Tenancy in common has long been one of the three types of joint ownership in real property recognized by North Carolina. Until recently, it was governed by common law principles and not codified by statute. However, on September 9, 2024, Article 7 of Chapter 41 of the North Carolina General Statutes was officially signed into law to clarify and consolidate the general principles of tenancy in common. This is good news for attorneys and the public, as tenancy in common, pun very much intended, is quite common. It is the default form of ownership when two or more individuals jointly … Continue reading
Author Archives: Andrew M. Brower
The Complexities of an Insolvent Estate
Ironically, insolvent estates are often more time-consuming, nuanced, and complex than solvent estates. This increased complexity stems from two primary factors. First, the procedural intricacies involved in providing notice to creditors under Article 14 of Chapter 28A and navigating the rules for presentation and payment of claims under Article 19 of Chapter 28A are nuanced. Additionally, the legal framework surrounding which assets are readily available to the personal representative, which assets require court intervention to access, and which are entirely exempt from claims is complex. Understanding Estate Insolvency Typically, insolvency refers to a situation where liabilities exceed assets or cash … Continue reading
The Significance of Disinheriting a Child – Alternatives and Protections
Clients choose to disinherit a child for many reasons. As an estate planning attorney, I often find that clients feel the need to justify this decision to me. While it’s helpful for an attorney to understand family history and dynamics, it is not our role to judge or attempt to influence the decision. However, it is the role of the attorney to advise on alternatives and ensure it is an informed decision. I emphasize to clients that disinheriting a child is a significant decision. I also ensure clients are aware of alternatives, such as leaving assets in a trust or … Continue reading
Should My Will or Trust Contain a “No Contest Clause” or a One Dollar Bequest?
When clients choose to disinherit or reduce an inheritance for a child, I am often asked whether they should include a “no contest” provision in their estate documents or if they should leave the child one dollar. In this blog, I will address these common questions. No Contest Clauses No contest clauses, also known as in terrorem or forfeiture clauses, are generally enforceable in North Carolina, but their effectiveness is subject to significant limitations. What is a no contest clause? It is a provision in a will, trust, or other testamentary instrument that threatens to disinherit anyone who challenges the … Continue reading
The “One Big Beautiful Bill Act’s” Impact on Estate and Gift Tax
Regardless of one’s views on the controversial One Big Beautiful Bill Act (“OBBBA”), it undoubtedly provides estate planners with certainty regarding the future of the estate and gift tax exclusion. Under the 2017 Tax Cuts and Jobs Act, the gift and estate tax exclusion was effectively doubled, but this increase was scheduled to sunset at the end of 2025. That sunset would have lowered the unified gift and estate tax exemption to just over $7 million in 2026, compared to $13.99 million in 2025. Over the past decade and a half, the unified gift and estate exclusion has been based … Continue reading
House Bill 992 Has Passed and Reforms Intestacy Laws for Children Born to Unwed Fathers
As I discussed in a prior blog, North Carolina has rather archaic laws regarding paternity and legitimization. In estate and probate matters, these issues arise when a father dies without a will (i.e., intestate) and leaves behind children born out of wedlock, where the father did not subsequently marry the mother or otherwise legitimate the child through the courts. In such cases, N.C.G.S. § 29-19(b) governs whether the child is considered an heir of the father and eligible to inherit via intestate succession. In general, children born out of wedlock do not inherit from their father via intestate succession. However, … Continue reading
Powers of Attorney Versus Guardianship and Why Guardianship is a Last Resort
Powers of attorney and guardianship are legal tools used to assist individuals who may be unable to manage their affairs. However, the two differ significantly in their application, implications, and the level of autonomy they afford to the individual. Guardianship is often considered a last resort due to its intrusive nature and the significant loss of rights it imposes on the individual. Powers of Attorney A power of attorney is a legal document where a principal (the person signing the document and granting the power) appoints an agent (the person receiving the power) to make decisions on their behalf. The … Continue reading
Can a Bank Refuse to Accept a Power of Attorney?
