They say you can’t take it with you. But without the right estate plan, your loved ones won’t take much of it either. North Carolina probate fees and intestate laws tear into an estate, sometimes tearing apart families. It’s one thing to lose someone you loved deeply, and it’s a double whammy when you find out that Big Brother wants to take a bite out of your inheritance. But you’re in luck—probate is not inevitable, and with the right help, you can avoid it altogether. Let’s look at when probate is required and what you can do to stop it.
Probate stinks—there are no two ways about it. It’s a court-supervised legal process that drains your assets and your family’s patience as they try to navigate life after you’re gone. Unfortunately, you can’t do anything about that afterward; that’s why you have to put a plan in place today. And to avoid the probate process, you must first understand why it happens. Here are four reasons why estates end up in probate.
Jointly owned property transfers upon death to the surviving person. That means if you die and owned a home with your spouse, your spouse won’t have to go to court to stake their claim on what’s already theirs. The same is true if these assets were held in a trust document—that’s because when you transfer property to a trust, you transfer ownership of that property to the trust. Now, don’t let that run you off just yet. As the trustee of a revocable living trust, you still get all the benefits of using those assets—living in your home, driving your car, managing investments, etc.—with none of the drawbacks of having those items titled solely in your name.
When you fail to plan, you plan to fail. And contrary to popular belief, a will doesn’t save your assets from probate. A will is great for designating beneficiaries for minor children and stating your wishes for funeral arrangements, but it provides no real asset protection. The best estate plan to shelter your wealth and, at minimum, save you money is a revocable living trust. But it doesn’t end there—an estate plan is a living, breathing document that should change as you change. Suppose you did have an estate plan. You put together a trust that holds your assets for the benefit of the people you love. But later in life, you buy a vacation home or other property. Assets left out of that trust will count towards the value of your estate and may be probated.
Beneficiary designations tell your loved ones who gets what after you pass away. Even if you have an estate plan, there could be some other assets like life insurance policies or retirement accounts that either lack a beneficiary, the beneficiary has died, or the beneficiary is still a minor at the time of your passing. In any case, these beneficiary designation mistakes can put a hold up on settling your estate and require probate court proceedings.
Estates worth more than $20,000 (or $30,000 if your surviving spouse inherits everything) are another common reason an estate goes through probate. On the other hand, a decedent’s estate worth less than the required amount can skip formal probate by filing an Affidavit for Collection of Personal Property of Decedent at your local superior court. But here’s the thing: if you own anything—a car, a house, or bank accounts—there’s a good chance your probate assets collectively are worth more than $30,000. And once the probate court gets through with them, they’re guaranteed to be much less than that.
If you don’t want to go through probate or you want to spare your loved ones from the process, you need an estate plan. An estate plan outlines the who, what, and when of how your assets will be distributed after death—and even protects you from financial abuse if you become incapacitated or can no longer make decisions for yourself. If worse comes to worst, and you find yourself going head to head with probate court trying to settle your loved one’s estate, a Wilmington probate attorney can help you sort things out. Our attorneys can help you, the estate’s personal representative, fulfill your estate administration duties and ensure your loved one’s wishes are carried out. If you’re interested in learning more about how to keep your assets out of probate (and we’re guessing you are), book a free consultation with a North Carolina probate lawyer today.