Intestacy

If you are a resident of North Carolina and decide not to draft a Will, the State of North Carolina has already written a Will for you. This is what it contains:

IF YOUR SPOUSE SURVIVES YOU:

If you have no parents, children or descendants of that survive you:

Your surviving spouse inherits 100 percent of your estate.

If at least one of your parents survives you, but you have no children or descendants of children:

Your surviving spouse inherits the first $50,000 of personal property, one-half of your remaining personal property and one-half of all the real property (land) in your estate. Property owned by spouses with right of survivorship is not included in this calculation.

Your parent(s) will receive the rest of your estate.

If one child, or descendants from a deceased child, survive you:

Your surviving spouse inherits the first $30,000 of personal property, one-half of your remaining personal property and one-half of all the real property (land) in your estate. Property owned by spouses with right of survivorship is not included in this calculation.

Your child or the descendants of your child will receive the rest of your estate.

If two or more children, or descendants of children, survive you:

Your surviving spouse inherits the first $30,000 of personal property, one-third of your remaining personal property and one-third of all the real property (land) in your estate. Property owned by spouses with right of survivorship is not included in this calculation.

Your children or the descendants of your children will receive the rest of your estate.

IF YOU HAVE NO SURVIVING SPOUSE:

If you have any children or descendants of children:

Your children or the descendants of your children will receive your entire estate.

If you do not have children or descendants of children:

If you die without any children, then your estate will pass in the following order. If there is any member of a group listed below, then the members of that group will inherit all of your estate:

Parent(s);
Brother(s) and/or Sister(s);
One-half to paternal grandparents (or if deceased, to paternal uncles, aunts or their descendants) and one-half to maternal grandparents (or if deceased, to maternal uncles, aunts or their descendants).

IF YOU HAVE NO RELATIVES:

If there are no children, parents, grandparents, brothers, sisters, aunts, uncles, and no descendants of any such persons surviving you, then your entire estate will be given to the State of North Carolina to be used to aid certain students who are residents of the State and who have enrolled in public institutions of higher education.

CALCULATING THE SHARES OF YOUR BENEFICIARIES IF YOU HAVE NO WILL:

Many people are surprised to learn how North Carolina chooses to calculate the shares of the beneficiaries if there is no Will. Here is an example of how shares are calculated.

Jane and John Smith had four children: Anne, Bobby, Cindy and Donald. John Smith died and his wife, Jane, never wrote a Will. When Jane later dies, Anne and Cindy survive her. Bobby had predeceased his mother, leaving one child, Roseanne. Donald had also predeceased his mother, leaving four children; Keith, Danny, Chris and Laurie. Jane Smith’s estate is valued at $400,000, after creditors and taxes.

Anne and Cindy would each inherit $100,000 (each receiving 1/4 of $400,000). The five grandchildren, Roseanne, Keith, Danny, Chris and Laurie, would each inherit $40,000 (each receiving 1/5 of $200,000). (Note: the children of the two surviving children, such as Ralph, are not entitled to receive any of the estate.)

Many people assume that Roseanne would have inherited her deceased father's entire share of $100,000. Many people would also assume that Roseanne’s four cousins would have to share their deceased father's share of $100,000, giving them only $25,000 each. However, this is not the way that North Carolina calculates shares. Instead, North Carolina redirects a portion of Bobby's share to the children of Donald in order to "equalize" the shares that each grandchild receives.

If, like most people, you would prefer that the result be $100,000 for Roseanne and $25,000 to each of Donald's children, then you need a Will.

COMMON PROBLEMS WITH THE N.C. INTESTACY "WILL":

The following are situations where serious problems can easily result from failing to prepare a Will:

Second marriages with children from prior marriages;
Estates subject to federal and/or North Carolina estate taxes;
Spouses in a nursing/care facility or possibly entering a nursing/care facility; or
Recipients of State or federal public assistance benefits (i.e. Medicaid).

ESTATE PLANNING: THE "WILL" IS JUST THE BEGINNING:

Even with a Will, your estate planning is not complete! Ultimately, your Will is only going to control the distribution of your property after your death. For most people, the far greater concern is how their property and affairs will be controlled in the event that they are incapacitated by an illness, such as a stroke or coma. You can control how your affairs are handled by preparing a Durable Power of Attorney for financial or business matters and a Health Care Power of Attorney for health-related matters. If you fail to prepare these documents and become incapacitated, then your family will have to obtain a Guardianship over you. Guardianship is a process by which the State controls your affairs. Guardians are appointed by judicial process and must continually report to the Court. Unfortunately, guardianship is often expensive and burdensome.

A related concern arises when there has been a divorce in the past. Recent court rulings and federal regulations involving the Employee Retirement Income Security Act (ERISA) could allow your ex-spouse to claim a share of your IRA, 401(k) and/or life insurance benefits if you fail to properly name a beneficiary for all such assets. This could happen regardless of having a final decree of divorce.

An attorney experienced in estate planning matters can be of invaluable assistance in helping you develop a plan to deal with the possibility of future incapacity or death.

Serving:

Alleghany Ashe

Carrabus

Davidson

Davie

Forsyth Iredell

Rowan

Stokes

Surry

Watauga

Wilkes Yadkin

Counties