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Why have an Estate Plan?

While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones.  Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones of the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.

  • Providing for Incapacity.  If you become incapacitated, you won’t be able to manage your own affairs.  Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated.  Here are some of the most common tools that are used to plan for incapacity.
    • Financial Power of Attorney. In order for others to be able to manage your finances, they must petition a court to declare you legally incompetent and they may have to come back to the court every year and show how they are spending and investing each and every penny.  If you want your family to be able to immediately take over for you, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home.  A will does not take effect until you die and a power of attorney may be insufficient.
    • Medical Directives.  The law allows you to appoint someone you trust - for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself.  You can do this by using a durable power of attorney for health care where you designate the person to make such decisions.  In addition to a power of attorney for heath care, you should also have a living will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.
  • To Avoid Probate. If you leave your estate to your loved ones using a will, everything you own will pass through probate.  The process is expensive, time-consuming and open to the public.  The probate court is in control of the process until the estate has been settled and distributed.  If you are married and have children, you want to make certain that your surviving family has immediate access to cash to pay for living expenses while your estate is being settled.  It is not unusual for the probate courts to freeze assets for weeks or even months while trying to determine the proper disposition of the estate. Your surviving spouse may be forced to apply to the probate court for needed cash to pay current living expenses. You can imagine how stressful this process can be.   With proper planning, your assets can pass on to your loved ones without undergoing probate, in a manner that is quick, inexpensive and private.
  •  Providing for Minor Children. It is important that your estate plan address issues regarding the upbringing of your children.  If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations.  You may also want to provide for special counseling and resources for your spouse if you believe they lack the experience or ability to handle financial and legal matters.  
  • Planning for Death Taxes. Whether there will be any federal or state estate tax to pay depends on the size of your estate and how your estate plan works.  There are many well-established strategies that can be implemented to reduce or eliminate death taxes, but you must start the planning process early in order to implement many of these plans. 
  • Charitable Bequests and Planned Giving. Your estate plan can provide for such organizations in a variety of ways, either during your lifetime or at your death.  Depending on how your planned giving is set up, it may also let you receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.
A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, probate at death, estate taxes and unnecessary delays.  You should consult a qualified estate planning attorney to review your family and financial situation, your goals and explain the various options available to you.   Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family in case the worst happens. 

Based in Raleigh, North Carolina we assist clients throughout Wake County, NC and Johnston County, NC as well as the cities of Cary, NC, Morrisville, NC, and Clayton, NC.



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