I get the question all the time: is the Ladybird Deed legal in NC? The answer is yes. But, I don’t want you to simply take my word without any further information. So, in an effort to settle the question once and for all, let me give you the legal basis for the Ladybird Deed. But first, why question it at all?
Maybe you did a Google search for Ladybird deeds in NC. Maybe you were talking to your neighbor. But someone somewhere said that Ladybird Deeds aren’t legal in NC. But here we are saving homes every day with this wonderful tool. Why the discrepancy? Well, the problem is that the people posting these articles on the internet aren’t doing their homework. Likely, they scanned the statutes in NC to see if it mentions “Ladybird Deed” and didn’t find it. Thus, they declare that NC doesn’t allow the Ladybird Deed.
The problem is: we don’t have a statute for the Ladybird Deed. In fact, most of our property law in NC is not codified in statute. Our property law is predominantly derived from common law or judge made law (also known as “legal precedent”). See Statute of Wills, 32, Hen. 8, c. 1 (enacted in 1540).
With that out of the way, what precedent allows for the Ladybird Deed. To recap, a Ladybird deed allows you to put a beneficiary on property (who you can change any time) without giving away any property interest).
We can trace the roots all the way back to jolly old England. English common law allows for something called a “power of appointment.” When you think of power of appointment, the best example is something like designating a beneficiary on a life insurance policy (note: this is not exactly a power of appointment but is good enough for this analogy). On a life insurance policy, you can pick a beneficiary to get the death benefit. However, that’s not set in stone. You can change that beneficiary any time. This is because you have the power to appoint whoever you want. A power of appointment is similar.
Per N.C.G.S. Section 4‑1, adopted in 1778, English common law is the law of the land in NC unless something says otherwise. There are no laws in NC preventing a power of appointment. Thus, the next question is: what precedent allows for a power of appointment on a deed?
This is a legitimate question because deeds convey interest. Usually, when a deed is executed, something (some right or interest in real property) is given. If the property is given to your beneficiary, then how do you retain a power of appointment. It’s like giving away your life insurance policy, yet retaining the power to pick the beneficiary. Luckily, both issues were solved in a super old case: Troy v. Troy, 60 N.C. 624 (1864).
Troy basically said that you can: 1. assign a beneficiary to property without giving them any interest; and 2. maintain a power to appoint any other beneficiary at any time without another person’s consent.
This gives us the legal basis for the Ladybird Deed that we now know and love.
If you or your loved one has questions we would be glad to extend a FREE CONSULT to answer those estate planning and elder law questions and get your affairs in order. Let the experienced attorneys at McIntyre Elder Law help. Call (704) 259-7040.
If we can help you preserve assets before major changes in the law we would be glad to do so and would offer a FREE consult to sit down and discuss asset protection. Give s a call to schedule your free consult today or schedule online at: mcelderlaw.com. For a list of local numbers to our offices see below:
Charlotte: 704-749-9244
Shelby: 704-259-7040
Hendersonville: 828-233-5991
Please don’t wait ‘til it’s too late. Call McIntyre Elder Law today.
Why can’t I just have one document that makes someone my power of attorney for everything? Well, technically you could do that. However, there are some clear reasons why that is not common practice and why we don’t advise taking that approach.
The first consideration is cost. A very practical reason not to combine your General Durable Power of Attorney and your Healthcare Power of Attorney in the same document is that it would double your recording costs. That is because although the Healthcare Power of Attorney does not need to be recorded at the Register of Deeds, the General Durable Power of Attorney is recorded. When a document is recorded you typically have a charge based on the length of the document, so the inclusion of all of the necessary pages in a Healthcare Power of Attorney would add to the total recording fees you had to pay. No one likes paying extra fees and so we don’t advise you to create a document that would result in unnecessary expense for you at the Register of Deeds.
A second major concern is efficiency. You may be thinking, hold on, wouldn’t the efficient approach be having only one document? However, the reality is that combining medical and financial information into one document would tend to make things harder on the agent that was granted those powers and on the institutions relying on those documents to allow your agent to act on your behalf. Banks can be very picky about how they handle powers of attorney. The inclusion of paperwork that is unnecessary for the financial institution is just asking for the possibility of a slow down in using your document.
Additionally, your Healthcare Power of Attorney could include very personal decisions and details about your medical situation that your financial institution does not need to know about. Likewise, your healthcare provider does not need to have to sift through details and decisions related to your finances before verifying that someone can make a medical decision on your behalf.
