USA – NORTH CAROLINA Trends and Developments Contributed by: Kelly Rains Jesson, Jesson & Rains, PLLC
was once tax minimisation, it is now increasingly pro - bate avoidance. Clients across a broader range of net worths are now well-served by trust-based struc - tures, and the rationale for those structures no longer depends on tax savings alone. One of the quiet failures of transactional estate planning is the assumption that a client’s net worth determines what kind of plan they need. Many traditional estate planning attorneys are guilty of this thought process, sticking clients into a will-based plan or a trust-based plan based on net worth. However, these traditional lawyers could be doing their clients a great disservice. A client’s net worth is not a proxy for their planning goals; it is simply a data point. The decision of how much to invest in an estate plan, and what that plan should accomplish, belongs to the client. A firm should educate every client on the practical realities of probate, fiduciary administration and asset transfers, and then empower them to make informed decisions about how they want to proceed. A trust that is partially funded does not avoid probate All practitioners know that the existence of the trust document alone will not achieve the goal of probate avoidance. The funding process – transferring titled assets into the trust, aligning beneficiary designations with the overall plan design, and ensuring that newly acquired assets are properly titled going forward – is where the plan becomes operational. Yet, many of us lawyers give the client a “to do” list and send them out the door after the trust is executed, never to be seen or heard from again. Those of us who do put in extra work and help the client get their existing assets trans - ferred to the trust post-signing leave it up to the client to notify the lawyer of any life changes in the future. True probate avoidance, as a planning goal, cannot be achieved through a transactional relationship. Assets change. Property is bought and sold. Finan - cial accounts are opened and closed. A client who executes and fully funds their trust today may find, years later, that the bulk of their estate passes through probate anyway, not because the plan was poorly drafted, but because it was never properly maintained.
Our firm addresses this directly through a structured funding meeting conducted after plan documents are executed, and through ongoing annual reviews that assess whether the asset picture has changed and whether the plan remains properly implemented. The goal of probate avoidance is only achievable if some - one is paying attention over time. That requires an ongoing relationship, not a one-time transaction. Business owner clients require deeper analysis The operational realities of a business owner ’ s death Estate planning attorneys who work with business own - ers are, in effect, planning for two transitions simultane - ously: the transfer of personal wealth and the continuity or orderly wind-down of a business enterprise. These two objectives are intertwined in ways that document- focused planning frequently fails to address. One of the most immediate and under-appreciated practical challenges is the gap in fiduciary author - ity that arises at death. When a business owner dies with a will-based plan, an executor must be formally appointed by a probate court before that individual has legal authority to act on behalf of the estate (and thus the business). In North Carolina, in some of the busier counties, that appointment can take weeks or even months. However, a successor trustee has authority to act immediately upon the owner’s death (although they must often wait approximately a week for a death certificate before dealing with third par - ties). For a business with employees to pay, vendors to manage, contracts to honour and banking relation - ships to maintain, the difference between days and weeks of fiduciary paralysis is not just inconvenient but can be materially damaging to the value of the very asset the plan is designed to transfer. The operational challenges do not end there. In many cases, the existing business documents, such as operating agreements, banking resolutions and sig - nature authority designations, do not contemplate the death of an owner and do not provide the succes - sor with clear authorisation to act. Thoughtful estate planning anticipates these gaps and addresses them before they become crises.
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