Most people have never read anything about probate avoidance in North Carolina, and know little about the topic. While the idea of probate, and probate courts, is not exactly an exciting topic for discussion, understanding the basic ideas surrounding this important area of the law is valuable, especially if you are thinking of creating an estate plan. Most people who create plans in the Greensboro, North Carolina area use at least some probate avoidance tools. Knowing what these tools do and how they work will help you get the most from the planning process.
Probate Avoidance in North Carolina: What is Probate?
Probate is the legal process that takes place after someone dies. Who inherits the deceased person’s property? Who files the will with the court? Who determines if the will is valid? Who takes care of the deceased person’s children? Who pays debts the deceased left behind? Probate laws exist to answer all of these questions and to provide a uniform, fair, and impartial way of managing them.
Every state has its own set of probate laws. While some of these laws differ, and can differ significantly, the probate process serves the same purposes regardless of where you live.
Probate Avoidance in North Carolina: How do you avoid probate?
If you own property as an individual, that property will typically have to go through probate after you die. But, not all property you own is owned as an individual, and not all property has to go through probate. A probate avoidance plan is a collection of tools or strategies that will allow you to transfer your property to others after you die, and do so outside of the probate process.
For example, one of the most popular probate avoidance tools used today is the revocable living trust. Sometimes referred to as simply a living trust, the revocable living trust is very much like a small company. The sole purpose of the company is to own the property you currently own as an individual, and allow you to use it just as you would normally do so. But, since the trust can continue to exist after you die, it can then distribute the property it owns to those you choose, and do so outside of the probate process.
Other commonly used tax avoidance strategies or tools include other types of trusts, transfer-on-death assets, and jointly owned property. To develop a probate avoidance plan, you and your attorney will look at all the tools available to determine what is best for you.
Probate Avoidance in North Carolina: Can probate avoidance help me reduce an estate tax bill?
No. Probate and estate taxes are almost typically non-overlapping subjects. Probate laws are state laws that ensure the property and affairs of the deceased are dealt with uniformly, while the estate tax is a federal tax that applies to the value of the estate left by a deceased person. Some states also impose a state-level estate tax, but North Carolina is not one of them.
A probate avoidance plan will help you and your family by ensuring that your loved ones will have to jump through fewer hoops to receive inheritances and settle your estate than they would if you didn’t have a plan. But, regardless of what kind of plan you create, probate will not affect how much, if anything, your estate will have to pay as an estate tax. While there are strategies you can take to minimize an estate tax bill, this is a separate issue from probate avoidance.
Probate Avoidance in North Carolina: Isn’t probate avoidance a crime?
No. Probate is a legal system that applies after a person dies, and the tools that allow you to minimize or avoid that system are recognized by, or created by, specific laws. Creating a probate avoidance plan is legal, wise, and beneficial.
Probate Avoidance in North Carolina: How do I get started?
To create a probate avoidance plan you need to first do one thing: contact an estate planning and probate attorney. Probate laws can be complicated and hard to apply. Not only are there state-specific statutes involved, there are also numerous court decisions that you have to take into account when you create a plan.
Further, the options you have can be difficult to decide between if you don’t have a background in probate law. Not all probate avoidance tools are created equal, and while one tool might suit one person, someone else might need something completely different.
So, if you want to talk about your planning options or get started on the estate planning and probate avoidance path, contact us at your earliest convenience.