Finally, the only thing worse than attempting to combine both powers of attorney into one document is having no power of attorney in place at all. These documents can make a massive difference in a crisis situation, as they allow someone to act on your behalf efficiently and also in ways to reduce further costs on you. Important medical decisions can be made quickly and actions can be taken regarding bills and expenses in order to avoid racking up late fees or liens on your property.
If you don’t have the protections of a General Durable Power of Attorney or a Healthcare Power of Attorney in place, one of the attorneys in our offices would be happy to discuss these with you and see what best fits your needs.
If you or your loved one has questions we would be glad to extend a FREE CONSULT to answer those estate planning and elder law questions and get your affairs in order. Let the experienced attorneys at McIntyre Elder Law help. Call (704) 259-7040.
“With the constant challenges to free speech and rumors of drastically increasing the estate and gift tax, how does this affect you and your family?”
Trust me, I am all too familiar with challenges to free speech. It’s not specifically legal challenges anymore but the tendency for unpopular opinions to be shouted down and the people behind them to be cancelled from social media and somewhat erased or made irrelevant. How does this factor into estate planning? My fear is that the termination of dissenting political views may pave way to an unopposed government agenda which can include higher income tax, estate and gift tax and other regulations that could drastically affect the landscape of estate planning. The plan that was right for you 5 years ago may provide no protections against the coming tide of legislation.
There have been rumblings that the current administration wants to drastically reduce the estate and gift tax exemption. This could mean that almost one half (1/2) of your estate could be eaten up by taxes and go to the State. This country was built on the premise that you could keep your hard work and property in the family. You could pass along what you owned to your loved ones. In a climate where any dissenting opinion is stamped out and the person with that opinion barred from the public forum, anything is possible and more likely, probable. As an estate planning and elder law attorney, we have defenses against this.
Trusts:
Trusts can maximize your taxable exemption and therefore help minimize or avoid the death tax. Trusts also allow any property contained within, including real estate, to preserve a step-up in basis. A step-up in basis means that you will avoid unnecessary capital gains tax should your beneficiaries sell the property. You can appoint a trustee to be over your assets and distribute your assets after death. Trusts are also private documents and not administered through public court proceedings as opposed to Wills which do become public record.
Trusts are our secret weapon against the threats of high taxation from many angles and also allow you the ultimate in control of assets even beyond the grave for years into the future. You write the story of your family’s legacy.
If we can help you preserve assets before major changes in the law we would be glad to do so and would offer a FREE consult to sit down and discuss asset protection. Give s a call to schedule your free consult today or schedule online at: mcelderlaw.com. For a list of local numbers to our offices see below:
Charlotte: 704-749-9244
Shelby: 704-259-7040
Hendersonville: 828-233-5991
Please don’t wait ‘til it’s too late. Call McIntyre Elder Law today.
It’s the season of love with Valentine’s Day but you can give the gift to yourself and family of legacy that will last a lifetime; will last for generations. Call out office today: 704-749-9244, or online at mcelderlaw.com/February.
No good assessment can begin without first laying out a disclaimer. In this instance, I must remind us that the campaign season has ended and that this article’s role is not to engage in advocacy for one administration’s ideas over another’s. However, an important aspect of our role as attorneys at this firm is to stay up to date on any change in the wind which could affect our clients and be prepared to advise them accordingly. This task is one we take on with extra focus as we observe the transition from one administration in Washington to the next. President Biden will bring with him a host of new policies and goals as his administration takes their position in 2021.
As is so often the case, what is said on the campaign trail may not be what is ultimately written into the final law that a President signs. The scope of this article is to contend with some of the proposed changes to the laws concerning retirement and taxes. Proposals of this type could significantly impact the way that we assess our client’s circumstances and account for future implications for their assets, income, and retirement.
Some of the highlights that have come from Biden’s tax related proposals are:
Repeal the components for high-income filers under the Tax Cuts and Jobs Act
Impose 12.4% Social Security payroll tax for wages above $400,000
Temporarily increase the amount of the Child Tax Credit and Dependent Credit
Increase the corporate income tax to 28%.
Payroll tax, individual income tax, estate and gift tax changes
A reduction of the exemption amount for the estate and gift tax
Provide a tax credit to caregivers of a spouse or parent
How could new policies affect what is taxed from the gifts I give and the estate that I leave behind?
