Who Needs Estate Planning

Who Needs Estate Planning?

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Who needs estate planning? Why everyone aged eighteen or older. But, most of us do not have any estate planning in place.

Did you know that fifty seven percent of Americans do not have a will?  So, if you don’t have a will, it’s okay. You’re not alone. You’re actually in the majority. However, this is not a necessarily a good idea.

Now a lot of clients come to me, and they look very chagrined and apologetic.  They blurt out  “I’m really sorry.  I don’t have an estate plan.”  I like to respond with:  “That’s okay. Most people don’t. The important thing is you are here. You are living, you are breathing and you are competent. So, we can do a will.”  Now how easy is that?

One Size Fits All?

Now how many about you out there think that one estate plan suffices for every person.  Anybody out there think it’s a good idea?  Anyone anyone? If you answered yes, we need to talk immediately.

But if you answered no which I hope most, if not all of you, out there did, you are correct! And why is that the correct answer? Let’s think about it for a minute. All of us are unique.

We have different personalities, different likes, dislikes. Each of us are in different stages of life and family situations. So why would anyone think a one size fits all will would suffice for everyone? Because you are unique, you have different needs . Those needs need to be covered in your estate plan. 

A good estate planning attorney will be able to you know flesh out what your unique needs are, what circumstances you have. He or she will then come up with a plan or an idea for how to accomplish your goals which again may not be the same goals and probably not going to be the same goals is your neighbor down the street.

Young Adult Life Stage

So, let’s talk about the stages of life.  We will start with the single young person. 

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Let me introduce you to Bob.  Bob is single and under the age of 30. He’s actually 24. He has a graduate degree. Bob has just started his first real job. Yay, Bob.

Bob decides to buy a house.  So, he is  now a homeowner.  And of course he has bank accounts. But, Bob doesn’t think he needs to have an estate plan.

One day I have a conversation with Bob.  I ask him “Why don’t you think you need an estate plan?” He’s responds: “Oh, please, I’m young. I’ve got you know, 50 or 70 more years to worry about dying. Why do I need an estate plan. I don’t have children. I don’t have a wife. Life is good. I’m just you know, free floating here.” 

I quickly pipe up with “But you have bank accounts, right? You have a house, right?”  Bob nods his head so I keep going.  I ask him if his parents are alive.    Bob responds:  “Yeah, my dad is but I don’t like him. So,  he’s not gonna get anything from me.” 

I respond “Really? Well, let me introduce you to this little statue that the state of North Carolina has called the intestacy statute. Under that statute, if you die without having a will, but your parents are living, your parents are going to get some if not all of your property.  In your case, that means your dad, whom you don’t like is going to get your house. He’s going to get your bank accounts. He’s going to get any assets that you have, because you have no plan.”   Guess who made an appointment to get his will done?

Living Together But Not Married Life Stage

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Maybe you are in love but not quite ready to get married.  So, you decide to live together like Bill and Kathy.    Bill is 35 and Kathy is 34. They’ve been living together for a few years and they’re not sure if or when to get married. They’re kind of happy with the way things are.  To them, marriage is just a piece of paper. They don’t really need to be married in their eyes.

House Issues

Bill and Kathy own a house together. They own the house as tenants in common. So, Bill has a 50% interest in the home and Kathy has a 50% interest in the home. They also both have full time jobs.

I ask Bill and Kathy if they have a will.  They replied “No, I don’t have a will but it’s okay. Everybody knows that we’re a couple.  Our families know that if one of us dies, the other one gets the house and everything.  And I’m like, “huh, really?” But instead, I say, “Well, that’s good that there’s an understanding.  But things happen. Money changes things.”

Remember that little statute we talked about earlier?  The North Carolina Intestacy statute? Remember that one?

Under that statute, if you are not married, your significant other is not going to receive your property when you die without a will.  Instead, it’s going to go to your parents or your siblings, children per the statute.  Those people may not honor your wishes that everything would pass to your significant other. Not to mention that your significant other is not going to be able to make any medical or healthcare decisions on your behalf should become incapacitated.

We definitely don’t want that to happen. Right?  So, if you are living together with someone you need a will. If Bill wants Kathy to have the house when he dies, then Bill needs to put in his will that Kathy is to get his one half interest when Bill dies.

Why? Because otherwise Bill’s one half interest is going to pass to his natural heirs when he dies.  That means Kathy now owns the house with Bill’s relatives.   Not a great situation.  So, get your estate plan done.

Married with Young Children

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Let’s talk about Jack and Diane. Jack and Diane are a young couple. They’ve been married for 10 years. And they own a house together as what’s called tenants by the entirety which essentially means they have equal rights in the house. And if Jack were to die first, the house would automatically pass to Diane. So we’ve gotten over the real estate issue that we had with Bill and Kathy.
Now Jack and Diane also have two sweet little children ages five and seven. I ran into Jack and Diane one day.  During our conversation, we begin talking about their children.  

