As a female, millennial estate planning attorney, I'm passionate about two things: (1) helping clients implement an estate plan to preserve, safeguard, and transfer their wealth, and (2) Taylor Swift. Below, I offer 13 estate planning insights inspired by song titles from Taylor Swift's latest album, “The Tortured Poets Department” (“TTPD”).
1. The Tortured Estates Department. Among the fundamental estate planning tools we employ are wills and revocable trusts.
A will is a legal instrument that provides for the distribution of your assets upon your death. A will becomes effective upon the death of the testator or testatrix (the person who makes the will) and appoints guardians for minor children.
A trust is a legal instrument created during the grantor's lifetime (the person establishing the trust). At the time the trust is signed, it becomes effective. The trustee, often initially the grantor, is in control of distributing the trust assets pursuant to the provisions in the trust agreement. Revocable trusts allow for flexibility in managing the trust's assets during the grantor's lifetime and upon his or her death.
A revocable trust can offer distinct advantages over a will. Unlike a will, a revocable trust maintains privacy, as it does not become part of the public record upon your death. Further, assets held by a trust bypass probate fees, potentially reducing estate administration costs. Additionally, revocable trusts facilitate seamless asset management during your lifetime and beyond.
The choice between a will or revocable trust often depends on the individual's familial and financial dynamics, desire for privacy, and desire for control over asset distribution.
2. I Can Do It With a Broken Heart. In addition to wills and trusts, our services extend to drafting Durable (General) Powers of Attorney, Health Care Powers of Attorney, and Advanced Directives (aka a Desire for a Natural Death or a living will). These legal documents empower you to manage your personal and financial affairs under challenging circumstances, so you can even do it with a broken heart.
A Durable (General) Power of Attorney names an attorney-in-fact that you authorize to handle your business and financial affairs while you are living and competent or incapacitated. For example, if you undergo broken heart surgery, your attorney-in-fact could pay your bills while you are unable to do so.
A Health Care Power of Attorney appoints a Health Care Agent that you authorize to make medical decisions for you when you cannot make such decisions for yourself, even if you are not terminally ill. For example, if your doctor must make a medical decision while you undergo broken heart surgery, your health care agent can ensure that your healthcare preferences are upheld.
An Advanced Directive tells your doctor and family your wishes regarding life-prolonging measures if you have a terminal and incurable illness and can no longer speak for yourself.
We advise all adults to establish these documents to prepare for unforeseen eventualities. Parents should ensure their young adult children also have these provisions in place, as parental authority ceases once children turn eighteen.
3. Down Bad. Taylor Swift sings “I might just die, it would make no difference” in the chorus of Down Bad (my favorite song off of the TTPD album). It isn't often that I disagree with Ms. Swift. However, if you pass away without any estate plan in place, whether that be a will or trust, your loved ones may face unanticipated negative consequences, and it certainly does make a difference.
In North Carolina, intestate succession laws dictate asset distribution when no will or trust is in place. Contrary to common assumptions, assets may not automatically pass to a surviving spouse, particularly in scenarios involving children. For example, if an intestate decedent leaves a living spouse and two children, under North Carolina law, one-third of the decedent's property could be distributed to his or her living spouse, and the other two-thirds of the decedent's property could be equally divided among his or her children. This scenario could be further complicated if the decedent's children are minors and underscores the critical importance of tailored estate planning to safeguard your intended beneficiaries.
4. I Look in People's Windows. Estate plans are not one-size-fits-all. In fact, estate plans are quite flexible. A simple will may suffice for one client, while it may be more beneficial for another client to have a more complex plan that includes a revocable trust. It is important that our clients allow us to look through their windows to help us better understand their family and financial dynamics so we can create the best estate plan that fits their specific needs.
5. Chloe or Sam or Sophia or Marcus. Deciding between Chloe or Sam or Sophia or Marcus to serve as your fiduciary is a deeply personal choice.
An executor is the person or entity you name in your will who, upon your death, is tasked with collecting your assets, paying your debts and taxes, and distributing your assets pursuant to the provisions in your will.
Similarly, a trustee is a person or entity you designate in your trust to manage and ultimately distribute the assets that are held in your trust for the benefit of your beneficiaries.
When deciding who to name as your executor or trustee, you should name someone you trust and is competent to serve in such role. In addition, it is important to consider the longevity of the trustee role. Some trusts can exist for many years, so it would be prudent to consider your trustee's age and health to ensure that he or she can fulfill the trustee's duties.
An attorney-in-fact is an individual you designate in your general power of attorney. In your general power of attorney, you authorize your attorney-in-fact to act on your behalf in business or financial matters. For this reason, you should name someone who is financially responsible, trustworthy, and understands your financial and business preferences.
Likewise, a health care agent is an individual you designate in your health care power of attorney that makes medical decisions on your behalf, if you are unable to communicate your wishes. Because your health care agent may make important decisions on your behalf, they should be someone who you trust understands your health care preferences and can make difficult decisions based on your wishes.
