New Home...New Estate Plan

We are deep into Spring, which is traditionally the busiest time of year for home sales (though, let's be real, in the Triangle area, the real estate market is always hot!). That means a lot of new folks are moving to town, and many of our new neighbors are coming to the area from other parts of the country. Not only do these new families need to find new doctors, new dentists, and new schools, they may also need to find a new local bank, a local financial planner, and maybe a CPA. One thing they almost certainly need is a new estate plan! Consider this:

1. Estate planning is a state-specific area of the law, meaning that the formalities required to establish a valid will is decided by each individual state. There is no federal standard. The formalities required by North Carolina are not the same formalities required by either Georgia or Virginia. Someone moving to North Carolina from another state will want a knowledgeable attorney to review their existing estate plan to make sure the documents will be recognized by North Carolina.

2. North Carolina is not a community property state. We are a common law property state (also referred to as a separate property state). Property ownership is different here than say California or Texas or the seven other community property states. In a community property state, all property is jointly owned by a married couple 50-50, regardless of whose name is actually on the deed or title. In North Carolina, however, property is owned by the person or persons whose name is reflected on the deed or title. This difference in how property is owned can greatly affect the size of a husband and wife's estate and how their estate planning should be handled. An estate plan that was designed for community property ownership will not necessarily be the most advantageous plan for property acquired in a common law state like North Carolina. For example, in California, it is common for married couples to have a joint trust whereas in North Carolina those same couples would have two individual trusts.

3. Perhaps the new home buyers have decided not to sell their previous residence but to retain it as a rental home or a vacation home. If that rental home or vacation home is situated in a state other than North Carolina, then the home buyers are looking at having to probate their estate in multiple states upon their death. The ancillary probate proceedings that would be required in this instance can be an expensive endeavor, but with proper planning, the need for multiple probate proceedings can be avoided.

There are countless other reasons why new homebuyers may need a new estate plan that have nothing to do with moving from another state. Perhaps they moved across town into a larger house because their family is expanding. Perhaps the need to relocate was to be closer to a sick parent. Perhaps they are empty-nest'ers looking to downsize and enjoy their retirement years.

Whatever prompted the new home purchase, there's a good chance a significant life change was involved. That means it's a good time to review your existing estate plan. Keep in mind that an estate plan is only as good as it is current!