When it comes to the estate and gift tax, the incoming administration has proposed reducing the estate tax exemption amount to $3.5 million, while increasing the top rate for the estate tax to 45%. This is a 5% decrease from the current top estate tax rate of 40% and an exemption reduction that stands in sharp contrast to the current exemption limits the IRS has in place for 2021 of $11.7 million for an individual and $23.4 million for a married couple. This also ties into Biden’s proposal to lower the gift tax exemption to $1 million as opposed to the gift tax’s current exemption amount, which also currently sits at $11.7 million. This would expose a lot of previously exempt estate and gift amounts to new tax liability.
It is also important to note that even if you read those numbers and think they could never apply to your own circumstances, the increased exposure to tax liability is important to consider for a broader spectrum of individuals than you may think at first glance. These exemption values pertain to the entire value of your assets, and it does not simply mean cash or money that is stored in personal bank accounts. This amount includes the sum of all your estate, which critically could include the home that you live in, any other land or real property, the value of retirement accounts, and other personal property such as your vehicles. Additionally, a forward thinking approach should consider the possibility that these exemptions could decrease even further as the incoming administration moves forward on other policy goals. This could be an area where additional taxes are levied in order to satisfy calls for a more balanced budget in response to the aid packages of this past year. So, even as we assess whether these proposals in their current form may affect you after their implementation, it is an important time to take stock of your situation and plan accordingly with the possibility of sustained change on the horizon.
Can planning ahead improve my ability to limit the tax burdens on my estate and my gifts?
Yes! Initially, it is important to clarify that the gift tax exemption is a lifetime limitation. This is important because through some advanced estate planning, you can identify the appropriate time to make a gift and the amount of that gift to best benefit your overall estate planning goals.
For instance, there is a $15,000 annual limit for gifts made to any one recipient. This means that the first $15,000 that you give to someone is an annual exclusion that is not taxable. However, once your gift exceeds the $15,000 threshold in one year, then the remainder of your gift counts against your exemption for both the gift tax and the federal estate tax. So, if you gifted someone $30,000 in one year, the first $15,000 would not be taxed but the remaining $15,000 would count towards your lifetime gift tax exemption and also towards your federal estate tax exemption. This would mean that any money in excess of your remaining exemption would be subject to federal taxes.
Additionally, there are multiple estate planning options available to individuals for preparing to handle a change to the estate and gift tax exemption levels. One avenue towards achieving that goal is to rely on certain types of tools like trusts or annuities. These are legal vehicles that may allow you to preserve more of the benefits of assets which are placed into a trust or an annuity. This strategy functions very specifically given an individual’s unique situation and advice varies depending on those facts. One of our attorneys would be happy to assess your current estate picture to advise on whether one of these tools would be a good approach for your estate plan.
With the right planning and knowledge, you can take steps to prepare for any decrease to the estate and gift tax exemptions. You can then have the peace of mind that you have minimized your potential liability that could result from an enactment of any of these legislative proposals and instead passed those benefits on to those that you love.
How could my income be affected?
Current proposals from the incoming Biden administration indicate that income earned above $400,000 could be affected in multiple ways. One proposal is to implement a 12.4% payroll tax on income earned above $400,000 that would be evenly split between employees and their employers. This would be earmarked as an Old-Age, Survivors, and Disability Insurance payroll tax, otherwise known as Social Security. Under current regulations, only wages up to the amount of $137,700 are subject to this tax. So the current proposal would leave wages earned above $137,700 and below $400,000 without an additional tax levied against those wages.
Another proposed change in tax to income above $400,000 is to return the top individual income tax rate to 39.6% from its current level of 37% that was enacted under the Tax Cuts and Jobs Act of 2017. This would result in a 2.6% income tax increase to any amount earned above the threshold of $400,000.
In addition to the proposals that would affect the tax levied on income earned above $400,000, there are also proposals that would affect what an individual earning that amount would be able to take in itemized deductions. The proposed cap would limit itemized deductions to 28% of value for filers earning more than $400,000.
Long-term capital gains and qualified dividends would also likely see some changes. The proposal in this area is to tax those sources at the ordinary income tax rate of 39.6% for individuals with incomes above $1 million, while also eliminating the availability of a step-up in basis for capital gains taxation.
At the same time, there are proposals to expand tax credits such as the Earned Income Tax Credit for childless workers over the age of 65 and for individuals utilizing renewable energy. Additionally, there is a proposal to expand the Child and Dependent Care Tax Credit (CDCTC) to $8,000 ($16,000 for multiple dependents) from its current maximum of $3,000. The maximum reimbursement associated with the CDCTC is currently set at 35% while Biden proposes raising it to 50%.