I always tell clients that the law is not always applied perfectly when interacting with the practicalities of the real world and real people. In other words, even when a person has the legal authority to take some action, they may still run into obstacles and red tape. For example, a bank teller or call center representative may initially tell a client something different than their attorney. Banks and other financial institutions generally do business in multiple jurisdictions, and even with training, are often confused regarding specific state laws surrounding wills, trusts, and powers of attorney. These matters spark confusion … Continue reading
The Hierarchy of Last Wills in North Carolina
In North Carolina, there are three types of wills, each with specific requirements outlined in Chapter 31 of the North Carolina General Statutes. While all three types are recognized, only a specific subset of one type should be used when planning your estate. In this blog, I will summarize the different types of wills and explain why a self-proved attested will is the only type of will that should be used for estate planning. Attested Written Wills and the Crucial Subset: Self-Proving Wills An attested written will is a written document signed by the testator (i.e., the will maker) and … Continue reading
IRS Releases Tax Inflation Adjustments for 2025
Around late October or early November, the IRS announces annual inflation adjustments for the following tax year. On October 22, 2024, the IRS published Rev. Proc. 2024-40, which provides these adjustments and changes to other tax provisions for 2025. In this blog, I will reiterate how the basic and annual gift and estate tax exclusions operate and provide the increases for 2025. Basic Exclusion The basic exclusion for decedents who die in 2025 will be $13,990,000, up from the 2024 basic exclusion amount of $13,610,000. The basic exclusion serves as the unified credit against gift and estate tax for an … Continue reading
The Bifurcation of Estate Administration and the Pitfalls of Individual Beneficiary Designations
The use of individual beneficiary designations offers several advantages and disadvantages that should be carefully considered when engaging in estate planning. One of the primary benefits of using beneficiary designations is the ability to bypass probate, allowing for a timelier transfer of assets upon the account owner’s death. Once upon a time, estate planning attorneys would instill fear in clients regarding probate fees and red tape, leading to the promotion of revocable living trusts which also avoid probate. While the living trust still reigns supreme for efficient estate planning, the reasons for such have changed dramatically over the past decades. … Continue reading
Special Needs Planning in North Carolina
Special needs planning in North Carolina is an important estate planning consideration for any family with disabled or elderly members. The most prominent tool used in special needs planning is the Special Needs Trust (“SNT”). An SNT is designed to preserve assets for a beneficiary without jeopardizing their eligibility for means-tested government programs such as Medicaid and Social Security Disability. The trustee of an SNT has the discretion to distribute income and principal for needs not covered by government programs but is prohibited from making distributions that supplant the services covered by those programs. This allows the SNT to supplement … Continue reading
Do You Love Your Pet to Death? Let’s Talk Pet Trusts and Other Honorary Trusts in NC
In North Carolina, under N.C.G.S. § 36C-4-408, pet trusts are a legally recognized means to ensure the care of one or more designated domestic animals or pets that are alive at the time the trust is created. Such trusts are valid and the assets in the trust must be used exclusively for the benefit of the designated animals. The statute explicitly prohibits the conversion of any portion of the principal or income of the trust for the use of the trustee or any other purpose that does not benefit the designated animals. Your first question may be: how are such … Continue reading
What is a Ladybird Deed?
The term “Ladybird deed,” also known as an enhanced life estate deed, was popularized in Florida in the 1980s. The name comes from Florida elder law attorney Jerome Ira Solkoff, who used the name of former First Lady “Lady Bird” Johnson in his educational materials to illustrate the mechanics of the deed. The name has since been attached to the concept, despite the fact that President Johnson likely never used a Ladybird deed to transfer property to his wife. A Ladybird deed is an estate planning tool that allows a property owner to transfer ownership of the property to another … Continue reading
What is a Medicaid, aka 1% Deed?
