Estate Planning Legal Information

Elements of Estate Planning

Estate Planning is usually broken down into the following 4 items: 

  • Will
  • Trust
  • Power of Attorney
  • Healthcare Power of Attorney

Each of these has different purposes and may not be appropriate for every person’s situation. Read on to decide what most fits your needs. 

When should you start?

Everyone should have an estate plan. Whether you have children or pets, own real or personal property, identify as LGBTQIA+, or have specific desires, an estate plan can be really helpful for you, your family, and your loved ones. 

Even if you have done some estate planning documents in the past, it’s always a good idea to review them after major events like moves, births, deaths, divorces, marriages, job changes, account changes, and more. 

Wills

Wills are documents that tell the Courts and your loved ones how you want your things distributed after you die. They establish who you want to follow your instructions, how you want things split up among your heirs and devisees (people you are gifting things to in your will), how you want your remains or funeral handled, and more. 

Wills are controlled by North Carolina General Statutes Chapter 31, which you can review here

There are many will drafting services at free or reduced cost online. Be wary of using these, because they may not comply with North Carolina’s requirements. The biggest concern of using these online options, as with any, is that they don’t know your unique circumstances. If you have something that isn’t clear from the statute on how to handle it, you should reach out to an attorney. 

Trusts

Trusts are documents that establish an entity to maintain financial accounts, real and personal property, and more. Trusts can be used to keep more of your information private since Trusts are not entered into probate. Although using a Trust may not keep your loved ones entirely out of probate, it can keep more of your information from becoming part of the Court record and reduce the amount of things that go through probate. 

Trusts are controlled by North Carolina General Statutes Chapter 36C, which you can review here

Trusts can be used to hold legal title to items, like your car or your home. If you are the Trustee, you may still have the ability to control these items even though their legal ownership is under the Trust. This allows you to use these items and pass them on to your loved ones without submitting them to probate. You can also set your financial accounts that have payable on death beneficiaries to pay to your Trust. Although Trusts also often have online drafting models, they can be incredibly complex and can contain more costly errors if done incorrectly. If you attempt to draft your Trust on your own, please consult an Attorney to review your work for accuracy. 

Trusts require more effort than wills. They are more complex and should not be done without an attorney. Here are some special considerations:

  • Trusts must be funded. The easiest way to do this is to open a bank account right away under the Trust’s name AND to staple a $10 bill to the original trust documents. If a Trust hasn’t been funded before the person’s death, it can cause all of those items that were supposed to go to the Trust to instead have to go through probate and undo all of the work the person did to keep their information private and reduce probate efforts. 
  • Not all things should be immediately put in the Trust. Many financial accounts can trigger early liquidation fees if they are moved into the name of the Trust, even if the Trustee is the same as the person who originally owned the account. The better way to handle these is to put the name of the Trust as the payable on death beneficiary. 
  • Trusts can require tax filings, especially if they have legal title to homes or vehicles which have their specific taxes. If a Trustee is also the original person, standard practice is to keep all the Trust under that Trustee’s social security number. If there are multiple Trustees or the Trustee is no longer the original funder, the Trust may require an EIN. Speak with a CPA for clarification on how this will work in your case. 

What are some things you can put in your Trust?

  • Real property (homes)
  • Vehicles
  • Personal property (specific items, lists, general terms)
  • Financial accounts (usually via payable on death beneficiaries)
  • Instructions for how to divide your assets when you die
  • Special additional trusts for children, pets, special needs family members, educational plans, or businesses. 
  • Provisions to provide for you if you become incapacitated
  • End of life instructions
  • Guardianship recommendations

Power of Attorney

A Power of Attorney is a document that gives specific powers to another individual to act as if they are you. A Power of Attorney is a powerful document. It can be as broad or as limited as you decide. You can use the powers as they’re listed in the statute, or you can limit your POA to a very specific situation (like signing any documents needed to sell your house). 

Powers of Attorney are controlled by North Carolina General Statutes Chapter 32C, which you can review here

You should only choose someone you trust. Establishing a POA means that person can act AS YOU for whatever powers you listed without any notice to you whatsoever. There are often incidents of people abusing their POA power to drain their family member’s bank accounts. Even though there are rules to help hold people who abuse this power accountable, that still requires someone noticing it happened and starting the process of holding them accountable. Keep your POA as limited as possible for your own protection, review it regularly, and revoke it if you no longer trust that your POA is going to act in your best interest. 

A Power of Attorney is only effective while you are alive. If you include things like making funeral arrangements, these must be done by your Power of Attorney before you die. 

A Power of Attorney can be standard or springing. A standard POA is effective as soon as it is signed. A springing POA is effective only when a condition has been met, like being found incompetent or signing an additional effectiveness page. 

You can use the statutory form yourself, which can be found here. Your POA is either effective upon signing or upon a springing condition, but it can also be filed with your county Register of Deeds. 

Healthcare Power of Attorney

A Healthcare Power of Attorney, sometimes called an Advance Healthcare Directive or a Living Will, is a power of attorney that is limited to healthcare and medical care. A HCPOA is, by its nature, a springing POA. It is only used when you are unable to make medical decisions, either by incapacity or by inability to communicate your wishes. Since these decisions are usually made directly to healthcare providers and directly impact your body, it is hard to enforce HCPOA powers by an agent when the principal is not incapacitated. 

Healthcare POAs are controlled by North Carolina General Statutes Chapter 32A, which you can review here

Healthcare Powers of Attorney have a statutory list of things that your HCPOA Agent can do on your behalf. You can use the statutory form to check off each power you choose to allow your Agent to have. I recommend generally allowing your Agent all powers because it shows you trust this individual to follow your wishes, but I usually remove the paragraph about electroshock therapy due to its recognized ineffectiveness. I also recommend not using the limiting powers section to limit the powers but to instead offer guidance. It can be hard for your Agent, especially since they are usually a loved one, to recall all your wishes in your time of need. 

HCPOAs are only effective while you are alive. Although there are specific sections in the statutory form that refer to organ donation, autopsy, and funeral arrangements, these all must be set up or completed by your agent while you are still alive. If you die before your agent can exercise those powers, then your agent cannot do those things unless the same instructions are in your will and your agent is also your Executor. 

You can use the statutory form yourself, which can be found here. Your HCPOA can be registered with the Secretary of State here, so the username and password you receive is all you need to share with your medical team rather than your entire HCPOA document. I recommend uploading that information to whatever website your normal health provider uses, like MyChart.