New proposals also involve the popular Child Tax Credit. This proposal is specifically meant for 2021 and would continue as long as economic conditions require it. Under this, the maximum value of the credit would increase from $2,000 to $3,000 for children age 17 and younger. It would also provide for a $600 bonus credit for children under the age of 6. Another aspect of the proposal calls for the Child Tax Credit to be made fully refundable and remove the $2,500 reimbursement threshold and the 15 percent phase-in rate that currently exist.
A few other increases in tax credits may come in the form of a proposal to reestablish the First-Time Homebuyers’ Tax Credit, this would provide up to $15,000 for an individual purchasing their first home. Or it may come in the form of a proposed $5,000 tax credit for caregivers that are looking after their spouses or parents. Although this tax credit might be a great resource for individuals providing care, it is important to note that the proposal would likely require that a health care practitioner verify that you are providing care to meet specific needs in addition to providing receipts of any care related expenses.
Can estate planning provide any benefits when it comes to my earned income?
Yes! Although one typically associates the term estate planning to mean planning that is concerned with what you leave behind, planning for the here and now is a vital part of the work as well. Aside from the benefits that come from simple awareness of regulation changes, so that you can be on the lookout for tax credits for specific activities that would benefit your returns, there are opportunities to plan ahead regarding your income as well.
Some important tools mentioned above, such as trusts, can come into play with preparing for where and how your income is claimed on your taxes. Some trusts can work to your advantage where that legal tool can displace the ownership of some earned income to spread around the tax liabilities. With the foresight of possible income tax increases, you can proactively set up structures that work for you or the business that you run. Armed with the knowledge that a certain bracket of your income is about to be taxed at a higher rate, or that the profits of your business are going to be treated differently, you may be able to structure your sources of income in a manner that maximizes what benefits you are preserving for yourself and your family.
It is true that some of these legal tools can be very fact specific and a plan needs to be customized to properly address your own situation. However, that is exactly one of the services that our attorneys are here to provide. Our role is to advise you on your specific situation and work with you to plan for all of life’s twists and turns, not only those that come from a new administration in Washington. Our goal is that you will be able to make fully informed decisions that benefit not only you in this year, but that reverberate into the future to benefit those that you love as well.
If you or your loved one has questions we would be glad to extend a FREE CONSULT to answer those estate planning and elder law questions and get your affairs in order. Let the experienced attorneys at McIntyre Elder Law help. Call (704) 259-7040.
Uncertainty is the enemy to peace of mind. And there are little other times more uncertain than the change of the guard and the transition of power that comes with the inauguration of a new president. This uncertainty is compounded by the contemporaneous change in the power structure of Congress. There’s nothing like a swing of the pendulum of power to upset the clarity of the status quo. As a result, the question in everyone’s mind is: what’s going to happen in the next 100 days?
The first 100 days of a president’s time in office is their chance to implement sweeping changes, to upset the apple cart, to show that they are effective, and to uphold their campaign promises. Washington, as a rule, tends to move at a glacial pace. However, it’s pretty much widely accepted that there is an exception for the president’s first 100 days. Washington, especially when in the grip of one political party, is a well-oiled machine for those three months. As a result, a lot can happen in a president’s first 100 days.
So, what can we expect to happen going forward? The next three months will usher in changes. But, more importantly, it will be the laboratory, the microcosm for the changes to come in the next four years. The next 100 days will demonstrate the effectiveness of the new president and the willingness (or lack thereof) of Congress to work with him. If the next 100 days goes well for the president, then the country could see significant changes that affect our day to day life. These are changes that we should prepare for.
Here are some of the anticipated changes that you should begin preparing for immediately:
1. Change in Taxation in Retirement Account Contributions. Currently, contributions to most retirement accounts e.g., 401k and IRA, are tax deferred. If you contribute, you get to lower your income by the contribution the account. Thus, you defer the taxation of the money in the account until it is pulled out in the future. The main benefits of this approach are (a) allowing the retirement account to grow quicker with compound interest and (b) to defer taxation until your income tax rate is lower (because you’re withdrawing it in retirement, where you’re not earning wages). Biden’s plan would change this structure. Contributions would not lower a person’s income. The only tax incentive would be a tax credit for contribution capped out at 26%. This would result in a double taxation of retirement accounts.
2. Increase in business tax rates. Business tax rates could increase a significant amount. This is not only important for business owners (especially those who depend upon their business for retirement) but also each and every consumer. Corporate tax rates can adversely affect a company’s bottom line and this cost can be passed along to the consumer.
