A Cautionary Tale of Estate Planning Missteps
There’s no doubt that estate planning is for everyone. Even a simple will can make a world of difference. But proper execution of that same simple will is just as important. As they say, the devil is in the details. In estate planning, what may seem like minor details can often cause the most significant complications.
Scenario
Consider the following scenario: Mr. Smith, a well-meaning gentleman who takes pride in doing things himself, decides to draft both a will and trust. He finds some forms online and manages to sign them in front of two witnesses, as required by North Carolina law. However, the form he found did not include a notary block, making it “non-self-proving.” Additionally, he establishes the trust but fails to fund it properly, leaving several assets outside of its control.
When he passes away, his family expects a smooth transition of assets. Instead, they find themselves mired in a protracted probate process. Because the will isn't self-proving, the probate court requires Mr. Smith’s family to track down the witnesses who signed his will and have them sign affidavits. Locating these folks proves challenging. One has moved out of state and the other is unresponsive. This process drags on for six months, during which time the estate's assets remain frozen.
Meanwhile, the trust, intended to bypass probate, holds no assets because Mr. Smith never took the additional step of retitling them. As a result, the very mechanism designed to simplify the estate's administration offers no relief.
Lessons Learned
There are two primary lessons to be learned from this cautionary tale:
Self-Proving Wills: In North Carolina, notarization isn't required for a will to be valid, but having it notarized in accordance with N.C. Gen. Stat. § 31‑11.6 makes it “self-proving” which significantly simplifies the probate process.
Funding Trusts: When it comes to trusts, creating one is only the first step. Assets must be retitled in the name of the trust to ensure they avoid probate.
Final Thought
Mr. Smith's story serves as an important reminder that details like proper execution and funding matter. They can mean the difference between a seamless transition and an expensive probate quagmire. Consulting with an experienced estate planning attorney can help you avoid these missteps. For example, I not only draft estate planning documents for my clients but have them signed in my office as well to ensure proper execution.
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