Effect of Separation and Divorce on Estate Planning in NC

If you and your spouse are separated or you have recently divorced, this blog will summarize the relevant North Carolina statutes.         Separation and Estate Planning A separation alone has no legal effect on your estate plan.  If you and your spouse have executed a separation agreement, it will likely have reciprocal renunciations of statutory spousal rights such as the Year’s Allowance, Intestate Succession, and the Elective Share.  These spousal rights exist regardless of whether your Will or Trust includes your spouse. As my Wills and Trusts professor always said, “you can’t disinherit your spouse in North Carolina.”  Without a … Continue reading

2024 Gift, Estate and Generation-Skipping Tax Exclusions

The unified lifetime general gift and estate exclusion, the generation-skipping gift and estate tax exclusion, and the annual gift tax exclusion are typically adjusted annually for inflation.   On November 9, 2023, the IRS announced an increased exclusion for all three which will become effective on January 1, 2024. The annual gift tax exclusion will increase from $17,000 to $18,000 in 2024.  This is the amount one can gift to a recipient during the year without filing a gift tax return and, therefore, without using any of their unified gift and estate tax exclusion.  With gift splitting, married couples will be … Continue reading

Asset Protection in North Carolina (Part 2)

One of the primary strategies for protecting real estate for long-term care and Medicaid purposes involves a special kind of deed converting the real estate to a non-countable asset while also making it non-recoverable from the Medicaid estate recovery laws.  Although generally used for Medicaid planning, I often inform clients that, in the event they never need long-term care or to apply for Medicaid, the deed provides a multitude of other benefits including general asset protection and probate avoidance. While changing the character of real estate ownership does not exempt the property from the claims of creditors, it can make … Continue reading

Asset Protection in North Carolina (Part 1)

I strive to write blogs that hit on the most frequent areas my clients inquire about in the first meeting. One of the most common, if not the most common, comments from clients in the first meeting is “we just want make sure things are protected”, “how can I protect what I have?”,  or something along those general lines. These are, of course, very general comments so the natural next step is to find out exactly what the client means in order to begin formulating specific estate planning goals. In prior blogs, I have focused on long-term care expenses as … Continue reading

What’s the Deal with Death Taxes?

In my experience, one of the initial questions from clients is what can I do to minimize estate taxes? In many cases, clients initially express an interest in creating a trust based on the notion that it is needed to minimize taxes. While there are many types of advanced planning trusts which are intended to remove assets or appreciation from a person’s taxable estate, the benefits of a standard revocable living trusts commonly used in estate planning typically does not include avoidance of estate taxes because any assets transferred to a revocable living trust remain in the settlor’s (the person … Continue reading

The Cost of Estate Planning vs the Cost of No Plan

Many people may consider the cost of Estate Planning to be prohibitive. I’d like to dispel that notion, particularly compared to some of the possible alternatives. A reasonable analogy can be made to insurance (health, car, or home)—although we may grumble about paying for insurance, we know that not paying for insurance can be exponentially more expensive! The same is true of Estate Planning. In the following paragraphs I’ll describe the simplest complete Estate Plan commonly used; please note that if your circumstances require more complexity the pitfalls associated would multiply in complexity and ultimately cost as well. An Estate … Continue reading

5 Law Firm Carolinas Attorneys Recognized in The Best Lawyers in America

Five attorneys at Law Firm Carolinas have been named to the 2024 Edition of The Best Lawyers in America. Carole Albright, who is a Board Certified Specialist in Family Law, has been recognized in the practice of Family Law. Keith Black, who is a Board Certified Specialist in Family Law, has been recognized in the practices of Family Law and Family Law Mediation. Steven Black, who is a Board Certified Specialist in Residential Real Estate, has been recognized in the practice of Real Estate Law and Community Association (HOA and condo) Law. Jim Slaughter has been recognized in the practices … Continue reading

Guide to Fiduciary Compensation: Part 3 – Trustees

North Carolina courts have provided that a “fiduciary relation” exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.  Furthermore, North Carolina courts provide that a fiduciary duty can arise by operation of law or based on the facts and circumstances.  In the case of estate planning and estate administration, we are speaking of clearly defined fiduciary roles which arise as an operation of law.  The primary examples are agent and … Continue reading

Guide to Fiduciary Compensation: Part 2 – Personal Representatives

North Carolina courts have provided that a “fiduciary relation” exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.  Furthermore, North Carolina courts provide that a fiduciary duty can arise by operation of law or based on the facts and circumstances.  In the case of estate planning and estate administration, we are speaking of clearly defined fiduciary roles which arise as an operation of law.  The primary examples are agent and … Continue reading

Guide to Fiduciary Compensation: Part 1 – Agents under Powers of Attorney

North Carolina courts have provided that a “fiduciary relation” exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.  Furthermore, North Carolina courts provide that a fiduciary duty can arise by operation of law or based on the facts and circumstances.  In the case of estate planning and estate administration, we are speaking of clearly defined fiduciary roles which arise as an operation of law.  The primary examples are agent and … Continue reading

North Carolina’s Archaic Laws on “Legitimacy”

