Planning for the Inevitable

Death is not a fun topic to discuss, but it’s a sure thing for us mortals. Ben Franklin quipped that “the only thing sure in life is death and taxes,” and we talk about taxes all the time. The problem is that most people avoid talking about death-related issues, despite the fact that death is inevitable. With proper planning, you can place controls on your bequests at death, and gift wrap the inheritance you leave to protect your loved ones as well as insure that only the chosen ones receive your gift, when you want them to get it and in the way you want it received.

One of the most important aspects of planning for your death is having the right documents in place. However, many people are confused about what happens to your estate when you die. 50% of people don’t have legal documents, which places a huge burden on their families when a lifetime crisis occurs. At that time, loved ones must implement a guardianship proceeding in order to make necessary decisions. You can avoid this situation by naming a trusted agent in a proper financial and health care power of attorney. You should also have a valid will. Without one, the state will implement an inheritance plan at your death that is different from what you expect. Most people think that if they die without a will, the state will give their spouse their assets. In reality, your spouse and your children will inherit together based on a number of factors, including whether it’s a second marriage and how long you’ve been married. Avoid these types of problems by indicating your wishes in well-drafted legal documents.

With trust-based planning, you can avoid probate and court costs, and lower your family’s professional fees. Many don’t know that a $1 million estate will have roughly $6,000 in probate court costs in North Carolina. You can do trust-based planning for far less than the cost of probate, which makes trust-based planning much more viable for many families. In addition, many don’t know that they can use a trust to control their estate after they die. While trusts are not for everyone, trusts do make better planning documents and should be used by many—all well to do families; families with real estate in more than one state; families in second marriages; families with special needs children; families with estate tax issues; and any family with unique planning concerns.

For those considering a second marriage, in addition to a premarital agreement, we recommend trust-based planning to those clients who have children from a previous marriage. These clients often want to provide for their wives but ultimately leave their assets to their children; trust-based planning allows them to achieve this goal. We also recommend trust-based planning to those parents who wish for their assets to stay out of the hands of their children’s spouses and instead pass to their children and grandchildren. Our clients achieve this by leaving their children in control of their trust as the trustee. The property in the trust is not considered a marital asset, such that if the couple divorces, the money is untouchable. This allows the parent to control where their money goes after death and allows them to keep their money in the family.

There are several other ways to avoid probate than through the use of a trust. For example, if you have a long-term marriage, you can avoid probate after the death of the first spouse with property held jointly with right of survivorship (known as a tenancy by the entirety in North Carolina). You can also avoid probate through the use of beneficiary designations (for assets such as life insurance and retirement accounts). However, creditors that you owe at death may still attack this property. But, if you don’t owe any debt at your death, then it is possible to pass your property this way at death without court interference, probate costs, or professional fees. While owning property jointly with right of survivorship (or as a tenancy by the entirety) works well, be careful how you hold title to other assets. Frequently bankers and financial advisors will encourage you to own your accounts jointly with right of survivorship, which could ruin other estate planning. How you own title to your property can affect your overarching plan and whether it will work the way that you intend. Unfortunately, all these do-it-yourself methods require you to leave problem issues for someone else to solve.

Finally, purchasing a pre-paid funeral plan and providing detailed instructions to your loved ones can be extraordinarily helpful to your family. Rather than placing money into a trust account at the funeral home (which may go out of business), we recommend purchasing a life insurance policy with a funeral trust, which will be paid directly to the funeral home at your death. Funeral trusts do not require you or your loved ones to choose the location of the funeral service until death, which allows greater flexibility if you do not know where you will be living later in life. Irrevocable funeral plans (up to $15,000 in NC) are exempt assets (not countable) for Medicaid eligibility, Special Assistance eligibility, and VA Pension eligibility.

In addition, whether or not you get a pre-paid funeral plan, you should prepare written instructions letting your loved ones know whether you want to be cremated or buried, where you want to be buried or have your ashes spread, where you want your memorial service held, who you would like to speak at your service, and what scripture and hymns you would like at your service, and anything else important to you; while it may seem morbid, writing your obituary will give you the opportunity to tell your family the things about yourself that were important to you. Your instructions will alleviate the burden of planning from loved ones during a stressful time.

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.