Our clients frequently ask us what we would recommend as the number one estate planning tool that every person should have. As attorneys, we advocate that every individual should have at least all five basic estate planning documents: a will, financial power of attorney, health care power of attorney, advance directive for natural death, and a HIPAA compliant medical release. However, if we had to choose the most important document, we would generally recommend the financial power of attorney. Read on to learn why!
When we assess a client’s estate planning situation, most are concerned with executing a valid will to determine where his or her assets will go at death. While important, and oftentimes extremely necessary to effectuate the correct disposition, North Carolina has a fallback statute for intestacy (the term that we use when someone dies without a will). Generally, assets are shared between family members at death if you have no will in place at the time of your passing. Although it is not ideal to die without a will, your assets will still be distributed amongst the family members closest to you if you pass away prior to executing one (it just may not be the family of your choice with the maximum protections available).
Likewise, North Carolina has a fallback statute in place if you fail to execute a health care power of attorney, advance directive for natural death, and/or HIPAA compliant medical release prior to needing emergency medical care. Our state statute designates priority for next of kin to make medical decisions on your behalf if you lack the capacity to make them for yourself. For this reason, although also not ideal, loved ones will still be able to make health care decisions for you if you fail to execute a health care power of attorney prior to needing assistance with medical decisions.
However, for financial powers of attorney (also known as general durable powers of attorney), our state has no fallback statutory provision to protect you if you fail to execute one prior to losing the capacity to make your own financial decisions. In North Carolina, we must seek guardianship over individuals who lack capacity through the utilization of an incompetency proceeding in court. This is often time-consuming, expensive, and can be humiliating to the person who may be at the beginning stages of needing assistance with managing their financial affairs due to age, accident, or disease. For this reason, we recommend that every person execute, at the very least, a valid general durable power of attorney appointing a trusted agent to manage his or her assets in the event of worst-case scenarios. Email me today at email@example.com so that we can set up the estate plan that is right for you!
With this knowledge, now you can Rest Easy.