Charlotte Injury Lawyer Blog

They are cute, cuddly and part of the family; but what happens to your pet after you pass? Unfortunately, you are not allowed to leave items to your pet in a will in North Carolina, so how do you ensure your pet is taken care of? To many, pets feel more like a child than an animal who provides comfort through difficult times and can feel closer to a person than their own family and friends. So, it is very common for people to ensure that proper measures are in place for their pet to be taken care of after they pass.

Unfortunately, in North Carolina, any testamentary gift you leave for a pet will automatically be deemed void by the Court. However, this does not mean there are no options to provide for your pets after death. There are several steps you can take to guarantee your pet is well taken care of when you no longer can, and our estate attorneys can assist with the preparations

You can choose who will care for your pet after your death

Generally, if there are no legal instructions for the passing of a pet after death, your pet will go to the residuary beneficiary of your will, or to your next of kin (as determined by state law) if you do not have a will (intestate). This may or may not be the person you would choose to take care of your pet after your death. Although they may be a great person, they may have no idea how to properly take care of a pet, or have no desire to do so.

To ensure your pet goes to a person you believe will take the best care of them, you have two options to name a new owner for your pet: a provision in your will, or a revocable living trust.

Will. Legally, your pet is considered a piece of property and should be passed in your will just as any other piece of property, such as a ring, car or house. This means you have an opportunity to choose a new owner for your pet - the owner you believe will take the best care of your loving family member. You should also list an alternate owner in case your first choice is unable or unwilling to take your pet.

Revocable Living Trust. Instead of designating a new owner in your will, you may choose to use a revocable living trust. A trust is a document that serves the same purpose as a will, but avoids probate after your death. A living trust will allow you to transfer ownership of your pet at your death, but by making it a revocable trust, you can also change your mind at any time before your death. Just as with the trust, you should be sure to name an alternate.

You can leave money for your pet after your death

Many times when a person leaves their pet to a new owner, they also leave funds to care for the pet. There are a couple of options for doing this. You could leave money directly to the new owner to take care of the needs of the pet, or in some states (including North Carolina), you could set up a pet trust for the benefit of your pet.

Leaving money to the new owner. This is as simple as it sounds; you make a provision in your will in which you leave a specific amount of money to the new owner "for the care of your pet." It is important to note that even though you leave money with specific wording for the care of your pet, the new owner may or may not actually use the money for the care of the pet. A provision like this is not usually enforceable, so you would want to make sure that the person you leave your pet and/or money to is someone you trust to follow your wishes.

Pet Trust. North Carolina allows a person to set up a pet trust where you, as the creator of the trust, fund it with money or property (prior to, or at the time of your death), and leave specific instructions on how the funds should be distributed. You would also appoint who you would want to serve as trustee, which is the person who is responsible for managing the trust and following the instructions you leave for it. For example, you could fund the trust with $3,000 and leave instructions to distribute $50/month for your pet's food, supplies and toys.

What should be your next step?

Act now. As discussed above, you can set up a will or trust that will take care of your pet after your death. You should set this up immediately so it will available for the care of your pet if you were to become incapacitated before your death and can no longer care for the pet yourself.

Contact Hull & Chandler today to see what you can do now to ensure your pet is taken care of later.

In the battle between hiring an attorney or using a 'do it yourself' legal services website, who comes out on top? When you factor in all concerns such as cost, legality, personal contact and quality, what it really comes down to is getting what you pay for. As a Business Litigation and Estates attorney in Charlotte, North Carolina, I am often asked by potential clients why they should hire me and pay more when they can use online sites, such as Legal Zoom, and save money. Although using online legal services may seem like the fast, easy and inexpensive thing to do, there are many reasons why going to an attorney is the better option and the winner of this battle.

Personal Contact

The first factor to take into consideration is personal contact. When meeting with an attorney compared to logging on to a website, you are able to build a relationship. With this relationship, your attorney learns about you and your needs and will be able to assist you beyond your original expectations. An attorney is also able to determine if your needs are something you wouldn't have even considered. For example, if you think you need a copyright, you can go to an online service and plug in what you need, and you will instantly get a copyright. If you go to an attorney with the same need, you might find out you actually need a patent and not a copyright. Without this personal contact, you may not get what you actually need, and in the end, you'll end up wasting time and money. Unfortunately, this personal touch is not available through online services.

Quality

The next aspect to consider is quality. With online sites, a person fills out a basic template and a product is produced. How was your information transformed into the final product? Who knows, but it certainly is not tailored to your exact needs. When you hire an attorney, not only do we work side by side with you to ensure you understand all steps in the process, but we also customize and tailor everything to fit your individual needs. For example, when preparing your Will, there are many complexities that a website cannot ascertain by having you answer a blanket questionnaire. When you hire an attorney, we work with you to answer any questions and ensure your family is protected. A Will is your last chance to be heard and allowing a website to generate this document is not wise.

Cost

The price differential is probably the main reason patrons use online legal services over hiring an attorney. Unfortunately, as the saying goes, you get what you pay for. By working with an actual attorney, the overall price may be a bit higher, but you can be assured that you'll get exactly what you are looking for and exactly what you need. Furthermore, your attorney is only a phone call away, so if you have any questions or concerns throughout the process, you know there is always someone there to answer them.

Legality

The final thing to take into consideration when choosing who you want to represent you is legality. As shown in a recent article by the News and Observer, the North Carolina State Bar has decided to take on the leading online legal center, Legal Zoom, questioning whether or not their actions constituted the unauthorized practice of law. As a response, the company said that there were inaccuracies in the State Bar's claims, stressing that its services are automated and don't involve legal advice. So whether or not the site's practice is authorized, Legal Zoom admitted their services are automated, and thus confirmed all points listed above.