Throughout my practice, what is colloquially known as a Medicaid or 1% deed has proven to be a viable and popular tool among practitioners and clients alike. In this blog, I will discuss the mechanics behind this technique and the aspects that are often misunderstood. While preparing a general warranty deed can sometimes be a straightforward legal service, the nuances and considerations involved in a Medicaid deed are complex and frequently overlooked. Unfortunately, I have observed many general practitioners offering Medicaid deeds as a service due to the seemingly simplistic nature of the task. Additionally, there is often conflation among … Continue reading
Federal Gift and Estate Tax Planning- Part 7 of 7: Advanced Planning with Charitable Trusts
Using a Charitable Remainder Interest Annuity or Unitrust (CRATs/CRUTs) and Charitable Lead Trusts (CLTs) Charitable Remainder Interest Annuity and Unitrust as well as Charitable Lead Trusts are vehicles for the charitably inclined that can provide significant income and estate tax benefits. Both charitable remainder trusts and charitable lead trusts are split interest trust where an annuity interest and a remainder interest are split among the grantor of the trust or other non-charitable beneficiaries and a qualified charity. CRATs and CRUTs Charitable Remainder Interest Annuity Trusts (CRATs) and Charitable Remainder Interest Unitrust (CRUTs) are the two types of charitable remainder trusts. … Continue reading
Federal Gift and Estate Tax Planning- Part 6 of 7: Advanced Planning with QPRTs
A Qualified Personal Residence Trust aka “QPRT” can be an effective gift and estate tax planning tool, especially in cases where an individual has a large amount of wealth of which a primary residence and secondary home make up a significant percentage. IRC Section 25.2702-5 governs the use of QPRTs. What property can be transferred to a QPRT? The IRS allows an individual to transfer no more than two residences (i.e. noncommercial property), including appurtenant structures and adjacent land for residential purposes (primary residence or secondary home) or interest therein to a QPRT. How is a QPRT structured? A QPRT … Continue reading
Federal Gift and Estate Tax Planning- Part 5 of 7: Advanced Planning with IDGTs
Freezing and Reducing your Taxable Estate with Intentionally Defective Grantor Trusts (IDGTs) Likely the most effective and popular advanced planning techniques are the use of a Grantor Retained Annuity Trust (“GRAT”) or an Intentionally Defective Grantor Trust (“IDGT”). The general idea of both techniques is to transfer assets expected to appreciate in an amount that exceeds the current month’s Applicable Federal Rate or Section 7520 (120% of the AFR) rate and pass the excess growth to non-charitable beneficiaries, all while using little or none of the individual’s basic exclusion. In this part, I will discuss IDGTs. An Intentionally Defective Grantor … Continue reading
Federal Gift and Estate Tax Planning- Part 4 of 7: Advanced Planning with GRATs
Freezing and Reducing your Taxable Estate with Grantor Retained Annuity Trusts (GRATs) Likely the most effective and popular advanced planning techniques are the use of a Grantor Retained Annuity Trust (“GRAT”) or an Intentionally Defective Grantor Trust (“IDGT”). The general idea of both techniques is to transfer assets expected to appreciate in an amount that exceeds the current month’s Applicable Federal Rate or Section 7520 (120% of the AFR) rate and pass the excess growth to non-charitable beneficiaries, all while using little or none of the individual’s basic exclusion. In this part, I will discuss GRATs, which are likely the … Continue reading
Federal Gift and Estate Tax Planning- Part 3 of 7: Advanced Planning with ILITs
Creating and Irrevocable Life Insurance Trust aka ILIT The first advance planning technique I will discuss in this series of blogs and one of the simplest strategies is to have a life insurance policy held by an Irrevocable Life Insurance Trust aka an “ILIT.” While this strategy does not reduce the size of an individual’s taxable estate or estate taxes per se, it creates untaxed liquidity outside of their taxable estate to pay the taxes which may be due on the individual’s taxable estate. One question clients may have is why holding life insurance individually does not serve this same … Continue reading