3. Estate and Gift Tax. No one really knows what the estate and gift tax will look like in the coming years. However, the discussions around the subject seem to indicate that more people will be subject to the estate tax in the coming years. Currently, only those who are incredibly wealthy pay any federal estate tax, that burden will likely be shared by the upper middle and middle class in the immediate future.
The best way to combat uncertainty is to prepare. To be ready for anything. That’s estate planning and that’s what we do at McIntyre Elder Law. If you want to combat the uncertainty and anxiety of the days to come, if you want peace of mind, give McIntyre Elder Law a call today at (704) 259-7040.
If you or your loved one has questions we would be glad to extend a FREE CONSULT to answer those estate planning and elder law questions and get your affairs in order. Let the experienced attorneys at McIntyre Elder Law help. Call (704) 259-7040.
When I sit down with a family member, with an individual or a couple, I want to start by identifying their assets and I want to make a list of their assets. Generally, I ask them to make a list of assets before they come in. They will list out their home, if they own one, a car, bank accounts, things that they’ve accumulated over their life with their hard work. What is your list of hard-earned money and property?
The reason I want to do that is it, number one, informs me as the attorney of what we’re dealing with. Number two, it gets them thinking. One the ways that I obtain clarity on any subject is to write things out. As they’re writing it down, I guarantee you, as you do that, you will start to think about those assets and the people or charitable organizations you want to receive them. A will is designed to help you pass your property on after you pass away. A will has no power while you’re alive and only has power after you pass away.
So first, we want to list those assets. Then, we want to identify the people who will receive those assets and your goals. In my experience, just the process of listing the assets will get you 75% of the way toward identifying your goals and what you want to do with those assets. Then I want you to shift your focus just on the goals and go the rest of that 25%. Identify and clarify and write down the people who receive those assets and your goals.
Is your goal to spend every dime you have during the rest of your life taking a cruise? Drive across the country in an RV? Those are valid goals. Maybe it’s to leave a long-term legacy to your family. Maybe it’s to send a grandchild to college. Maybe it’s just split assets evenly among your children. There might be a home that’s been in your family for years and you want to make sure that it stays in your family and is preserved. Wills can be great vehicles to allow you to accomplish those goals. Even trusts can be created within a will. These are called Testamentary Trusts.
Let’s dive into the technical aspect of writing a will. And I would caution you, I always seek professional advice before I take on tasks that are outside of my area that I practice. I had a transmission go out in my car not too long ago. I did not jack the car up in the backyard and try to change that transmission because I don’t work on transmissions. I don’t know anything about transmissions. I know the general idea of what they are, but for me to get in there and break one open or fix one or replace one in my car, a newer car, I think would be foolish on my behalf. I took the car to a mechanic’s shop that’s just worked on transmissions and I had them fix the problem. Same principle applies here. When you’re writing a will, you’re really going into an area that’s complicated law and I would recommend that you seek the advice of a reputable estate planning and/or elder law attorney to assist you in doing so or to interpret what you want, work with you, and write that will for you to make sure that it’s legal and valid under the laws of the state in which you live.
Right now, we’re in North Carolina. I’m an attorney in North Carolina. If I wrote your will, it would be for a resident of North Carolina and it would comply with North Carolina law.
When I hear people ask me, and they do all the time, “Hey, Greg, I just want a simple will. I just want a one to two page simple will.” That is somewhat of an oxymoron. There is no such thing as a simple will. The shorter you probably make your will, the more complicated you make the life of your executor and your heirs because you may be ignoring items that are necessary to place in the will for legal reasons. You want your will to be self-proving.
So let’s go through the nuts and bolts of a will and the parts of a will. When I start writing a will, we want to say, okay, we want to cancel any prior wills or codicils. We do that because I don’t want you to have multiple active wills at one time. It’s my recommendation that if you write a new will, that you dispose of the old will. Throw it away, burn it in a fire, rip it up, shred it, because I would hate for someone to find both your new will and your old will, and maybe decide to toss the new will because the other one was more favorable to them. So think about that when you’re writing a new will and dispose of the old will. Make sure the new will clearly states that it disposes of any prior wills or codicils.
Second, I want to identify if there’s any person that I want to cut out of my will. And I’m a big fan of telling plainly, stating plainly in the will, “This person will not partake in my will, is disinherited from my will.” That way, there’s no question that that was your intention. I usually do that in a section where I identify all direct family members as well. So a short biographical section that identifies family members, heirs, beneficiaries that would take under a will or trust.
