When people say that real property (which refers to real estate such as your home, as opposed to personal property such as your chairs, tables, jewelry, etc) passes “outside of probate” what does that mean? Simply put – real estate transfers to the new owner at the time of the decedent’s death. It is not subject to the probate process and it transfers immediately (with some provisions that we touch on below).
While it is never something we want to consider, planning for incapacity is an important part of making an estate plan. There are many methods and tools available to make sure that your wishes are respected and that the people you trust the most will be the ones making important decisions on your behalf.
Some useful tools to consider include:
- Health Care Power of Attorney: A health care power of attorney becomes effective after a physician determines that you are unable to make or communicate health care decisions yourself. It is a legal document giving authority to the person (or people) of your choosing who you trust to make medical decisions on your behalf.
- Advance Directive / Living Will: A living will is the legal document that you can use to direct whether you want your life prolonged in specific circumstances. It is a great way to be able to direct your health care power of attorney so that they can best champion your wishes in the event that you cannot make them clear at the time.
- Advance Instruction for Mental Health Treatment: An advance instruction for mental health treatment works much like an advance directive or living will, but instead applies when one lacks the capacity to make or communicate mental health treatment decisions. This document gives your appointed agent the power to make decisions regarding mental health treatment – and includes specific directions for your agent to follow regarding the use of medication, shock treatment, and/or admission to a mental health facility.
- Power of Attorney: A durable POA is a great choice for many people as it allows for you to appoint an attorney-in-fact who can basically step in to your shoes and act on your behalf with regard to your financial affairs.
- Revocable Living Trust: While you can be your own trustee of your RLT during your lifetime, you can also appoint a secondary, or successor, trustee to take over in the event of incapacity. Since a trustee only has power over the property held in trust and subject to the trust document itself, the grant of power is generally less broad than a POA, creating an RLT may be an option to consider if you want to put greater restrictions on the actions of your attorney-in-fact.
- Standby Guardianships for Minors: if you have minor children but become incapacitated, having a standby guardian for any minor in place can ensure that the people you trust the most will be able to fill in for you to make decisions on behalf of the child.
We highly recommend that you put a plan in place so your wishes are followed in the event of incapacity, and perform periodic reviews of your documents to make sure nothing needs to be changed or updated.
Titling a Car as Joint Tenants With Right of Survivorship
Your vehicle may be one of your most valuable assets, next to your home, that you own. If you rent, it may be your most valuable asset. If something happens to you, what will your partner or spouse need to do with it? Will they need the cash value of the vehicle to pay for your expenses? If so, it might require that several probate hoops be jumped through in order to sell it. In this situation, wouldn’t it be nice if you could just take the title and death certificate to the DMV? Well, owning a car as joint tenants with right of survivorship would allow just that - and is about to get easier as of January 1, 2017.
First, owning a car with your spouse/partner/family member as joint tenants with right of survivorship (JTWROS) means that, upon the passing of one of the joint tenants, ownership will be consolidated in the surviving tenant. Functionally, for estate planning purposes, this means that when one owner passes away the car is wholly owned by the survivor.
Second, this allows the car to avoid the probate process. Generally, if just you or your partner own the car separately, ownership will not pass until the probate process is completed. This can take a lot of time depending on the size and complexity of the estate.
Third, titling a car (or other vehicle) as JTWROS in NC is totally doable and about to get easier. For sometime now, the DMV has allowed people to to write in the designation “JTWROS” on the certificate of title application. As of January 1, 2017, the form will contain a “preprinted option” for co-owners to choose JTWROS.
Curious how this will impact you and your loved ones? Feel free to reach out to us to discuss it all in more detail.