Life, Death & Debt. What You Don't Know About A Will

6:20 PM, Nov 20, 2013   |    comments
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GREENSBORO, NC -- It's not your usual holiday gift. But knowing your family is taken care of is priceless.

Jennifer Koenig, a expert in estate planning with the firm Schell Bray is helping us understand wills.

Let's start with a misconception: If you don't have a will, the state will get everything.

"What happens to your assets (that is, what you own) at your death depends first on how those assets are owned. For example joint accounts, real estate owned by husband and wife will go to the spouse. But life insurance, retirement accounts, will go to whomever is listed as the beneficiary."

If you don't have a Will, then the laws of NC dictate who will get those assets. It depends on whether you are married, survived by children, parents, etc. If you are married with no children for example, your spouse gets your assests. But if for example you are married with children, your assets wil be divided between your spouse and children. If you are single with no children, the state will find your closest relative, starting with your parents.

Here's something else: You can't inherit debt. If a family member passes away, you are not liable for their debt unless you co-signed with them on the debt.

Wills often don't seem important until people have children. Jennifer says it's not enough to tell someone they are going to get the kids, you need to put it in writing. Again, the state will decide where the children go and the more your wishes are known, the better chances your wishes will be carried out.

Another misconception: If I'm married, my spouse will get everything.

"It is true that if you own assets jointly with your spouse with rights of survivorship, then those assets will pass to your spouse by survivorship. BUT, most people own something in their own name, whether that is a bank account or a vehicle. Those assets would pass under a will."

Also, administering someone's estate will be much easier and less expensive if proper planning has been done. The thing to remember about estate planning is that you may not be saving yourself time and money (because most people are not subject to estate tax), but you will be saving your loved ones time and money.

Jennifer says you should expect to pay anywhere from $500 to $1,000 for a will. That may have you seeing sticker shock and looking for a cheaper way, like an internet will you can do yourself.

"Unfortunately, we have seen in our office that a poorly written Will can be much worse than no Will at all. When a Will is not written by an attorney who is trained to understand the legal language involved, the Will may not be interpreted in a way that is what the maker intended."

Jennifer says people joke about "legalese", but the language is in there for a reason.

"For example, if I leave my house to my daughter, but I don't say what should happen if she dies before me, NC law provides that my daughter's children will get the house if she does die before me. That may not be what I wanted. Note that the result would be different if I left my house to a friend and that friend died before me."

If you have power of attorney for your parents, grandparents or family member, it doesn't extend past life.

"I find that this is one of the most misunderstood issues about estate planning. Powers of attorney are effective only when the person making the power of attorney is alive. Having someone's power of attorney does not give you any authority to settle their estate when they die. In order to have authority after death, you generally need to be appointed Executor or administrator of the estate."

You should look at your will once a year to make sure things haven't changed. And Jennifer suggests updating your will with a lawyer ever 3 years or so.

For more information, see the public service and pro bono section of the NC Bar Association's website. There you will find links to various resources, including pamphlets published by lawyers to help educate the public on issues including estate planning. There is also a link to the Lawyer Referral Service there.

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