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Planning

How To Plan a Will

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A Will is legal document prepared by an attorney that directs what happens to your assets after your lifetime. You can also use a Will to nominate a guardian for your minor children and to create Trust provisions to benefit minor children or other loved ones to whom you may not wish to leave assets outright. Your original Will should be stored in a safe, secure place accessible by your executor.

What happens if I die without a Will?

If you were to die tomorrow, how would your assets be distributed? If you are resident of North Carolina and die without a Will, your property will pass in accordance with North Carolina’s intestacy laws. Generally, your estate assets will be distributed as follows:

  • If you are married with children, the estate is divided between spouse and children.
  • If you are married with no children but have a living parent, the estate is divided between the spouse and the parent.
  • If you are not married but have children, the property goes to your children.
  • If you are not married and have no children, all property goes to your parents or siblings.

A Will is a useful tool to provide for the disposition of your property at your death and can also be used to provide for the guardianship of your minor children (children under 18). If you die and there is no surviving parent to care for your minor children, a permanent guardian will need to be appointed by the clerk of superior court. You need to consider who you would want to take care of your children on a daily basis and who you would want to handle the finances on behalf of your children.

A Will allows you to designate who will receive your property and in what proportion. You can also establish a Trust under a Will. This is called a Testamentary Trust. A Trust created while you are alive, known as a Living Trust, is a private document that cannot be viewed by the public. However, if a Trust is created by Will, which is a matter of public record, then the Trust will also be public record. See our article on Trusts to learn more.

How to create a Will

Anyone in North Carolina who is 18 years of age and of sound mind may make a Will. SECU recommends you consult a qualified estate planning attorney to create a Will. There are self-service templates that allow you to create your own Will; however, you should consult an attorney to obtain legal advice about your individual situation. A Will is a very important legal document and you should have sound advice in executing what may be the most important document in your life. Attorney fees to draft a Trust can vary depending on the complexity of your situation. You should ask about the fee before you agree to the services provided.

Choosing your executor

In your Will you will also nominate an executor, who is responsible for administering your final affairs and distributing the assets of your estate. An executor has many responsibilities and duties including collecting and valuing assets, reviewing and paying any outstanding bills and creditor claims, ensuring your final tax return is filed, and completing accurate and timely filings with the local clerk of superior court. When choosing your executor it is important to consider who has the competence, time, and organizational skills to administer the assets of your estate and ensure your estate plan is carried out according to your wishes.

Any competent person over the age of 18 can serve as executor. A financial institution or Trust company can also serve as executor. SECU through Members Trust Company offers Corporate Executor Services to handle the estate settlement process, helping to relieve family members and friends of this burden at a time when they are grieving. SECU Trust Services has the expertise to effectively settle estates, adhering to final instructions and fiduciary responsibilities.

Guardianship of minor children

In your Will, you can nominate who you would prefer to step in and take care of your minor children (children under the age of majority, which is 18 in North Carolina) as guardian after your lifetime. If you die and there is no surviving parent to care for your minor children, a permanent guardian will need to be appointed by the clerk of superior court. You should consider who you would want to take care of your children on a daily basis and handle the finances on behalf of your children.

Types of guardians:

  • A guardian of the person handles the daily physical care of your children, such as food, clothing, shelter, and school.
  • A guardian of the estate handles the finances for your children.
  • A general guardian serves in both roles.

Testamentary Trust provisions

A Will also allows you to create a Testamentary Trust, or a Trust under Will, to control how and when your property is distributed to your beneficiaries. If you were to leave assets outright to a minor child, those funds would likely need to be managed by a guardian of the estate appointed by the clerk of superior court. When the child turns 18, any remaining funds are transferred to them directly.

With a Testamentary Trust, you appoint a trustee to manage the assets for your child’s benefit until a more responsible age. You can also provide specific instructions to your trustee for how you would like the assets to be managed.

There are many other situations in which a Testamentary Trust may be beneficial, including:

  • Adult children or other loved ones with inexperience in managing financial assets, spendthrift concerns, or substance abuse issues
  • Beneficiaries with special needs who may risk losing government benefits if assets were left to them outright

Members also have the opportunity to name SECU Trust Services through Members Trust Company to manage Trust assets and oversee distributions on behalf of beneficiaries.

Will Substitutes

It is important to note that not all property can be disposed of by Will or by intestate succession. The items listed below are known as Will Substitutes because these items pass according to the terms of the agreement or ownership, not the terms of your Will.

  • Life insurance proceeds will be paid to the named beneficiary.
  • Pensions funds, retirement accounts, and Individual Retirement Accounts (IRAs) will be payable to the designated beneficiary. If no beneficiary is designated, proceeds will be payable to your estate.
  • Payable on Death designations will be payable to the designated beneficiary.
  • Property owned jointly with right of survivorship will pass to the surviving owner.
  • Deeds of Title will transfer according to the deed.
  • Living Trust items will pass according to the terms of the Trust document.

When to change (amend) a Will

As circumstances in your life change, you may want to update your Will to reflect these changes. You may wish to change your Will to provide for the following life events:

  • Marriage, separation, or divorce
  • Birth or adoption of a child
  • Death of a spouse or child
  • Moving to a different state

You should work with a qualified estate planning attorney to make changes to your Will. It is not advisable to make changes on your own, including any hand-written notes, as it could create issues when the time comes for your executor to admit the Will to probate.