Many people don’t see the point when it comes to estate planning. They want to write a will and be done! However, a last will and testament is just the beginning. Though it is an essential document, there is more to consider when making an estate plan for your future and that of your family. The question isn’t will vs estate planning, but how to plan for your future!
Estate planning helps you stay ready for emergencies, protect your assets, and prepare your assets for your loved ones to inherit. With the right estate planning documents, you can ensure that your assets are safe from creditors and other threats and stay ready for whatever may come.
So why not get started today? It could make all the difference in the world!
What is a Will vs Estate Planning?
A will is just one part of estate planning. However, it is where you make crucial decisions about how to leave money and property to your loved ones. You may also state your last wishes for funeral plans.
Without a will in North Carolina, you die “intestate”, meaning that the state will decide who inherits based on complex bloodline state laws. The state will also decide on the guardian for any minor children. Writing a will is crucial for your family!
At the time of death, the executor you select works with the probate court to distribute your assets. However, it’s crucial to consider your personal finance accounts, such as retirement accounts and bank accounts. You must keep the beneficiary designations on these accounts up to date.
If the will contradicts the beneficiary designations on the accounts, the names on the will won’t get their inheritance. Be careful to update your designations, so that family members don’t feel upset about what they inherit.
Estate planning includes:
- Powers of attorney
- Health care directives
- Trusts and asset protection planning
- Avoiding probate court
When you think of writing a will vs estate planning, consider what else estate planning can do to prepare you and your family for the future! Each of these documents plays an important role in protecting you and your assets.
Let’s break down what’s involved in these types of estate planning!
Powers of Attorney (POA)
Powers of attorney give someone else the legal authority to make decisions on your behalf if you cannot do so yourself. This could be due to illness, injury, or even death.
A durable power of attorney remains in effect even if you become incapacitated. In contrast, a springing power of attorney only goes into effect under certain circumstances, such as if you become incapacitated. A financial power of attorney gives financial power to your agent while a healthcare power of attorney gives power to make decisions about your medical care.
A durable general power of attorney gives your agent broad authority to handle your affairs in their entirety, including your finances. An agent may make medical decisions on your behalf if you become incapacitated or incompetent through illness or accident.
There is no need for guardianship with a durable general power of attorney. Your agent can set up care for your personal needs and handle your financial decisions and accounts without court involvement.
For your POA, you may select a family member or someone else who will keep your best interests in mind. However, once you set up power of attorney documents, you’ll need to update them if you have your spouse as your agent but then go through divorce. With more than one marriage, it’s crucial to update your will and any other legal document.
In North Carolina, we don’t pay an estate tax or “death tax” so that is one less thing to worry about! Your legal advisors can help you determine which estate planning tools are best for your unique situation!
Healthcare Advance Directives
Advance directives lay out your medical care desires. A health care advance directive spells out your wishes for medical treatment if you cannot communicate them yourself. This ensures that your loved ones know what you would want and can make decisions accordingly.
Many individuals write a living will to limit medical interventions when their health worsens. However, you can also write advance directives to add additional medications or ensure that your medical team considers palliative care.
For example, you can make decisions about life support and these other crucial issues:
- Psychiatric treatments
- Blood transfusions
- Organ or other transplants
- Kidney dialysis
- Pain management
- Breathing treatments such as respirators
- Nutrition measures
- Hydration measures
Trusts and Asset Protection Planning
Trusts can help protect your assets from creditors, bankruptcy, nursing home costs, inheritance taxes, and MERP. They can also help your loved ones avoid probate court and ensure that your assets distribute as you want after you die.
Trust Basics
When you create a trust with your estate planning attorney, you are the “grantor.” You may add assets and property to your trust to fund it. You also make “beneficiary” designations who benefit from the trust.
And you’ll name a “trustee” to distribute assets to your beneficiaries using the trust’s terms. You may designate a successor trustee in case your named trustee can no longer handle that role. A successor trustee steps in if needed.
Avoiding Probate
The two types of trusts include revocable trusts and irrevocable trusts. Trusts are legal frameworks that hold your assets and exist for the benefit of your named beneficiaries.
With a revocable trust, you may be one of the designated beneficiaries. A living trust is an example of a revocable trust that holds your real property, digital assets, and other property.
Because trusts are not a part of your estate, you avoid probate court. Writing a pour-over will allows the remaining assets not already placed in the trust to pour into your trust at the time of your death.
With a trust, you no longer need to worry about privacy concerns, such as a public probate court allowing the inventory of your estate.
Probate is a legal process all estates go through according to state law after a death. The probate process may be extended and uncomfortable for your family, so it is a gift to them when you make estate plans to avoid court!
Instead of your family members going through probate, your trustee handles all estate settlement issues after your death. Living trusts can help you transfer ownership of your trust property without a court’s involvement and with no public record.
Asset Protection
Asset protection planning can help protect your assets from lawsuits and other threats. With an irrevocable trust, you have less power to decide how assets held by the trust are distributed.
However, your distance from the trust assets helps prevent creditors or bankruptcy from accessing your assets. Your distance from the trust also can help you qualify for benefits that cover nursing home costs.
Some trusts distribute to the grantor during the grantor’s lifetime and then distribute to another person at the grantor’s death.
You may decide to open a trust to benefit other beneficiaries, such as a grandchild who struggles to save money or another person in your family with an addiction problem, spending issues, or special needs – anyone who would benefit from financial support.
When considering writing a will vs estate planning, there are many reasons to start your estate plan today!
What is a Comprehensive Estate Plan?
A comprehensive estate plan includes everything you need to keep yourself, your family, and your assets protected in the event of death or other emergencies.
Legal documents such as POAs, your last will and testament, advance directives, trusts, and other documents work to keep you, your kids, family, money, and property safe. If you’re looking at writing a will vs estate planning, consider setting up your estate plan today!
How to Start With Your Estate Planning Today!
Many people don’t realize the importance of estate planning until it’s too late. Don’t make this mistake!
By doing even a little estate planning, you can make a big difference in your life and the lives of your loved ones. Get started on your estate plan today to protect yourself and your family members.
Contact us at Cape Fear Law to get started on your estate plan! We can help you set up trusts, create power of attorney documents, and ensure your assets stay safe.
Planning can make all the difference in the world! Get in touch and find out how we can help you prepare for your future today!