Post-Thanksgiving Edition
Nothing says “I need a new estate plan” quite like surviving Thanksgiving dinner. Maybe it was the unsolicited life advice, the third retelling of your “pilgrim phobia” origin story (surprisingly recent), or the realization that the only one at the table who didn’t drive you insane was your sister’s Labradoodle. Or maybe it hit you that your real loved ones are your friends, your pets, or the bartender who knows your “usual” without asking.
Whatever the reason, the holiday season is a perfect reminder that “family” isn’t always defined by blood, and your estate plan doesn’t have to be either. So, if you’re ready to update your estate plan (or finally make one), here are some key considerations for those who don’t have, or don’t want, family at the center of it:
No Family? No Problem.
If you die without a will (aka dying “intestate”), North Carolina law has a plan for how your assets will be distributed. Your closest relatives, including the ones you actively avoid at Thanksgiving dinner, may inherit everything. If no relatives can be located, then your estate will ultimately pass to the State of North Carolina.
The good news is that you have the power to leave your assets to the people, charities, or organizations that matter most to you.
If you’re looking beyond family, you might consider:
- Your alma mater;
- Scholarship or educational funds;
- Religious organizations or places of worship;
- Charities and non-profit organizations;
- Caregivers;
- Close friends (or your “chosen family”); and last but not least,
- Your pets (because if anyone deserves your fortune, it’s the one who never judged your Thanksgiving wine pour).
It is important to note that in North Carolina, you can’t disinherit your spouse entirely unless you have a valid premarital or postmarital agreement that says otherwise. So, if you’re married, your spouse is legally entitled to a slice of the pie (metaphorical and possibly pumpkin).
Naming the Right People for the Job.
One of the most important aspects of your estate plan is naming the individuals (or professionals) who will manage it: your executor (under a will) or trustee (under a trust).
These are the people who will:
- Pay your debts;
- Distribute your assets;
- File your taxes; and
- Keep the peace.
If you don’t name someone, the court will do it for you. That means a judge, who’s never met you and definitely doesn’t know which of your family members almost went to mediation over who got to carve the turkey, gets to decide who’s in charge of your estate. Let’s be honest, if you didn’t trust certain family members during your life, you probably don’t want them calling the shots once you’re gone.
So, who should you pick?
- A trusted friend who’s good with logistics;
- A bank or trust company that offers fiduciary services; or
- A professional fiduciary.
Planning for Incapacity.
We all like to think we’ll be in control until the very end, but life doesn’t always go according to plan. Accidents, illness, or even a temporary hospital stay can leave you unable to make decisions. Luckily, you can put safeguards in place now, while you’re healthy and clear-minded, to ensure your affairs are handled according to your wishes.
Health Care Power of Attorney: A health care power of attorney lets you name someone to make medical decisions if you’re unable to. Without a health care power of attorney, your attending physician may end up making those decisions for you. Choose someone you trust, someone who knows your wishes and will actually follow them, so your care isn’t left to chance (or a stressed-out first-year resident with a clipboard).
General Durable Power of Attorney: A general durable power of attorney grants someone you trust the legal authority to manage your financial affairs, including paying bills, handling bank accounts, filing taxes, overseeing investments, and dealing with real estate matters, as well as government benefits and insurance claims. In short, it’s the person who keeps your financial life running smoothly when you need assistance.
Without a General Durable Power of Attorney in place, no one (not even your spouse or parents) can automatically step in. Instead, a court may have to appoint a guardian to take over. That process is public, time-consuming, and expensive. And you don’t get a say in who’s chosen. Your guardian could end up being someone you wouldn’t even trust to fairly divide the pie, let alone manage your entire estate.
Health Care Powers of Attorney and General Durable Powers of Attorney ensure that someone you trust, not a stranger or a long-lost relative, is the one stepping in when it matters most.
Double-Check Your Beneficiary Designations.
Some of your most valuable assets, such as retirement accounts, life insurance policies, and payable-on-death bank accounts, don’t pass through your will or trust. Instead, they go directly to whoever is listed as the beneficiary.
That means that even if your will says “leave it all to my dog,” your 401(k) could still be distributed to your ex from two jobs ago.
Take a moment to review:
- Have you named someone?
- Are they still the right someone?
- Is their name spelled correctly?
- Do they put up their Christmas tree before Thanksgiving?
If there’s no one listed or the listed beneficiary has passed away, those assets could get lumped back into your estate. That means probate, delays, and the very real possibility of your least favorite relative cashing in.
Update as Life Changes (Because It Will).
Just because your estate plan made sense a decade ago doesn’t mean it still does today. Life has a way of throwing curveballs: marriages, divorces, relocations, reconciliations. The people in your life today may not be the same individuals you’d choose to make decisions or inherit your assets five years from now. It’s wise to review your estate plan every few years or whenever a major life change occurs. Your plan should evolve as your life does.
Final Thoughts.
Not having close family, or not wanting to involve them, doesn’t mean you’re out of options. In fact, it means you have the freedom to create an estate plan that truly reflects your values, priorities, and people (or pets). If Thanksgiving reminded you that not everyone deserves a seat at your table, consider it an ideal opportunity to review and update your estate plan.
About the Author
Sydney ter Avest is an associate attorney in Carruthers & Roth’s Business, Tax, and Estates practice. She assists clients with corporate and business law matters, estate planning, and wealth transfer and preservation. Sydney received her B.A. from the University of North Carolina at Chapel Hill and her J.D. from Campbell University School of Law, where she served as both a teaching scholar and research assistant and received multiple academic honors in civil and criminal law.
Sydney can be reached at (336) 478-1187 or sta@crlaw.com.