ESTATE PLANNING IN NORTH CAROLINA
Where there is a will,
there is a way
Learn about the different types of wills, their purpose and preparation, when
professional assistance is advised, and the pitfalls of self-prepared wills.
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Actively planning for death is not a joyous
task. But preparing a will can prevent poten¬
tial financial, tax, and asset distribution prob¬
lems for your family and other beneficiaries.
A will is a legal document that describes how
you want your property distributed at your
death. It is a blueprint that guides the execu¬
tor (male) or executrix (female) in distributing
your estate. It names your executor or execu¬
trix, names who shall receive your property,
and indicates what property or share each
heir will receive. A person who makes a will is
called a testator (male) or testatrix (female).
When a person dies leaving a will, he or she
is said to have died testate. A person who dies
without a will dies intestate. (See the compan¬
ion publication in the Estate Planning series.)
In North Carolina, any person of sound mind
who is at least 18 may make a will.
What a Will Does for You
A will is the supporting central part of your
estate plan. It ensures that your decisions will
be carried out upon your death:
• Transfers assets to the beneficiaries of your
choice.
• Names a guardian for any minor children
and provides for management of assets un¬
til a minor child reaches a responsible age.
• Provides for care of adult children with spe¬
cial needs.
• Names your chosen executor and controls
how your estate is settled.
• Directs or gives discretion to your executor
to make donations of conservation ease¬
ments on your real property.
Why You Need a Will
If you do not have a will when you die, your
property will be divided according to intestate
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succession rules, which may not distribute
your assets as you would have desired.
Married couples often assume that they
do not need a will because they own every¬
thing with a right of survivorship. At the death
of one spouse, ah property should transfer to
the other. However, property can exist, such as
a wrongful death award, that does not pass via
survivorship. Such property will be distributed
by the rules of intestate succession to all eli¬
gible heirs, not the spouse alone. Following the
surviving spouse’s death, the property will also
be divided as per the rules of intestate succes¬
sion. This may result in excessive taxes for the
second spouse's estate when he or she dies.
If both spouses die simultaneously, their
property will be probated. Probate is a court
process to settle the estate. Where there has
been inadequate estate planning or there are
unresolved family disputes, probate can tie
up property transfer and result in significant
legal costs. Dying intestate can lead to some
undesirable circumstances while the estate is
being settled.
The rules don’t provide for recommen¬
dations for choosing a guardian for a minor
child. If a minor child inherits property worth
$1,500 or more, the court will appoint a
guardian to manage it until the child reaches
age 18. The appointed guardian may not be to
the liking of the parties involved.
If a beneficiary predeceases an intestate
decedent (the property owner who dies) or
renounces his/her interest, the property may
pass to someone unintended by the decedent.
If a decedent dies intestate, the estate
administrator must post a probate bond and
may have to pay bond premiums. A probate
bond guarantees that the estate’s creditors,
heirs, and beneficiaries receive the distribu¬
tions to which they are entitled if an executor
or administrator misappropriates funds. This
expense could be avoided by waiving bonding
through a provision in a will.