Being a typical estate planning attorney, I casually asked them:  “Have you ever given a thought as to who’s going to raise those children? You know, if both of you are not around to raise them and they’re still minors?”  They both sputtered: “Of course one of our parents will step in and take care of the kids. We don’t need to worry about that.” 

And I said, “huh.”  Notice I’m saying a lot. This is my famous statement to a lot of people. I went on to say:  “Well, let me tell you this; if you do not have a will, in which you officially name a person or persons to serve as guardians of your children, then it will be up to a court to determine who gets to raise your children.” 


Now, if you’re a good parent, which I’m sure you are, you are going to want your kids raised by someone you trust and love. Someone who has the same beliefs that they do. Someone who is at the same financial standing as you are. You also probably want your kids to be raised with the same morals and life goals that you yourself have.

But again, if you’ve not named the guardian in your will or you don’t have a will at all, it’s going to be up to the court to make that decision. And the court may pick somebody that you would not have approved.  So, don’t take the risk.  Get your will done and name a guardian for your children.

When to Inherit?

 Now other issues to consider besides the guardianship that we just went over is age of inheritance. As a parent, you may have a child who is either a minor or maybe the child you know is not financially responsible. Or you know, maybe the child’s married to somebody that you don’t really like? Okay, that happens sometimes. And you may want to create what’s called a testamentary trust within your will.

With a Testamentary Trust, you determine when your child receives his inheritance.  The Trust holds the assets or inheritance until your child reaches an age that you set – for instance 25.  When your child reaches the age of 25, he or she receives those assets outright.  Until then, there is a buffer called a Trustee, whom you choose and you name.  The Trustee determines whether or not your child should receive any or all of his inheritance from that trust.

Financially Irresponsible Children

Another reason for setting up a Testamentary Trust is if you do have a child who is a financially irresponsible adult.  Maybe your adult child has a drug problem.  Maybe they’re a gambler.   And, you know that hey, if I give my child my child gets any money in his or her hands, he’s going to blow it and the money will be gone in a year or two.  Well, again, we can create a testamentary trust, a lifetime trust in this case, where again, the child has access to those funds, but he or she must go through a Trustee to receive those funds.   Then when that child dies, the remaining trust property will be distributed to anybody else whom you have named.

Keep It In The Family

I’ve also had some people say you know what, I love my daughter in law. She’s the sweetest person in the world. But I want to make sure that the family money stays within our family because you know, she and my son could get divorced.   Or, she could end up remarrying if my son dies first.  We want to make sure that the money goes to the grandchildren.

You set up a testamentary trust for the benefit of your son during his life. When your son dies, the remaining assets pass to his children.

College Tuition

Some parents are also thinking about college tuition. They have a goal that they want their kids to be able to go to college. Now some parents start college savings plans.  But not every parent does.

So, some parents will want me to create a testamentary trust where we earmark a certain amount of funds to be used solely for college tuition. That way the trustee can only give the child those funds for college purposes.   So, you don’t have to worry about your kid using those funds to buy a sports car or a horse. The testamentary trust  is a good way for you to control how your child spends his inheritance.

Middle Age

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So now at this point, we have probably experienced a lot of life changes. We’re pretty settled in our life. Our careers are pretty much on path. We’re starting to accumulate wealth. We may businesses at this stage.

For instance, let’s meet Jack and Jill. Now Jack is 56 and Jill is 54. They have been happily married for many years. They have raised two beautiful children. Both of their children are now adults and their children actually have their own children. So Jack and Jill now have grandchildren.  Jack and Jill are starting to think about retirement.   They’re not ready to retire but they know that they need to start thinking about long term goals. And the reason for that is because life changes. 

Anytime there’s a major life change, you need to revisit your estate plan. Some of the life changes that affect a lot of people in middle age is that they divorce or separate from their spouses.  Also, when you reach middle age, you start thinking about health issues. I know for me every year I get older I start experiencing more aches and pains in my joints and that’s sure will continue increasing as I age.

Health Issues

You have a heart attack or a stroke.  Maybe you have high blood pressure.  Well, scary as that may be, we need to have an estate plan in place to cover these circumstances.

The reality is we’re living longer and longer. As Americans, more people are living into their 80s 90s and beyond. So, our chances of us entering a nursing home, skilled nursing care or an assisted living facility are pretty good. It’s very likely that most of us will end up in some type of nursing care during the last few years of our life.

Well, here’s the issue with that. The average stay in a nursing home right now is over $100,000 a year. And if you’re in a nursing home for more than a year or two, you know that can quickly deplete your lifetime savings. So, in middle age, some people will start working on asset protection with their estate planning attorney or elder law attorney.

