Every successful professional pays attention to his or her business. However, many professionals fail to pay any or enough attention to their personal business, particularly their estate planning.

It’s easy to overlook this necessary task. We all know we are going to die. It’s just that most us assume that it won’t be tomorrow, and that there will always be time to get our estate planning in order. Sometimes tomorrow never comes. At a minimum, every professional needs the following estate planning documents:

Will: A will states to whom your property will go and who [the “executor”] will be in charge of following the legal processes to make sure it gets done to your wishes. While it’s beyond the scope of this article to discuss all the issues that the will may touch on, it will generally make provisions for you and your children. Your will should account for the following considerations:

  • ⋅ Whether the disposition of assets will be outright or in trust. If the payout is in trust, how and when will the trust be paid out to the beneficiaries? If there is a trust, the trustees of the trust must be named.
  • ⋅ If there are minor children, the will should suggest who should be the guardian of the persons of the minor children if both parents are deceased. In all cases, if individuals [as opposed to corporate fiduciaries] are chosen as executors, trustees, or guardians, then other individuals should be named as successor executors, successor trustees, or successor guardians, in the event the first named person is unable or unwilling to serve.

Power of Attorney: Just as important as having a will to handle affairs after your death, everyone should have a power of attorney (POA) to permit some named person to handle your financial and property affairs in the event of your incapacity. If you don’t have a POA, someone will need to be appointed as guardian of your property. This will require a court proceeding and is generally a cumbersome process to go through. Having a POA eliminates the need for a guardianship of one’s property and is more flexible. By the way, the North Carolina legislature revised the North Carolina Power of Attorney Act effective January 1, 2018, so you should consider updating your POA even if you already have one.

Healthcare Power of Attorney and Advance Directive: From my perspective, a healthcare power of attorney is of equal importance to a financial power of attorney. A HCPOA names another individual — and a back-up — to make healthcare decisions in the event you cannot make them yourself. Hopefully, one’s family will be of one mind regarding your healthcare decisions in the event of your incapacity. However, if not, then the HCPOA will designate one person as having the legal authority, to the exclusion of all others, to make healthcare decisions.

I believe it is also important to have an Advance Directive that sets forth your views as to life ending treatment, if that situation arises. We typically combine the Advance Directive with the HCPOA, as most people want both.

Revocable Trust: A revocable trust, also called an “inter vivos trust,” or a “living trust, is a trust set up and funded while you are alive. It is frequently discussed as a means to avoid “probate,” — a means to avoid the estate administration process when you die.

In my opinion, the estate administration process in North Carolina is relatively simple and inexpensive and frequently does not merit the additional cost and complication of setting up a revocable trust. However, a revocable trust may provide small business owners the means to more seamlessly transition their business ownership and operation in the event of death. Also, if the business owner has multiple business entities or owns investment properties, a revocable trust may again provide a more seamless method to transition the ownership and management of the business or assets.

If you’re just getting started with your estate plan, check out our estate planning workbook to best utilize time with your attorney and make the most out of your first meeting.

Don’t Overlook These Essential Estate Planning Next Steps

The drafting, review, and execution of your estate plan does not end the process. These additional steps should be taken and periodically reviewed to ensure that your estate plan is effective.

  • ⋅ Your executor, POA, and HCPOA need to know where your original documents are and how to access them in the event they are needed.
  • ⋅ Review all beneficiary designations on any life insurance policies and any retirement plans [401(k) plans or IRAs] to make sure the beneficiaries are up-to-date and in keeping with your estate plan.
  • ⋅ Accumulate in one place all information about your finances, property, life insurance policies, safe deposit boxes, electronic passwords, etc. Also, make sure your executor and/or POA knows where to access such information in the event of your death or incapacity. The point here is that your executor and POA needs to know as much as you do about your property and finances, if they are to do their job well.
  • ⋅ Determine what you want as to your final arrangements regarding funeral and burial, record it somewhere and make sure your executor and POA know where to find this information if the need arises. Making such arrangements yourself and pre-paying for them is an even better idea. If done, make sure records are kept and available.
  • ⋅ Discuss with your family your desires regarding life-ending treatment. They may be called upon to make some very difficult decisions regarding such matters. If you have shared with them your preferences, it may make those decisions a little easier to make.
  • ⋅ For a business owner, a succession plan for your business is an absolute necessity. You have spent a lot of sweat and tears building up the business. If you have not made the proper provisions for a succession plan, it may go all down the drain in quick order upon your death or incapacity

Finally, it is generally not necessary to repeat the estate planning process frequently. However, it is important to periodically review your estate plan to make sure that certain life events or financial circumstances don’t necessitate changing your documents.

I suggest looking over your documents and updating your financial/property information at least once a year. It is worth the money to sit down with your attorney and review your estate plan once every 5 years.

Your commitment to doing a thorough estate plan to begin with — and then doing the work necessary to keep it updated — will mean that your family and beneficiaries won’t have to bear the burden of sorting through a mess left by your demise, in addition to the emotional toll.

About the Author

John A. Cocklereece, Jr. is a director and attorney at the law firm of Bell, Davis & Pitt, P.A., with offices in Winston-Salem and Charlotte. He focuses his legal practice on estate planning and administration, tax law, property tax appeals and general business law. Cocklereece, who has practiced law in Winston-Salem for 35 years, is a former Chairman of the North Carolina Property Tax Commission.