Then I want to identify my executor. So you want to list and think about who will be your executor. The word executor derives from the word execute or is a variation on the word execute. That’s what they do. They execute your will. An executor doesn’t have free will. An executor can’t go off and do whatever they want to do, although you should appoint a trusted person. Many times that’s a close family member, maybe a spouse or a child or a trusted grandchild. Sometimes it can be an attorney. And I serve in that role from time to time if people need me to, although I don’t jump at the chance to do that.
Your executor simply carries out your wishes under the watchful eye of the clerks at the courthouse and the court process. They have to approve everything that the executor does and make sure it complies with your will and your wishes.
After I’ve identified the executor, I want to search and think long and hard if there is someone else who could be a backup, who can be a substitute? If I go on the road with a basketball team, I’m not going to just take five players with me. I’m going to take 10 because I’m going to have subs to come in in case somebody gets hurt or fouls out of the game. I’m not going to just play with four players or three players. I want that will to be the same thing and I want it to last the rest of your life. So we want to have a substitute, it could be one, it could be two, that are available to come in and play the role as the primary executor if, heaven forbid, something happens to that primary executor and they can’t serve in that role prior to your passing.
Then I really want to break out that list of assets and connect it to that list of family members and heirs that comply with my goals of what I want to do, or charitable organizations, churches. It’s kind of like one of these tests you take where there’s a list of one side and a list on the other and I match up the ones that match. I draw a line. I’d love to see that thought process.
And that’s what we do when we sit down in a consult. I want my home to go to my three children equally and I want to list that out in the will. I want to state that clearly for direct distribution, specific distributions to people. I want my cars to go to my spouse, my house to go to my spouse, everything to go to my spouse. Maybe I want to give 10% to my church. You need to state that clearly as a specific distribution.
So if I’m giving everything to one person or specific things to one person, same thing here, what happens if that person predeceases me? If that person dies before I do or simultaneously with me, to whom does that asset go, or all the assets? Maybe I want to say everything to my spouse first, and then if my spouse predeceases me, everything equally to my children. I want to account for those things. I want to state those things in my will.
And then I will tell you, in my head, I’m running through our wills, and we have multiple sections. We will have what’s called a residuary. The residuary is, as I like to call it, the trash can or clean-up clause. It’s after all the specific distributions are given, what happens to anything else that we didn’t specifically describe? What if there were some other assets we forgot about that pop up that needed to be transferred? The residuary cleans that up. It might say, “Hey, anything else that’s left over to my spouse if she survives me. And then in the alternative, if she predeceases, to my children equally.”
Then I will have multiple other sections. I have a definition section in our wills that define all the legal terms we use. We do that so not only the client knows what the terms mean, but it’s less about that and more so the courts and any attorneys that might be involved in the probate of that will know what the terms mean. We don’t want another attorney coming in and arguing or questioning what we mean by the terms we use. We want to make sure that we give powers to the executor, kind of like a power of attorney, but after you pass away, to do anything with the money and property that you had during your life to get it where it needs to go under your will.
And I like an administrative section that tells the clerks and the courts how to set up the will. For instance, does your executor need to post a bond to cover all the assets in your state, or do you trust that person and you wave bond right in the will?
And last but not least, and where I see people make the most mistakes and where wills are rejected from the courts as non-probatable, they can’t go through that probate process to pass assets because they weren’t witnessed and signed correctly. To be a valid will in North Carolina it should be witnessed by two witnesses. Those witnesses need to be disinterested parties. That means they can’t be heirs or beneficiaries that take under the will.
So I’ve seen horror stories firsthand where people cut themselves out of the will because they witnessed a will. You can’t recover if you’re witness. You can’t take under a will if your witness.
And then last but not least, of course the testator, the person writing the will, needs to sign the will in front of the witnesses. But to be self-proving, all our wills are self-proving, they have attached a self-proving affidavit. To be self-proving so that at the time the will is probated through the courts if you pass, the witnesses don’t have to be called in or sign affidavits at that time, because what happens if your witnesses predecease you? This would present a situation where the will may be unable to pass through probate and pass assets. In order for a will to be self-proving, it has to have certain language within the self-proving affidavit that has to be properly witnessed and notarized.
The testator, the person making the will name, and the two witnesses’ names need to be notarized by a notary public officially. In addition, it has to have self-proving language that the person is of sound mind and body, over the age of 18, and executing their wishes.
I would caution you, again, wills are complicated. There is no such thing as a simple will. So be careful. Proceed with caution in this area, but certainly give it the right amount of thought. And it starts with those lists, assets, the people you want to inherit those assets, and goals, which I think those are akin to the same thing, the goals and the people you want to receive those assets. Match those up and you’ll be well on your way to writing your will and to working with a professional and estate planning or elder law attorney to make that a reality and put a tailored plan into play.
