Here is the second column to discuss practical how-to tips to ensure a smooth estate administration.
Over the years of handling hundreds of estate administrations, the best legal problems, I have found, are the ones which never happen. Use these suggestions to guide you if you are handling an estate in which the decedent did not have their assets in a trust.
1. Are there assets which may pass outside of probate? Yes, likely. Unless you make informed choices to provide otherwise, your beneficiary designations for accounts presumably should go to the same beneficiaries as your will provides.
Best Practice. If you are a single parent and you have adult children who are responsible who will inherit your property, it makes sense to consider having your bank and investment accounts “payable on death,” or “transfer on death” to these children. These assets will go to them a short time after your passing, and these assets are payable outside of the probate estate.
2. What if a decedent’s bank account is set up so that a parent and one of the children can write checks on that account to pay a parent’s bills, for example? Check to see what happens when the parent passes away. Often an account is innocently set up and the bank account is owned by both the parent and the child in a RIGHT OF SURVIVORSHIP ACCOUNT. When the parent passes, any remaining monies in that account go directly, to the surprise of all, just to that one adult child. The loved one’s will may provide that everything goes to all their children, but the monies in this main account are going FULLY to just one child.
Best Practice. Set up the account so it is owned by the parent, and the adult child can write checks as the parent’s power of attorney agent. The parent will have to have a power of attorney in writing, of course, naming that adult child. This way the assets in that account can go to ALL OF THE CHILDREN, not just to the one adult child who is simply helping the parent pay the parent’s bills.
3. Are your beneficiary designations for other assets which may be distributed outside of one’s so-called probate estate otherwise up to date?
Best Practice. Review your beneficiary designations of your banking and investment accounts, life insurance policies, retirement accounts, company pension benefits, and other beneficiary-designated assets. You would be surprised at the number of people who do not update these accounts with beneficiary designation options. For example, if you get a divorce and property settlement without an attorney’s assistance, your retirement account beneficiary after a divorce should be changed to note that the primary beneficiary should be your PRESENT spouse, Not your (now) former spouse. Or, when the designated beneficiary has passed away, and with no alternate beneficiary, that asset goes through probate, and sometimes with considerable adverse tax consequences.
4. Who will be the executor of an estate? Many times, people did their estate planning documents when their children were quite young, and the executor or alternate executor named is no longer the executor of choice because circumstances have changed. If this occurs and the executor is not living, the laws of North Carolina state who the executor should be, which sometimesare the This can create real issues, especially if the children do not work well together for whatever reason.
Best Practice. Review your will to be sure the executors you have named are the ones you want, and that you provide solid choices for an alternate executor or executors.
The next column will address other practical estate administration tips.
NOTE OF APPRECIATION: Many thanks to all of you who called in with your good questions during the NCBA Ask-A-Lawyer annual event on March 6. (I talked to many of you on the 7-10 am shift in Greensboro!) Thousands of citizens received free answers and great direction from hundreds North Carolina lawyers across the state.
Remember: An informed choice is a smart choice.
Mike Wells is a partner with Wells Law, PLLC in Winston-Salem. His email address is email@example.com and his telephone number is 336.283.8700.