When it comes to estate planning, many people think that a DIY will is enough. However, to ensure your loved ones are taken care of in the event of your death, it’s essential to have a comprehensive estate plan in place. An estate plan includes several crucial documents, such as your will, power of attorney, healthcare directives, and trusts. It’s essential to ensure these documents are valid under North Carolina law. This blog post will take a closer look at the difference between a DIY will vs estate plan, and also see how to ensure your estate plan will make the grade in North Carolina.
Will Vs Estate Planning
When most people think about estate planning, the first thing that comes to mind is writing a will. While it’s undoubtedly an essential part of any estate plan, you need other documents included in an estate plan.
While a will is crucial for naming a guardian for minor children you have, other legal tools are better at caring for you while living, ensuring your assets go to the heirs you assign, and saving you and your heirs money in the long run.
Let’s look at what an excellent estate plan may include next.
Necessary Estate Planning Documents
DIY packages you can buy online that purport to be comprehensive may not include essential legal documents. While your state may consider a DIY will as a legal document, it cannot benefit you like a comprehensive estate plan.
Wills are only one part of an estate plan that protects you and your family. Even if your DIY Will meets all your state’s requirements and is legally valid, the will alone is unlikely to address all your estate planning needs.
Consider these crucial legal documents that help protect you and your family as you grow older.
Durable General Power of Attorney
Handles your assets and finances and manages your needs if you are incapacitated.
Financial Power of Attorney
Provides someone with the power to manage your finances if you become incapacitated.
Healthcare Power of Attorney (Medical Power of Attorney)
Allows you to name a healthcare proxy to make medical decisions for you, considering your wishes, if you cannot do so yourself.
Instructs doctors on your treatment in the event of a terminal illness or a coma. States your wishes about medical treatments if you become incapacitated.
Health Care Proxy
Makes your healthcare decisions and wishes known should you become incapacitated.
Advance Health Care Directive
Provides instructions regarding the life-sustaining treatments you may or may not want. For example, you may not wish to endure life support measures or medical care involving artificial breathing. In an advance directive, you can lay out your desires for these crucial decisions.
Last Will & Testament
A public record listing heirs, assets, and a guardian and fiduciary for any minors. However, a will cannot help you avoid probate court or creditors or place contingencies on inheritances. Without a trust to hold your simple will, your financial affairs are public knowledge. Crafty criminals can easily access public data about your estate through your will and probate court documents.
It’s crucial to note that designated beneficiaries of life insurance policies or retirement accounts and joint owners of a bank account with the right of survivorship will receive those assets regardless of your will.
Reduces taxes, lessens privacy concerns, and maximizes asset protection, among other benefits. These legal frameworks can help you avoid creditors, qualify for long-term care benefits, and manage your assets while living. After you pass away, your estate can avoid probate, estate tax, will contestations, Medicaid recovery, and heirs’ creditors or lawsuit damages. Assets in a trust are much more complicated for crooks to find out about.
A trust includes instructions about how a trustee should handle financial decisions, what happens on your death, how to handle unpaid bills, and more. With a living trust, you can act as your own trustee until death.
Living trusts are revocable trusts that give you an end-of-life planning tool. And, with a living trust, you also name a successor trustee to manage your estate after you pass away.
Special Needs Trust
These trusts help your loved ones with disabilities. This trust holds assets that can be used to supplement government benefits a disabled or special needs beneficiary receives.
A comprehensive estate plan is a vital tool to ensure care for you and your family both now and in the future. It’s always best practice to consult with a competent attorney who specializes in estate planning when making your plans.
Common Mistakes with DIY Wills and Estate Plans
The internet offers all the information and tools we need to create our own estate plan, right? For most people, this is not true.
Proof That A Qualified Attorney Makes a Difference
Several years ago, Consumer Reports®, an independent nonprofit consumer watchdog group, did a study. They created wills using the forms provided by DIY websites and asked three law professors to review them. The professors found that the wills drafted using the DIY services were better than those drafted by non-lawyers. However, the wills were inadequate to fully meet most consumers’ needs.
Although your DIY “estate plan” may initially cost only $49.95, it may cost much more in the long run than an estate plan designed by an experienced estate planning attorney.
And DIY estate planning may not conform to the applicable law. Although the forms you can find on the internet may claim to conform to North Carolina law, this may not always be the case. In addition, if you own property in another state or country, the laws in those jurisdictions may differ significantly, and your DIY estate plan may not adequately account for them.
DIY Plans: Inaccurate, Incomplete, or Contradictory Information
Suppose you create a will using an online questionnaire. In that case, there is the possibility that you may select the wrong option or leave out important information that could prevent your will from accomplishing your goals. In addition, some online services allow users to insert additional information not addressed by their questionnaire that could contradict other parts of the will.
Protect Your Family’s Future
Estate planning should account for changing life circumstances and potential future scenarios.
- If you create a will in which you leave everything to your two children, what happens if one dies before you? Will that child’s share go entirely to his or her sibling—or will it go to the child’s offspring?
- What if one of your children accumulates a lot of debt? Is it okay with you if the money or property the indebted child inherits is vulnerable to claims of the child’s creditors?
- What if your will states your daughter will receive the family home as her only inheritance, but it is sold shortly before you die? Will she inherit nothing?
Ensure Legal Validity
Under the law, specific requirements must be met for wills and other estate planning documents to be legally valid. For example, in North Carolina, a typed will must be signed in front of two witnesses, and they must sign your will in front of you. Your witnesses must also be “disinterested” parties who are not in line to inherit assets from you.
North Carolina also allows you to make your will “self-proving” by having a notary present while you and your witnesses sign an affidavit. A self-proving makes probate more efficient because the court does not need to contact your witnesses before probating the will.
Forgetting to Include Specific Assets
Assets may be left out of your estate plan. Many people do not realize that a trust is frequently a better estate planning tool than a will because it avoids expensive, time-consuming, and public court proceedings (i.e., the probate process) that would otherwise be necessary to transfer your money and property to your heirs after you pass away.
Even if you have created a DIY trust, if you do not fund it, that is, transfer title of your money and property into the name of the trust, it will be ineffective, and your loved ones will still have to endure the probate process to finish what you started.
Further, if you initially transfer title of all your assets to the trust, you will likely acquire additional property or financial accounts over the years. These assets left out of your will must go through probate if title is not transferred to the trust.
However, an attorney can help you draw up a pour-over will that automatically places all assets into your trust at death. A pour-over will and a trust can help your estate avoid probate entirely.
Do You Have a False Sense of Security?
Your DIY estate planning may not achieve what you think it does. If your DIY will is invalid, your property and money will go to heirs specified by state law—who may not be the people you would have chosen.
An unfunded trust will be ineffective. Banks may not accept a generic power of attorney you found online. Laws affecting your estate planning may change. These are just some mistakes or unforeseen issues that could cost your family dearly.
Regular meetings with an estate planning attorney can help ensure that your plan accomplishes your goals and that your grieving family members are not left with significant headaches after you die.
With the help of an experienced attorney, you can rest assured that your intentions will not be defeated because of mistakes made during the execution of your documents.
Our Experienced Estate Planning Attorneys Can Help
At Vail Gardner Law, our knowledgeable estate planning attorneys are aware of any trends in the law that could dramatically affect your estate planning documents. We have the expertise to help you design and create a comprehensive plan protecting your assets.
We can help you think through the potential changes and contingencies that could impact you or your family and design a plan that prevents unintended results for your estate planning goals.
Get in touch today so we can help provide you and your family with the peace of mind from knowing that your estate planning accomplishes your goals and avoids fees, headaches, or conflict for your grieving family when you pass away.