Say What? Glossary of Basic North Carolina Estate Planning Terms
Beneficiary: A beneficiary is a person who stands to receive an advantage from something, such as a portion of an estate, trust, or life insurance policy.
Consent to Health Care for Minor: If parents are unavailable to make health care decisions for their minor children on a temporary basis, this document provides another individual with the right to make decisions on behalf of the parents for the minor children. See North Carolina General Statutes Chapter 32A, Article 4.
Decedent: The person who has died.
Estate: An estate includes all of the assets and debts owned by an individual at the time of death. See North Carolina General Statutes Chapter 31, Article 7, § 31 40 regarding what property passes by Will.
Estate Taxes: Both the state and federal government impose taxes on the property that is transferred from the decedent to beneficiaries at the time of death. See North Carolina General Statute G.S. 105-32.2(a) on the North Carolina Department of Revenue Website.
Executor (male) or Executrix (female): An executor manages the assets of the estate. A Will often names a primary and secondary executor. To qualify as an executor in North Carolina, the individual must be a resident of the state, 18 years old, competent, not a convicted felon and be able to assume the responsibilities of the role. If the named executor is not a resident of North Carolina then they may hire an agent who is located in the state to handle their responsibilities. The executor has many responsibilities to the estate, including but not limited to the following: filing a petition to probate the Will, locating and managing the assets of the estate, paying any state and federal taxes, paying any existing medical bills and other debts of the estate, distributing any specific bequests, and distributing the remainder of the estate to beneficiaries. For information about the duties of an Executor see North Carolina Judicial Court Form 850.
Fiduciary: A person who acts under trust in the interests of another individual, trust or estate. See North Carolina General Statutes Chapter 32-2.
Gift: A gift occurs when one individual gives property to another individual without receiving anything in return. The person providing the gift cannot be obligated to give that gift in any way or it does not qualify as a gift. There are federal tax exemptions for gifts to a certain limit. See the IRS Website information about gifting.
Guardian: A guardian is an adult who is given the care of a minor child. A primary and secondary guardian may be named in the Will and instructions for the guardian’s care of the minor child and details regarding access to any testamentary trust for minor children may be included. See North Carolina General Statutes 35A. In general, a guardian has the authority to make decisions regarding the following:
- The health, care and well-being of the child,
- Where the child will live based on the needs and resources available,
- Arranging for the child’s education,
- Caring for the property of the child in a reasonable manner,
- Providing consent for medical care, dental care, legal matters, and any other services that the child as a minor is unable to handle on their own,
- Engaging in any legal protection that might be needed for the child.
Most parents are also concerned that the guardian will have similar parenting philosophies and that they will also provide emotional support and love to their child. See the How to Choose a Guardian Checklist for more considerations in making this decision.
Health Care Power of Attorney: This document allows the individual a right to designate a health care agent who has the authority to exercise his or her wishes in the event that he or she would be unable to do so. For example, in the event of an emergency where the individual was in an accident and unable to speak for herself, if that individual had created a Health Care Power of Attorney and filed it with the North Carolina Secretary of State’s online Health Care Directive Registry, the health care agent would be contacted by the emergency room to make decisions regarding the grantor’s care. See North Carolina General Statute Chapter 32A-15.
Intestate: When you die without a Will.
Jurisdiction: Jurisdiction is the location where the individual has access to the court system. This is usually determined by the location where the individual resides, but the location of real property may also determine the jurisdiction. In North Carolina, a Will should be probated in the Estates Division of the Courthouse in the county in which the Testator (the person who died with the Will) was a resident at the time of death.
Living Will or Advance Directive: This document provides instructions for end-of-life care in the event that the individual is unable to make his or her wishes known. For example, these documents often contain “do not resuscitate” orders or requests for limited medical intervention under certain circumstances. This document may also be filed with the North Carolina Secretary of State’s online Health Care Directive Registry.
Notary: A notary is an individual that the State of North Carolina has given authority to authenticate and verify the signature of an individual signing a document. The notary will check the driver’s license of the person who signs any document in order to verify that the individual is who they say they are. See the North Carolina Notary Association for more information.
Notarized: A document that includes the signature, date, and North Carolina stamp of a notary.
Power of Attorney: This document is created by one individual (the grantor or principal) and gives another person (the attorney-in-fact) the power to handle financial and other affairs for them. Depending on which powers are granted in the document, this means that the attorney-in-fact for the grantor may take any action on behalf of the grantor as if that person was taking that action for him or herself. For example, the attorney-in-fact might be able to sign legal documents, such as the closing of a real estate transaction, on behalf of the principal without their physical presence. See North Carolina General Statute Chapter 32A.
Preplanning for Final Arrangements: When an individual makes his or her funeral, burial or other final arrangement plans ahead of time and includes instructions for the execution of this plan in his or her Will.
Probate: When the court administers the estate of a decedent. During the probate process, the court appoints the Executor (or a Personal Representative if no Executor is named) to handle the administration of the estate. More details about North Carolina Estate Administration may be found at North Carolina General Statute Chapter 28A.
Special Needs Trusts: These trusts may be set up to work with an individual’s Will to take care of an individual who receives benefits from state or federal programs as a result of a disability or other reason. A special trust is set up to ensure that the individual is able to receive any inheritance, child support, gifts or other distributions that he or she is entitled to while remaining eligible to receive public benefits.
Specific Bequests: When an individual names specific personal property that he or she would like to pass on to another individual upon death. For example, a mother might make a specific bequest to leave her wedding ring to her son or daughter, or a father might make a specific bequest to leave his motorcycle to his nephew or niece.
Successor Trustee: If the Trustee is not able to or refuses to assume his or her responsibilities, the Successor Trustee takes over this role. You may name a Successor Trustee in your Will.
Testamentary Trust: A trust created within a Last Will and Testament. For example, a Testamentary Trust of Minor Children creates a trust upon the death of the testator that is funded with assets of the estate. Parents may include restrictions on the distribution of the estate to the children, and this trust is administered by the trustee. See North Carolina Uniform Trusts Act at North Carolina General Statutes Chapter 32.
Testate: When you die with a Will.
Testator: This is the person who has executed the Will. He or she must be over the age of 18, competent, and under no undue influence or constraint.
Trustee: In the case of a Testamentary Trust for Minor Children, the trustee is an individual named in the Will who will administer this trust. The trustee has legal title to the property in the trust and manages it for the benefit of the minor children. For example, the trustee will be responsible for providing funds to the guardian for the care of the minor child. The trustee may be the same individual as the guardian. Some Testators choose to make an entity the trustee or to have co-trustees.
Will (Last Will and Testament): A Will is a document created by a person, called a Testator, who must be over the age of 18. This document lays out the person’s wishes regarding his or her property upon death. A Will may be used to do the following:
- Designate beneficiaries
- Make specific bequests
- Create testamentary trusts for minor children
- Name guardians for children
- Name your executor
- State burial or funeral arrangements
- Provide other protections to ensure that the remainder of the estate is distributed as intended by the decedent
In North Carolina, a Will must be signed by the Testator in front of two witnesses and a notary public in order to be “executed” or legally enforceable. See also North Carolina General Statutes Chapter 31, Article 1.
Witnesses: Witnesses to the execution of estate planning documents in North Carolina should be over the age of 18, competent and disinterested (meaning that the individuals do not stand to inherit or benefit in any way from the estate). See also North Carolina General Statutes Chapter 31, Article 3.
