Clients often ask many questions of their attorneys as they explore their options and try to understand the decisions that need to be made. Part of the attorney's role with the client is to explain what legal terms mean and how decisions may positively or negatively affect desired outcomes.
Questions and answers listed below are some of the most frequently asked and sometimes misunderstood. The answers are general and while intended to be helpful, they are not specific legal advice.
1. What happens if I die without a will?
The state of North Carolina will decide who receives your property via the Intestate Succession Act, thus the reason for having an estate plan.
2. What documents do I need, to have a complete estate plan?
A Durable Power of Attorney governs your business affairs in the event that you are unable to do so yourself. Your choice of a health care agent is critical, and needs to be a most trusted family member or another person in whom you have complete confidence. It is as if that person can "step into your skin" and do anything you can do.
Declaration of a Desire for a Natural Death, often called a "Living Will." This document states your wishes as to what you want to happen if you are terminally and incurably ill, or in a persistent vegetative state, as determined by your physician. You may choose whether or not you wish to be placed on life support and/or receive artificial nutrition and hydration to sustain your life. A "Living Will" permits you to make your choices known ahead of time and eliminates the trauma and pain of a spouse or family member having to make choices for you.
Health Care Power of Attorney This instrument is similar to a Durable Power of Attorney for business and financial matters except that it applies to health care decisions. It enables your health care agent, such as a spouse, family member or other trusted person to make health care decisions for you if you are unable to.
Will - It controls how your assets are to be distributed. If you do not have a Will, the State of North Carolina will distribute them pursuant to the Intestate Succession Act.
If you have a Will, YOU will determine everything, including who inherits your assets, what portion each heir receives and when. You will also control who administers your estate and you can provide for special needs of your spouse, children and grandchildren. If you want to control the distribution of your assets, you must have a Will.
3. What types of business structures are available in North Carolina?
Sole Proprietorship - A business owned by an individual. You are the owner and all profits are yours, and all business debts are your responsibility. There is no protection for your personal assets against liabilities and debts of the business.
General Partnership - Two or more persons who provide funds, labor and skills to a business and share its profits and losses. All partners are liable for their actions as well as the actions of other partners.
Corporation - A separate legal entity from the persons who form it, known as shareholders. They are not personally liable for business debts.
Limited Liability Company - Separate legal entity which provides limited liability to one or more members. It also provides different tax treatments, depending upon whether it is a single member LLC, an LLC filing as a Corporation, an LLC filing as a Partnership, or a Disregarded Member LLC.
Limited Partnerships - May be a Limited Partnership (LP), or a Limited Liability Partnership (LLP).
A LP is made up of two or more persons, corporations, or partnerships. LPs have both general and limited partners. General Partners customarily operate the business, and the Limited Partner usually is the investor in the business.
A LLP has only general partners, but they are protected from personal liability.
5. What are the pitfalls of using the seller's agent if you are buying a home?
It's legally permissible for a real estate agent, upon executing a document with full disclosures. If a conflict develops, the agent must withdraw from representing all of the parties. While the real estate agent owes the same duties to both buyer and seller, practically speaking it is difficult for an agent to represent both parties equally.
6. What should I think about before agreeing to serve as an executor of an estate?
The executor takes an oath to represent both the heirs and creditors in a fair and equitable manner and must strictly follow terms of the Will, as well as the law of estates in North Carolina.