What happens if I don’t make an estate plan?
Testate or Intestate?
Many folks don’t realize that they already have an estate plan in place the moment they take up residence in North Carolina. The North Carolina legislature has created a default estate plan for all its residents.
As to the first part, the legislature has a complex and lengthy process in place to appoint a Guardian of the Person, Guardian of the Estate, or General Guardian when someone is unable to make decisions for themself. That process involved a law suit that is filed against you alleging that you are not competent. The court generally appoints a Guardian ad Litem to meet with you and investigate the allegations in the complaint. Doctors and other experts will often be needed to testify and produce evidence of your competence. A judge will hear the case and make the decision about your competency. If the court deems you incompetent, another hearing is held to decide whether a guardian is needed, what type of guardian that should be, and who should be appointed.
Sometimes, if the court believes there is too much strife in the family or they don’t believe the family members are able to serve in the appropriate role, that may as the Department of Social Services, Adult Protective Service division to serve as your guardian. In addition, if the court appoints someone to manage your assets (either as a Guardian of your Estate or a General Guardian), the court will order them to post a bond that would cover any malfeasance or mistake. Then the guardian will be required to file accounts at least annually with the court to show exactly what has come into you and what has been spent on your behalf which become part of your court record.
And if that wasn’t bad enough, the clerk of court charges a fee per dollar of the assets being overseen by the guardian and the guardian can also be compensated. Finally, the attorney that your family likely hired to help with the process will also need to be paid. Needless to say, it is very important to avoid this lengthy and costly process.
The legislature has also created a plan for the second part to designate who gets what when you pass away. When a person dies without a Will, they are said to have died intestate. The legislature has an entire chapter of the statutes that answer the question of who gets what and how. While many people assume that if you pass away and leave behind a spouse that he or she would inherit everything, but that is sadly not the case most of the time.
For example, if you pass away and leave behind a wife and two minor children, your wife will receive one-third (1/3) of real estate in your name, the first $60,000 of personal property and accounts, plus one-third (1/3) of the balance and the children will split the rest. But if one or more of the children is a minor, that inheritance now has to be tracked by the courts in much the same way as the incompetency guardianship discussed above. Moreover, even if your wife is the children’s mother, she will likely have to get court permission to do things like sell the house. Let’s say you don’t have any children but are survived by your spouse and one or more of your parents. In that case, your parents would inherit a large portion of your personal property and individual bank accounts. I’ve never met anyone who likes this plan and it’s certainly not appropriate for everyone.