If we can help you or your family write a will, please give us a call, 704-749-9244, or go online to mcelderlaw.com. Right now, I’m offering free consultations to meet with you and your family to write your wills and put in play your estate plan. That’s about a $300 value for an hour or more of our time to freely sit with you and discuss with a professional estate planning elder law attorney and get really clear on how to take care of your hard-earned money and property and create your legacy for your family, your children and grandchildren. You can also schedule that free consult right online at mcelderlaw.com.
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Attorney, Brenton S. Begley, wanted to build a quick answer section onto our website which we are sure will quickly become one of our most frequented pages. We thought it also important to put out this important information to our readers and clients as it is a great summary to some of the most frequently asked legal questions in our estate planning and elder law practice.
Quick Answers:
What is a Ladybird Deed?
A ladybird deed is designed to protect your home and surrounding property. It’s quite simply a new deed for your property that allows you to protect the property from Medicaid Estate Recovery and avoid probate without violating the lookback period. The ladybird deed does this by allowing you to assign beneficiaries to your property. You get the protection without giving up control or ability to sell your property all with one special tool, the ladybird deed.
Can Medicaid take my property?
Yes. Medicaid can take property through a process called Medicaid Estate Recovery. This means that Medicaid can recover whatever they’ve paid out for long term from a Medicaid Recipient’s estate. Luckily, Medicaid is limited to recovering from people’s estate ONLY if their estate goes through probate. Avoid probate and avoid Medicaid recovery.
What is the Lookback Period and why does it matter?
The lookback period is the period in which Medicaid will retroactively review of the financial activity of a long-term care applicant. Specifically, Medicaid is “looking back” at whether or not the applicant gave anything away to either lower their asset threshold (a gift) or remove an asset from possible estate recovery. If a gift has been given within the lookback period, and cannot be cured, then the applicant is penalized—meaning, they will not qualify for Medicaid until they’ve paid the facility an amount roughly commensurate with the value of the gift. The lookback period is three years for assisted living and five years for skilled nursing level care.
How can I pay for Long Term Care?
There are a few options: 1. You can pay out of pocket; 2. You can utilize long-term care insurance; or 3. You can qualify for a benefit through Medicaid or the VA to pay the cost of care. Out of pocket pay is the most costly for you and your family because of the incredible cost of long term care ($5k to $10k per month on average). Long term care insurance may be a good investment. However, you’d have to qualify for it long before the need for long term care. Additionally, some long term care insurance policies have expensive and impractical premiums. Lastly, you can utilize Medicaid or VA benefits to pay for long term care. These benefits can cover the cost of long-term care with little to no money out of pocket.
What is a trust?
The best way to think about a trust is that it’s essentially a pot where you can put your assets. Putting your assets into a trust consolidates your assets into one place. This allows you to quickly protect your assets if needed and also allows you to avoid probate in the future. Trusts are flexible tools that can be set up in many ways. Their basic function is to hold assets and determine what happen to those assets when the maker of the trust dies (just like a last will and testament).
What’s the difference between Guardianship and Power of Attorney?
Power of Attorney is a power granted by an individual (the “Principal”) to appoint an agent to act on the Principal’s behalf. The agent’s powers are governed by the power of attorney document. The agent can only act as the principal wishes and must not act against their wishes. An individual must be competent to execute a power of attorney.
Guardianship is only available if an individual is incompetent and, therefore, unable to make decisions on their own behalf. The Guardian is appointed by the court to act on behalf of the incompetent individual (the “Ward”) only after the court has found by clear and convincing evidence that the person in question is, in fact, incompetent. A Guardian can act against the wishes of the Ward as long as they act in the Ward’s best interest.
What is probate and why should I avoid it?
Probate is the default process by which title to a decedent’s assets pass to his or her heirs. The probate process is monitored by and handled through the court. The court requires filings such as an inventory of the decedent’s assets and an accounting of the estate, which are regulated by rigid and strict laws. As such, the process can be complicated and can take anywhere from six months to two years to finish. Moreover, all the creditors of the decedent must be notified through the probate process e.g. medical creditors, the nursing home, and Medicaid. Probate is the creditors’ opportunity to go after the assets of the estate before the heirs get their share.
If you avoid probate, you avoid the long, tedious, and expensive hassle. You also avoid the chance for creditors to deplete the estate and take your loved ones’ inheritance.