While I am sure most people will continue to marry for other reasons, and tax credit dating sites are probably not in our immediate future, estate planning and family law attorney should be aware of a new provision in the latest estate tax law. In particular, the portability of the unified estate tax credit from one spouse to the other.

After 10 years of anticipation, and with a full 14 days to spare, Congress passed the Tax Relief Act of 2010, providing some clarity regarding the future of the estate tax. The legislation extends the estate tax through 2012, reduces the top tax rate to 35% and increases the amount excluded from the estate tax to $5,000,000.00 per decedent. If further legislation does not make this law permanent, the pre 2000 tax laws will spring back and the top tax rate will be 60% with an exclusion amount of only $1,000,000.00. It is widely believed that the 2010 act will provide the framework for the estate tax going forward.

An interesting addition to the act is the portability of the tax exemption. Under prior estate tax laws the surviving spouse would gain no benefit from the deceased spouse's credit amount unless it was preserved through appropriate planning. Usually this required a credit shelter trust to be formed to preserve the benefit of the estate tax credit. Under the new legislation, the credit is portable as long as an estate tax return was filed (IRS form 706) showing how much of the credit was used by the decedent.

A surviving spouse could receive all of the assets from the decedent (using the marital deduction and none of the unified credit) file the estate tax return, and increase their estate tax credit to $10,000,000.00.

This tax change, if made permanent, should incentivize people to leave more assets to their spouse free of trust as many of the credit shelter trusts prepared are purely for tax purposes. While it is extremely unlikely, it could also cause marriage to a widow (that has filed the appropriate paperwork) to be a tax planning tool.

Therefore, all surviving spouses should file an estate tax return on their deceased spouse to preserve their tax credit. Then the surviving spouse may have a multi-million dollar tax advantage when they strike it rich, win the lottery or marry a sugar daddy.

Since 2002, estate planning attorneys have been discussing the estate tax repeal, the phase out through 2010 and the "sunset" provisions that would bring back the old tax laws in 2011. In most all conversations it was considered unthinkable that Congress would not fix the estate tax laws to match the system that was in place during the repeal period with a unified tax credit of $3,500,000.00 t0 $5,000,000.00. In fact it was unthinkable that the laws would not be revised before 2010 due to the accounting nightmare that results from a single year with a vastly different tax system. At the time of this blog post, Congress has two months left to fix this issue.

For some background, the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"), phased out the estate tax with the goal of repeal in 2010. The phase out was implemented by dropping the tax rate (reducing the top rate from 55% to 45%) and increasing the unified credit from 2002 through 2009 (from $1M to $3.5M). Due to budgetary issues, the "repeal" had to expire by 2010. Prior to EGTRRA the federal estate tax topped out at a 60% rate and would have phased up to a $1,000,000.00 unified credit. Failure of Congress to act will bring back the 60% tax rate and the lower unified credit amount.

Estate planning attorneys commonly use credit shelter trusts to allow a married couple to each take advantage of their unified credit essentially doubling the amount of assets that can pass to the next generation free of estate tax. The credit shelter trust allows for the estate of the first deceased spouse to split its assets and put a portion in a trust that preserves the first deceased spouse's credit. Then at the death of the surviving spouse, the credit shelter trust does not count in determining the surviving spouse's assets allowing the surviving spouse's credit to be applied elsewhere.

A failure to revise the estate tax has a number of problems the primary of which is that the tax will affect more estates than originally intended. It is common that a young family with children would have life insurance in excess of $1Million due to the current cost of living and what might be needed for the support of their children. For the purposes of an example, let's assume the $1 Million life insurance pushes the value of the couple's estate to $1.5 Million. Now to avoid hundreds of thousands in estate taxes, this family needs to invest in a credit shelter trust when all they have done is purchase a reasonable amount of life insurance.

With the current uncertainty we prefer to give our Clients the information on the estate tax and let them decide whether they think the extra expense of a credit shelter trust is justified. As we come down to the deadline, it appears that the added expense may become necessary. We hope that Congress acts soon to provide clarity on this issue but if the last eight years have been any example, the unthinkable will probably occur.

A Will is the basis of every carefully developed estate plan. It lets you control what happens to the assets you have built up after your death. You use your Will to direct exactly how your estate will be handled, divided and received by your heirs.

Without a Will, North Carolina law decides how your property will be distributed. The State's way of distributing your estate may be very different from the way you want it distributed. The following are some examples of what may happen if the State decides where your assets to at your death.

If you have a spouse and a living parent, approximately 50% of your estate will go to your wife and the rest will go to your parents.

If you have a spouse and a child, approximately 50% of your estate will go to your wife and the rest will go to your child.

If you have a spouse and more than one child, approximately 33% of your estate will go to your wife and the rest will go to your children.

If the state controls the disposition of your estate, it will also control how any assets going to a minor (someone under 18) will be held after your death. Expensive court-supervised methods may be employed by the state in distributing and managing your child's share of your estate. These expenses and administrative hassles may be avoided through proper estate planning.

Most important for parents is not the disposition of their property after their death, but rather, the proper care and custody of their minor children. Custody of minor children is decided by the courts and there is no guarantee that family members or godparents would receive custody of the minor children. North Carolina law provides that a designation of a guardian in a Will shall be considered by the court as a "strong guide" as to whom to appoint as guardian.

Without a Will, there are many potential pitfalls, delays, and hassles for those that you leave behind. Plus, there are not guarantees as to who will acquire your property.