Planning that Works

At W.G. Alexander & Associates, we pride ourselves on planning that works—that is, plans that result in your loved ones receiving your property the way you want and when you want with the least tax liability and the lowest administrative fees. However, good planning is more than just having the right documents in place. Sometimes plans don’t work because people don’t understand how their overarching estate plans work. How you hold title to your various properties can significantly alter the results of even the best documents. Having your documents and property titles reviewed by an experienced Elder Law attorney and then properly titling your assets to work with your documents will maximize your asset protection.

It’s important to have your documents reviewed at least every five years to ensure that no new laws have affected your planning. For example, if you created a revocable trust more than ten years ago, it is likely that your trust contains outdated estate tax planning provisions. Back then, estate taxes applied to all estates that were $1 million or more. At that time, many people needed revocable trust planning so that their children would avoid paying estate taxes. Today, the estate tax exemption is $5.34 million, meaning that estate taxes affect only the wealthiest families at death. As a result, most families would be better served by implementing income tax planning into their revocable trusts. For this reason, it is important to have an experienced Elder Law attorney review your estate plan for outdated provisions that could negatively affect your family at your death.

There are many other reasons why trusts can be helpful: for a second marriage, because of special needs for your children, for asset protection purposes, or for more sophisticated planning options. However, for many, trusts can be confusing and complicated. As a result, it is easy to make mistakes with trust-based planning. One of the biggest mistakes that people make is that they fail to transfer their property to the trustee. The trust, which is really just a contract, does not have any meaning unless you transfer property into it. Without properly funding your trust, you will ultimately create more trouble for your family at your death. All of your property will go through probate before going into your trust, creating additional probate and trust administration fees.

Most people don’t know that titling their property improperly can negatively affect their overarching estate plan. One reason that sophisticated trust plans fail is because as people acquire property (such as life insurance, annuities, bank accounts, or investments), they fail to consider the effect that titling their new assets will have on any previously created trusts. Their financial institution will fail to ask if they have a trust, as well as whether they want to title the new asset in the name of the trustee. Many people title their property without thinking about how it affects their overall plan. For example, most married people in North Carolina own their homes and other real property as Tenants by the Entirety. By virtue of the deed to their property, the survivor of the two will own the real estate outright. For this reason, married couple’s plans often don’t work because of how they hold title to their property, although for many this is exactly the result you want. People also often own their bank and investment accounts with their spouses jointly with right of survivorship. Regardless of what their trust or will says, the financial institution will pay the money in these accounts to the survivor at death because of these contracts. Similarly, both life insurance and retirement accounts (qualified plans such as 401ks, 403bs, etc.) are distributed by beneficiary designations. This money will be paid to the beneficiary indicated on your contract when you die, regardless of what your will or trust indicates. As a result, many plans fail when people hold their other assets jointly and forget to fund their trusts.

Finally, plans fail when people lack the right kinds of documents. As we get older, it is important to give a trusted agent more authority in a general durable power of attorney. Most people have statutory powers of attorney, which give limited authority to the agent to make only limited decisions. However, as you reach your 70s, seniors need a different type of power of attorney that will allow a trusted agent to protect their property in the event that they cannot do so for themselves.

If you or your loved one needs assistance with your estate plan, or if you have questions about government assistance programs such as Medicaid or Veteran’s Benefits or other Special Needs programs, consider W.G. Alexander & Associates – we offer a unique blend of asset protection, Elder Law and estate planning. You can also attend our free seminars, learn more through our website at, or call us at (919) 256-7000. Also, every Tuesday morning at 9 am, you can listen to our radio show, “Asset Protection Today,” on Talk Radio 850 WPTK (AM) with Attorney Bill Alexander.