While many are fortunate enough to create a Last Will and Testament during their life dictating the disposition of their estates, many individuals pass away unexpectedly or simply lack the resources, knowledge, or motivation to create one prior to death.  These individuals are referred to as Intestates and, for individuals who pass away as residents of North Carolina, the disposition of their estates is dictated by the North Carolina Intestate Succession Act.  The North Carolina Intestate Succession Act (Chapter 29 of the North Carolina General Statutes) provides the scheme by which property passes from a person who dies without a … Continue reading

Filing an Income Tax Return for a Deceased Person

While I am not a CPA or tax attorney, I am often confronted with tax matters in my estate planning and estate administration practice.  In this blog, I will focus on filing any outstanding federal and state income tax returns for a deceased individual. As a disclaimer, this blog should not be taken to provide tax advice and is intended only as general information on the types of returns and appropriate parties to sign. Information in this blog is gathered and, in some places, quoted directly from irs.gov. Consultation with a CPA is highly encouraged before any filing decisions or … Continue reading

Filing an Income Tax Return for an Estate Vs. Filing an Estate Tax Return

While I am not a CPA or tax attorney, I am often confronted with tax matters in my estate planning and estate administration practice. In this blog, I will focus on federal income tax returns for estates (Form 1041) versus federal Estate (and Generation-Skipping Transfer) tax returns (Form 706). As a disclaimer, this blog should not be taken to provide tax advice and is intended only as general information on the types of returns. Information in this blog is gathered and, in some places, quoted directly from irs.gov. Consultation with a CPA is highly encouraged before any filing decisions or … Continue reading

Tenants-in-Common: A Common Complaint and an Untenable Affair

With my primary areas of practice in estate planning, estates and real estate, co-owned real estate is a frequently discussed topic with clients.  North Carolina recognizes three types of co-ownership in real estate.  First, tenancy-by-the-entirety is a type of co-ownership in real property reserved exclusively for spouses.  Tenancy-by-the-entirety has built in rights of survivorship and protections against the creditors of one spouse.  Second, joint tenancy is a type of co-ownership for non-spouses with rights of survivorship which means when one co-owner dies, their share is automatically vested in the surviving owner/s.  Joint tenancy in North Carolina at one time required … Continue reading

Estate Planning and Capacity: In Theory and in Practice

North Carolina requires the requisite capacity for an individual to sign legal documents.  Different legal documents require different levels of capacity.  Executing a Last Will and Testament requires testamentary capacity.  Executing a power of attorney requires contractual capacity.  Other legal instruments such as executing a deed require their own type of capacity.  Of importance, there is a presumption that every individual has capacity.  Declining mental and physical health are not enough to overcome this presumption, but clear indications of incapacity derived through conversations with an individual or medical information may overcome such presumption.   Additionally, capacity is not always fixed but … Continue reading

Health Care and Estate Planning: Legal Documents versus Medical Orders

The two primary health care documents attorneys prepare for clients as part of an estate plan are a health care power of attorney and an advance directive.  An advance directive is also referred to as a “living will” or a “declaration for a natural death.”  A health care power of attorney may contain an advance directive, in which case there may be only one multipurpose health care document in an estate plan. Health Care Powers of Attorney A health care power of attorney is a document where the principal appoints an agent to make major medical decisions on their behalf … Continue reading

Health Care and Estate Planning: Legal Documents versus Medical Orders

The two primary health care documents attorneys prepare for clients as part of an estate plan are a health care power of attorney and an advance directive.  An advance directive is also referred to as a “living will” or a “declaration for a natural death.”  A health care power of attorney may contain an advance directive, in which case there may be only one multipurpose health care document in an estate plan. Health Care Powers of Attorney A health care power of attorney is a document where the principal appoints an agent to make health care decisions on their behalf … Continue reading

Physiology and Estate Planning: An Imperfect Pair

Early in my career and as I began specializing my practice in estate planning, I always found aspects of drafting and explaining health care powers of attorney and advance directives to be peculiar to my background.  Using terminology such as “persistent vegetative state”, “advanced dementia” and “artificial hydration and nutrition” felt out of place in a law office.  Additionally, evaluating a person’s mental capacity requisite to execute certain legal documents was daunting with no academic background in physiology.  I had not taken so much as a basic biology course since my freshman year at North Carolina State University circa 2002/2003.  … Continue reading

Ad Valorem Real Property Tax Exclusions in North Carolina

All homeowners are responsible for real property taxes collected by the local taxing authority.  The antiquated legal terminology for this type of tax is an ad valorem tax, which is defined as a property tax based on the assessed value of the property, which may or may not be equivalent to its market value.  The local taxing authority assesses the value of your home or other real property and charges you a tax based on the applicable tax rate.  You can also make a timely appeal of an assessed value determination.  There are many programs and regulations in North Carolina … Continue reading

Law Firm Carolinas Named to Fast 50 List

Law Firm Carolinas has been named by the Triad Business Journal to its “Fast 50 List,” which consists of the 50 fastest growing businesses in the Triad. It is the firm’s third recognition on the Fast 50 list. Managing Partner Carole Albright points to several examples of the firm’s growth over the past three years, including the purchase of a larger Charlotte office, renovations in the Greensboro office, and the opening of several new offices, for six total—Greensboro, Charlotte, Raleigh, Wilmington, Columbia (SC), and Greenville (SC). Partner Jon Raymer accepted the firm’s Fast 50 recognition at the Business Journal’s recognition … Continue reading