Essentially that’s where we carve out legal ways to preserve some if not all of your assets to enable you to be able to qualify for Medicaid down the road if the need arises. The issue is that you have to start that sooner as opposed to later.  Why?  Medicaid has a five year look back period.  And that doesn’t start until the day you enter that nursing home. So, it’s kind of a numbers game.

You’re kind of betting that you will be able to make it five years down the road before you end up with the need for Medicaid. Otherwise, you undo all of that fancy planning that you and your estate planning attorney created. So that’s all the more reason to have an estate plan in middle age.

Tax Issues

Also, we’re accumulating more and more wealth hopefully as we age. That’s the goal right? We want to be able to comfortably retire and take care of ourselves and that brings us to tax savings. A good Estate Planning Attorney can help you or rather your heirs save money on taxes.

The reason this is so important is the estate tax. Any inheritance over the federal estate tax exemption amount is taxed at 40%. That is a huge tax rate. Your heirs could end up paying more in taxes than they end up inheriting potentially.

Not problematic for most of us right now because if you have less than $11,700,000 as a single person, your heirs will not pay any inheritance tax in 2021. But the inheritance tax federal limit exemption limit changes every year. So, let’s say it drops down to 1.5 million. Well, all of a sudden a lot more of us have now reached that level because of our houses, especially here in North Carolina with the way home values are soaring.

With the assets that we’ve accumulated, our businesses that we built up, we could easily leave our heirs assets worth more than $1.5 million. And if we hadn’t gone to a good estate planning attorney who would work with your accountant and / or your financial planner to carve out legal plans on how to shift assets around, your heirs could be facing a huge tax bill when you die.

We don’t want that to happen. Don’t let that happen, folks.  Get your estate plan done now.


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So let’s talk about the disability life stage. This stage could happen at any time and any age.

Let’s meet Franny.  Franny is such a sweet little lady. She’s 49 years old. Unfortunately, she’s just been diagnosed with early set Alzheimers. Franny is worried because she knows her long term prognosis is not very good. She knows she may still live several years. But, eventually she’s going to reach the point where she’s not going to be able to make financial or medical decisions on her behalf. So,  Franny’s estate planning needs are a little bit different than the other stages of life we have discussed. Franny needs to what I call the power of three.  These documents go into effect during your lifetime only when you become ill or disabled.

Health Care Power of Attorney

Now the first document we’re going to talk about is the healthcare power of attorney. This document is where you appoint a healthcare agent to make medical decisions on your behalf if you’re not able to do so. So, in Franny’s case, she is eventually not going to be able to communicate or understand what her doctor is saying. If she’s executed a healthcare power of attorney, then her agent will be able to talk to the doctor and make those decisions for her.

Living Will

Along with a healthcare power of attorney is what’s called an Advanced Directive or living will. Now this document goes hand in hand with your health care power of attorney. In fact, some attorneys will put them in the same document. I like to keep them separate as I find it’s a little less confusing for my clients. I’ll be honest here, the living will is not a fun document to complete. Why?  This document governs end of life decisions and whether or not life saving measures should be taken. Nobody myself included, like to you know, think about these decisions. But, this document helps give guidance to your healthcare power of attorney agent as to whether or not you want life saving measures to be taken in certain situations.

Let’s talk about if you are terminally ill and you’ve reached the point where there’s no chance of survival. There’s no more medicine the doctors can give you there is no more treatment. And for all intents and purposes if they do nothing at all, you will die within a relatively short period of time. Would you want life saving measures taken?

Living Will Choices

Now some of my clients elect that if I’m in that situation, I absolutely positively do not want any life saving measures to be taken. On the other hand, I have other clients who think along the line of you know what, I don’t really want life saving measures to be taken. But I’m not 100% certain. 

Until I’m actually in that position, I’m probably not going to know what I would really want. So, I’m going to leave it up to my agent. I’ll let me agent know that I  prefer not to have life saving measures taken.  However, I’m going to leave it up to them so they can get second opinions. They can consult with other family members, review my medical records and/or try other treatment options.

And then I have other clients that will say you know what I don’t care what any doctor says any medical professional says. I want every single life saving measure to be taken until I take my last breath. So those are your three options you can with the living will.

Durable Power of Attorney

On a related note, we have your durable power of attorney.  With this document, your agent or attorney in fact, as the agent is sometimes referred to, doesn’t make medical decisions for you.  Instead, these agents make financial decisions for you.

For instance, in Franny’s case, assume she has reached the point where she is unable to handle her financial affairs.  She has executed her durable power of attorney. Here attorney in fact  is able to pay her mortgage, write checks on her behalf, access access her bank accounts, pay bills, etc.

Everyone who is at least age eighteen or older should have these power of three documents.  None of us knows what might happen to us at any given moment in time. The time you need these documents is now  – before you need to use them.  Get your power of three documents done now along with the rest of your estate plan.