What is the difference between a revocable trust and irrevocable trust?
The difference comes down to protection and control.
Control: in a revocable trust, the person who makes the trust is the person who controls the trust (the trustee). For a trust to truly be irrevocable, the person or persons who created the trust cannot be the trustee. An individual creating an irrevocable trust must pick someone other than themselves or their spouse to be trustee. The best way to think about an irrevocable trust is: the person who makes the trust sets the rules of the game but once the game begins, the rules cannot be changed.
Protection: a revocable trust provides protection for assets by allowing the trust maker to. avoid the probate process entirely. An irrevocable trust provides a larger measure of protection by also removing the assets from the trust maker’s name. This can help individuals qualify for benefits like Medicaid, preserve assets, and avoid taxes.
If you or your loved one has questions we would be glad to extend a FREE CONSULT to answer those estate planning and elder law questions and get your affairs in order. Let the experienced attorneys at McIntyre Elder Law help. Call (704) 259-7040.
Yes, you read that title right. The late Elmer Fudd would be proud. While Elmer would certainly urge your silence, I would offer that your voice should not go unheard!
So, how do you ensure your voice is heard? One very straight forward way is to execute a Last Will and Testament.
A Last Will and Testament is a legal document that communicates a person’s final wishes. A person can direct how their real and personal property is to be distributed in the event of their untimely demise. For those of us with minor children, a Will is also a place where you can name another person (or people) to act as guardian in the event that both parents pass away before the children reach the age of majority.
Well, what happens if I don’t make a Will? Great question and I’m glad you asked. In the event that a person passes away without a Will, otherwise known as dying “intestate,” that person’s property will be distributed in accordance with the laws of intestate succession. These are a set of laws, established by the State Legislature, that act as a default set of rules in the absence of a Will. Both real and personal property will be distributed in accordance with the relevant statutes that fit the factual circumstances surrounding the decedent’s estate.
I have always learned best by example. Let’s take a closer look at a common situation where the absence of a will has a significant effect on property interests.
Example
Betty and Margaret are two lifelong friends. Betty is married with two adult children. Margaret is widowed and has five adult children. Betty and Margaret are co-owners, each with a 50% ownership interest as tenants in common, of a small piece of real estate that they bought together. Margaret dies suddenly without a will, leaving only her five adult children behind. What happens to that small piece of real estate that Betty and Margaret bought together?
Analysis
In short, Betty’s interest remains unaffected. She retains the same 50% interest in the property that she had prior to Margaret’s death. However, Margaret’s interest, in the absence of a Will, is distributed to her heirs at law. In this case, Margaret’s 50% property interest would be divided evenly between her five adult children. In other words, each adult child would acquire a 1/5 interest of Margaret’s original 50% interest, in the real property as tenants in common. As a result, there would now be six co-owners of the small piece of real estate originally purchased by Betty and Margaret.
Afterthoughts
Was this the intended outcome? Now that there are considerably more owners, what happens if there is a disagreement between the co-owners on what to do with the property? What if one of the five adult children want to sell the lot or build a house on the property contrary to everyone else’s position? What if one or more of the adult children predeceased Margaret? Furthermore, if one or more of Margaret’s children predecease her, how did their respective estate plans direct their assets, if at all? If Betty files for divorce from her husband, would her interest be subject to equitable distribution? Who is responsible for paying annual taxes, necessary upkeep, and maintenance? How easy is it to identify the current owners?
There are countless “what-if” scenarios that could apply and it is easy to see how easily things can spiral out of control. Ultimately, the question remains: Could this all have been avoided?
The answer is YES. If Margaret had executed a valid Last Will and Testament during her lifetime, she could have directed the property to pass according to her wishes. For instance, she could have directed her ownership to a single person of her choosing. Alternatively, she could have granted Betty what is called a “right of first refusal,” giving Betty a choice on whether to buy out Margaret’s interest upon her death. There are a multitude of ways that Margaret could have simplified the process. Nevertheless, absent a valid Will, distribution of Margaret’s property interest was out of her control.
The following are some other common scenarios that can prove to be problematic when someone passes away without a Will:
The decedent was separated from a spouse but not divorced
There is an illegitimate child of a deceased father
The decedent owned an interest in a functioning business with another non-family member
Let us help you avoid leaving a tangled web. The professionals at McIntyre Elder Law can assist not only with drafting a Last Will and Testament but with all your estate planning needs. Call us at 704-749-9244 or visit us at mcelderlaw.com and book your free consult today!
