My name is Thomas Jeter and I am an estate planning attorney here is Charlotte, NC. My partner Pete Nosal and I assist clients with Wills, Trusts, & Estates in both North Carolina and South Carolina from our offices in Cornelius, NC and Fort Mill, SC. We put this list together after many cases and personal experiences that we hope will help you understand the importance of a proper estate plan, as well as how to avoid some common pitfalls in planning your own estate.

1) Not having an Estate Plan at all

Far and away, the worst thing that you can do, is not planning an estate plan at all. Let me say this again, this is by far the worst mistake that you can make. If you die without a Will or Trust, your property will pass to your heirs at law under the intestacy statutes of your State of residence, and this may or may not be where you intended for your property to go. Your estate may be taxed at the maximum rate, thereby giving the government much more than you ever thought they would get. And even scarier, without a proper Healthcare Power of Attorney and Durable Power of Attorney, if you are severely injured in an accident, your loved ones may not be able to make life-threatening medical decisions for you or have access to necessary financial resources. These are all issues that can easily be protected with a properly prepared estate plan.

2) Avoid Online or Do it Yourself Wills, pre-populated forms, and pre-paid legal services

Yes, the $69.00 Will kit that you downloaded off the internet will hopefully meet the statutory requirements to be submitted to probate in your State of residence and may be sufficient to transfer at least some if not all of your assets upon your death.

Attorneys have forms that we use to draft your documents, so what’s the difference?

Estate planning is about asking the right questions to make sure that ALL of your goals are accomplished as efficiently and cost effective as possible. Drafting of legal documents is only a small part of Estate Planning, which is why advice from qualified estate planning attorney is invaluable when planning for your family’s future.

Let’s go back to the Last Will and Testament that you got on the internet…

A) Does the Will waive the bond requirement for your Executor? I have seen quite a few online Will forms that do not have this basic language in there.

Under North Carolina law, unless it is affirmatively stated in your Will that a bond is waived, the Executor of your Estate will have to furnish a bond to be qualified for probate, which means money will be taken out of your Estate and away from your heirs to be paid to an insurance company to furnish a bond. The bond amount is relative to the size of your estate and can be costly for larger estates. In any event, this is an unnecessary expense, which can be avoided with proper planning.

B) Have you printed and signed your Will?

If not properly executed, your Will is not worth the paper you printed it on. If everyone knew when he or she were going to die, we would all sign our Estate plans the day before our death. However, we do not know the exact date of our death, which is why you cannot afford to have your Will as a file on your computer or waiting to be signed in your to do box.

C) Has your Will been properly witnessed?

You printed your Will off the Internet, and you understand that you need two witnesses to make the Will valid. Without thinking, you ask your wife and son to come in the dining room and sign as witnesses. However, you have also named these family members as beneficiaries under your Will. If these are the only two witnesses, you do not have a valid enforceable Will because the witnesses stand to take under the Will and are not a disinterested third-party as required by law. Thus, again, a very small oversight could have massive unforeseen implications on your Estate.

These are only a few of the many issues that could arise when trying to use a pre-populated form or downloadable Estate Plan. Besides getting valid and enforceable legal documents, an Estate Planning attorney will provide you with sound legal advice and ask the right questions to make sure your Estate Plan fits your family’s needs.

3) Not planning for your Incapacity or desire for a natural death…

Durable Power of Attorney & Healthcare Power of Attorney

This is the most common mistake that we see people make because it applies to adults of all ages. Whether you are in college, newly married, a working parent, or a retired senior, you need to decide who will make financial and healthcare decisions for you if you are unconscious, incapacitated, or for any reason unable to make decisions for yourself.

Bob and Libby are a newly married couple in their mid 30’s, who are in a car accident coming back from their honeymoon. Bob is seriously injured and is in a comma in the hospital. Libby does not have a Financial Power of Attorney or Healthcare Power of Attorney over Bob. Who will make life-threatening medical decisions for Bob? Who will investigate disability insurance or auto insurance? Who will have access to Bob’s bank account to pay bills? 

Without a financial or healthcare Power of Attorney, Libby can make none of these decisions for Bob without first applying for Guardianship through the Court. Obtaining guardianship of an adult is a serious legal proceeding and can cause unnecessary delay, expenses, and stress at a very emotional time for their family. Libby and Bob could have avoided intrusive Court intervention in this situation by just executing two simple documents giving each other Power of Attorney to make important decisions for the other one.

Living Will

Expressing your desires as they relate to your last dying illness through a Living Will can relieve your family members and love ones of having to make an extremely difficult decision at a very emotional time. The worst mistake that you can make is assuming that all family members know your wishes. However, you can unequivocally make your wishes and desire for a natural death known by signing a Living Will as part of your estate plan.

4) Be careful with when adding a child or other family member on a joint account…

Placing your money in a joint account with a child or family member can be beneficial in many ways; however, there are a number of potentially adverse consequences that you should be aware.

POD Accounts – If a joint account is listed as Payable on Death or with right of survivorship, then the entire balance of the account will pass to the surviving account holder outside of your Will and probate.

Jane is a 75-year-old widow with two adult children, Jack and Jill. Jill lives close to her mother and often helps her with her bills and finances. Jane places $100,000 in a joint POD account with Jill to make it easier for Jill to write checks and pay bills on her behalf. Jane loves both of her children and her Will states that upon her death all of her property shall pass to her two children in equal shares. Jane passes away and her Will is submitted to probate and all of her assets combined total $150,000. However, the $100,000 in the joint bank account passes outside of probate solely to Jill. Thus, the net effect is Jill inherits $125,000 while Jack only inherits $25,000 from their mother. Jill’s attorney tells her that she legally does not have to split the $100,000 with her brother. Jack knows that this result was not his mother’s intent and resents his sister for keeping the money.

Jane had no idea that her simple estate plan would lead to such an inequitable result and cause life-long discord between her children. I have seen this identical fact pattern many times, and it is a good example of how proper planning is needed to avoid unintended results.

Other pitfalls include the potential for the joint account holder to abuse discretion and withdraw balance for their own benefit, and situations where the account could be subject to claims of creditors, divorce, or bankruptcy of the joint account holder.

5) Not immediately changing beneficiary designations on Life Insurance and Estate Planning documents when separated or divorced

If you are separated or divorced, it is probably a safe assumption that your ex-spouse is the last person who you would want to receive your assets or proceeds from a life insurance policy upon your death. If you died without changing the beneficiary on your life insurance policy, these proceeds will be paid to your ex-spouse if they are the named beneficiary. A change of beneficiary form is very simple and often only requires a call to your financial advisor or insurance agent.

However, if you have minor children, a change of beneficiary may not be enough if your ex-spouse has custody of the children and your children are your beneficiaries. In this situation, creating a trust for your children and naming the Trust as the beneficiary of your policy and foundation for your Estate plan protects your money from an unruly ex-spouse, allows you to continue to support your children after your death, and provides you with the flexibility to determine how and when the assets will be distributed to your heirs.