer to probate as there are more items to be accounted for and valued. 3) Probate Court Caseload, 4) Challenges to the Will. Heirs, beneficiaries, and those who thought they would be beneficiaries, can object to and challenge the will’s terms and legality. 5) Creditor Notification. A will’s executor must notify the decedent’s creditors so they have time to submit claims for debts.

3. Money

The bad news: probated estates are subject to a variety of costs from attorneys, executors, appraisers, accountants, courts, and state law. Depending on the probate's complexity, fees can run into tens of thousands of dollars. (Try our free Probate Calculator) The good news: probate costs are relatively minor in North Carolina for small estates and probate costs can be significantly reduced by avoiding probate altogether. Here are three simple ways to avoid significant probate costs: 1) Name a Beneficiary. A beneficiary is just a fancy name for the person designated to receive a stated benefit. Common assets that designate a beneficiary include: life insurance, annuities, and retirement plans. 2) Create a Revocable Living Trust. A revocable living trust owns your property, you remain in charge of all legal decisions until your death, and assets belonging to the trust are not subject to probate. 3) Own Property Jointly. Probate can be avoided if the property you own is held jointly with a right of survivorship.

So, what should you do? Sadly, there’s no one-size-fits-all approach. But, there are a number of affordable and efficient options that can be customized to fit almost any set of circumstances. Click Here to schedule your Virtual Estate Strategy Session with me. Choose a day and time that works best for you, we'll send you an intake form, I'll contact you either by secure video portal or telephone, I provide a comprehensive overview of your options as well as answers to all your questions, then you choose the plan that works best for you. When it’s time to sign the documents we send the completed plan directly to your home or place of business, we review the plan together for accuracy, and then we make notaries and witnesses available at the location of your choosing to execute the plan. Easy peasy! As an added benefit, members of our Estate Maintenance Program have 24/7 access to their entire executed plan through our secure client portal, accessible through any device. Contact Me to learn more about our Estate Maintenance Program. 

Click Here for more estate planning advice, informational videos and articles, as well as a copy of my new Ebook Six Things to Know Before Making a Will or Living Trust (2016 Edition)

Comment

Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.