The choice as to how someone’s hard earned wealth is distributed after their death is one of the most basic foundations of estate planning. Getting this right involves more than just the documents. At Clarity Legal Group, we work with clients to make sure that their plan documents not only say what they want but also do what they want. The ability to decide how their estate assets are distributed is one of the most important reasons why Clarity Legal Group Clients are motivated to create an estate plan.
I’ve helped people with these kinds of issues for quite awhile. I’ve learned that people often fail to realize that a poorly drafted or a plan that deals only with the documents and ignores the critical component of organizing the ownership of assets and the designation of beneficiaries to be in sync with the documents can fail to fully distribute their estate assets as intended which results in leaving behind at best a mess, and quite possibly something the person did not intend. To help you avoid this common problem, let me share some thoughts about the risks of unintentionally creating a plan in which things don’t work the way you intended.
Estate Planning Goals: Asset Distribution
While a properly drafted and comprehensive estate plan can accomplish much more, a fundamental goal of every estate plan is the creation of a plan that directs the distribution of estate assets after the death of the plan’s creator. In an initial estate plan, this is usually accomplished with a Last Will and Testament; however, as an estate plan grows, the distribution of assets may include additional tools such as trust agreements, life insurance policies, jointly held accounts, and other estate planning strategies. The more complex an estate plan gets, the more important it becomes that the various tools and strategies work in harmony with each other to accomplish the complete distribution of your estate after you are gone.
Common Mistakes that Result in an Intestate Estate
In legal terms, an intestate estate refers to assets left behind by a decedent that are not distributed via a Will, Trust, or another legal mechanism. Assets that are part of an intestate estate are distributed according to the North Carolina (of the state of residence of the decedent) intestate succession laws. As such, those assets are passed on to a decedent’s legal heirs instead of chosen beneficiaries. Numerous mistakes can result in unintentionally leaving behind an intestate estate, including:
- Relying on a living trust without understanding the role of a Pour-Over Will. A properly drafted trust agreement can distribute most of your estate assets. Because it is always possible to overlook an asset when transferring assets into the trust or to not have time to transfer a recently purchased asset prior to your death, you should always have a “Pour-Over Will” that “pours” overlooked or last-minute assets into the trust after your death.
- Using DIY estate planning documents. One of the many problems with relying on DIY estate planning forms is the increased likelihood that won’t successfully interact with each other. This, in turn, increases the likelihood that assets will be left out creating an intestate estate.
- Failing to contemplate a predeceased beneficiary. If you leave assets to your adult children, for example, and fail to consider what should happen to those assets if a beneficiary predeceases you, those assets could end up as part of your intestate estate or part of the intestate estate of your deceased beneficiary. Either way, they may not end up in the hands of the beneficiary of your choosing. A properly drafted estate plan will include legal terms such as per stirpes or per capita to direct what happens to the share of a predeceased beneficiary.
- Failing to properly organize asset ownership and beneficiary designation. If assets and beneficiary designations are not in sync with the legal documents, it doesn’t matter whether the documents say what you intend, they won’t do what you intend. Many lawyers only deal with what a Will or Trust says, without helping people organize their assets. This isn’t estate planning, it’s document drafting, and you need more than a document drafting to get it right.
How to Prevent Leaving Behind an Intestate Estate
The best way to prevent unintentionally leaving behind an intestate estate is to work closely with an experienced North Carolina estate planning attorney. Your attorney will make sure that all the bases are covered so that your assets end up being passed down according to your wishes instead of according to the laws of the State of North Carolina.
Do You Need Help Creating a Successful North Carolina Estate Plan?
If you need help creating a successful North Carolina estate plan, contact a Chapel Hill estate planning attorney at Clarity Legal Group by calling us at 919-484-0012 or contact us online.
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