We all live in the “rat race,” rushing around trying to check off our to-do lists. It’s tough to think what would happen if we weren’t competent to manage our affairs and to do the things we do. Who would care for us? Who would take care of our personal and financial business?
The best time to plan your affairs and plan what happens after you die is when you are unlikely to be sick or die in the near future. Pre-planning is easier and allows you to calmly detail the steps you would like taken in the event you are incompetent or die suddenly. Make a plan to get your affairs in order by the end of the year.
Documents You Need
Power of Attorney — This is the most important document you need. A Power of Attorney appoints someone else to make decisions for you in the event you become incompetent or unable to make your own decisions.
There are two types of Powers of Attorney in North Carolina: a General (or Financial) Power of Attorney and a Health Care Power of Attorney. The first appoints someone else to make financial and business decisions for you if you become incompetent or incapacitated (i.e. bedridden). The second names someone to make medical decisions for you if necessary.
If you do not have a Power of Attorney and you become incompetent, you may have to go to court, be declared incompetent and have a guardian appointed for you – a very timely and fairly expensive process. Additionally, your guardian will have to account to the court each year for how your money is spent; it can only be spent in accordance with the law. Given this inflexible process, we recommend you avoid this by setting up your Power of Attorneys documents now.
Living Will — Another very important document is a Living Will (formally called a Desire for Natural Death in North Carolina). This document details your wishes concerning life support and feeding through tubes, should you find yourself in a hopeless circumstance where death is imminent. This can be a great gift to family members who are trying to make decisions because it offers your specific instructions on the use of ventilators, respirators, feeding tubes, saline IVs, and more. Living Wills are inexpensive and save countless hours of anxiety for family members.
Trust — We often are asked, “What can I do today to make it as easy on my loved ones as possible when I die?” The short answer: a Trust. A Trust is a legal document that allows you to avoid probate, maintain your privacy, protects you in the event that you are incompetent or incapacitated, and may even allow you to avoid certain taxes.
While a Will is good, Trusts enable you to avoid “probate” (i.e. opening an estate with the court when you die) because legal title is no longer held by you, but is transferred to you or someone else as Trustee. A Trust can be set up to manage money or property for the lifetime of the beneficiary, to provide for education of a beneficiary, to protect a spouse, or to accomplish countless other goals, thereby making it very flexible alternative to a Will and a great option.
A Trust costs more up front, but it saves time and money in the long run. If you have a properly drafted and funded Trust, your family is often able to settle your estate in only a day or two!
Will — A Will is necessary for anyone who doesn’t want the state to decide who will take their stuff. Most Wills are relatively simple and name a person to administer the estate after death (called the “Executor”). They often provide for a spouse or a loved one, but if you only have a Will without a Trust, chances are your family will still have to go through probate and open an estate with the court when you die. This process can take a year or more to accomplish and the title for many assets will often be held by the Executor during this time. Therefore, we encourage all clients to consider a Trust to avoid the costs and delays attendant to probate and the estate administration process.
If you have questions regarding a Will, Trust, or Power of Attorney, please don’t hesitate to contact us.