Overall, any fiduciary you name should be an individual or entity you trust and is competent to serve in the designated role. In addition, we recommend naming successor fiduciaries to serve in the event that your first choice fails or ceases to serve for any reason.
6. loml. Taylor Swift's song employs two uses of the acronym “loml,” those being “love of my life” and “loss of my life.” Similarly, our estate planning strategies encompass provisions for spouses and contingencies for the loss of beneficiaries or fiduciaries named in documents.
There are several ways to provide for your spouse in your estate plan. For example, your estate plan can provide that your property be distributed to your spouse outright upon your death. Depending on the amount and type of assets you hold, you may also wish that your assets be held in trust for the benefit of your spouse.
In addition, we recommend that, when you experience the loss of any family members, beneficiaries, or fiduciaries named in your estate planning documents, you review your estate plan to see if any updates are needed.
7. So High School. Tailoring estate plans to include provisions for children or grandchildren requires strategic foresight. One common provision we include in trusts for children or grandchildren is the HEMS standard (Health, Education, Maintenance, and Support). Trusts incorporating the HEMS standard provide structured guidance for asset distribution, ensuring beneficiaries' needs are met, even during formative years.
For example, if the beneficiary is So [in] High School, your trust may give the trustee the discretion to distribute any trust property for the beneficiary's education. So, the trustee may use trust assets to pay for tutoring or school supplies.
8. The Black Dog. Some clients wish to include their furry family members in their estate plan. There are a few estate planning strategies that you can implement to provide for the care of your pets upon your death. In your trust or will, you can direct that your pets be given to a certain family member or friend.
In some cases, you may want to create a “pet trust.” As the name suggests, a pet trust is a trust that provides specific terms regarding the care and maintenance of your pets upon your passing or incapacitation. In this trust, you can designate a caretaker for your pets, allocate assets to the trust, and provide guidelines for how such assets should be used. A pet trust also provides for the disposition of the trust assets upon the passing of your pets.
9. imgonnagetyouback. The inherent flexibility of wills and revocable trusts allows for amendments and revocations in response to evolving life circumstances, such as familial and asset changes. For example, if your niece forgets your birthday one year, and you decide that youregonnagetherback, you are free to amend the terms of your will or revocable trust to remove her as a beneficiary. This adaptability ensures estate plans remain current and aligned with your evolving wishes throughout your lifetime.
10. Florida!!! Transitioning estate planning documents across state lines demands meticulous review to ensure compliance with varied legal requirements. Each state has different requirements that estate planning documents must adhere to for the documents be considered valid. If you plan to move states or have moved, it's important to review your estate planning documents to ensure they are drafted properly and comply with the laws of both states.
11. So Long, London. Owning international property or moving to a different country can introduce several complex estate planning challenges due to different countries' legal systems, tax implications, and practical considerations. However, these challenges can be addressed with thoughtful estate planning strategies.
If you own property in a different country, it is important to recognize that each country has different property laws regarding ownership, inheritance, and succession, as well as varying estate tax laws and thresholds. If you move countries or have dual citizenship, your estate planning documents may need to comply with the legal requirements of the jurisdictions in which you own property. International estate planning requires consideration of a multitude of legal and tax implications to effectively protect assets and minimize tax liabilities.
12. But Daddy I Love Him. Premarital agreements, an often overlooked tool in estate planning, offer strategic benefits by delineating asset rights and inheritance provisions in anticipation of divorce or death.
A premarital agreement is a contract between a couple executed before marriage. As it pertains to estate planning, premarital agreements can provide that neither party is obligated to make any provisions in their respective wills or other estate planning documents for the benefit of the other party. In addition, a premarital agreement can provide that each party waives their rights under North Carolina law to claim any statutory rights to receive property from the estate of the other party.
In the absence of a premarital agreement, one spouse cannot “disinherit” the other through their estate plan. In North Carolina, spouses are entitled to a statutory share of the deceased spouse's estate. The amount the surviving spouse may claim depends on the duration of the marriage, but it can be up to fifty percent of the deceased spouse's total net assets.
13. Alchemy. Estate plans turn to gold when we collaborate with your CPAs and financial advisors. The preparation and execution of your estate planning documents are only the first phase of the estate planning process.
To ensure that your assets pass as intended under your estate plan, it is important that you review the ownership of your assets, as well as beneficiary designations of assets such as retirement accounts, life insurance policies, and bank accounts, which may not pass under your will or trust. Collaborating with your CPAs and financial advisors enhances the efficacy of your estate plan and ensures that all of your beneficiary designation forms are properly completed to adhere to your intended distribution wishes.
Navigating the complexities of estate planning demands “Taylored” strategies that honor your personal goals and safeguard your wealth. Working with a knowledgeable attorney ensures that your estate plan not only reflects your current intentions but also adapts to future circumstances with clarity and precision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.