Standby Guardian Article for Wills
One of the overriding purposes driving people to create and establish an estate plan is to ensure their minor children are cared for and will continue to be provided for in case a tragedy befalls the family and one or both parents pass away.
It is imperative that you weigh the pros and cons before opening a joint account with your child. Particularly, you must analyze your situation and your reasons for doing so. You will find that for many of these reasons there may be other options that do not change ownership but still carry out your goals and wishes.
Business succession planning with proper direction.
Are you a small business owner? If so, you may love your job so much, that retirement, death, or incapacity are the furthest thoughts from your mind. While you may not intend to exit the business in the near future, have you considered the possibility of what might happen if you have to unexpectedly retire, die, or become incapacitated? How will your company continue to exist? Who will take the reins and run the company in your absence? Continue reading
As you may have heard, Congress enacted the Achieving a Better Life Experience Act of 2014 (the “ABLE Act”) on December 19, 2014. Many have deemed this a monumental step toward the betterment of the lives of individuals faced with mental and/or physical disabilities. While many experts would agree this piece of legislation is several years too late, Congress’ decision to move this legislation forward is a huge victory for those families that must deal with physical and mental disabilities of their loved ones on a daily basis. Continue reading
Posted in Beneficiaries, Children, Estate Planning, Medicaid, Trust, Uncategorized, Wills
Tagged ABLE Account, ABLE Act, Achieving a Better Life Experience Act of 2014, agent, assets, available resources, beneficiary, custodian, dementia, estate planning, gifting, Government benefits, incapacity, intestacy, life insurance, means-tested, medicaid, Medicaid Planning, pay on death, Public Benefits, resources, SNT, special needs trust, SSI, supplemental needs trust, supplemental security income, trustee, uniform transfers to minors, UTMA
Two of the most commonly used methods of transferring money and assets to minors are a Uniform Transfer to Minors Act (UTMA) Account or a Trust. A UTMA Account is relatively simple to create and fairly inexpensive, but you cannot exercise any control over the assets. While a trust allows you to maintain a level of control, the expense may be substantial. Below are several pros and cons of each to consider before making your decision. Both mechanisms can be implemented during a parent’s lifetime or upon their death. If you want to provide a gift to a minor child or some other beneficiary that has not yet reached adulthood, depending on your personal goals for the gift a UTMA Account or Trust may be the perfect mechanism to achieve the desired result. Continue reading
Posted in Beneficiaries, Children, Estate Planning, Trust, Uncategorized, Wills
Tagged agent, Asset Transfers, beneficiary, bypass trust, Childrren, College Planning, creditors, custodian, end-of-life, estate planning, Fiduciary, gifting, Minors, pay on death, principal, Trust for Minor, trustee, uniform transfers to minors, UTMA
In many states, the use of a Revocable Living Trust has become increasingly popular as a viable estate planning option. But in Maryland, the ease of the probate process, among many other reasons, makes this option usually not worth the hype, money or time.
Posted in Beneficiaries, Estate Planning, Power of Attorney, Probate, tax, Trust, Uncategorized, Wills
Tagged agent, estate planning, incapacity, maryland estate taxes, power of attorney, probate, tax, trust, trustee, Will
When it comes to protecting your loved ones, we encourage you to have an Advance Directive (See Get an Advance Directive: Don’t Be a Headline; Should I get an Advance Directive, a Living Will or a Health Care Power of Attorney?). Having an Advance Directive is effective in explaining your wishes and giving someone the authority to act on your behalf. To be absolutely sure your wishes are followed, however, you should consider completing a Maryland Orders for Life-Sustaining Treatment (MOLST) form. Continue reading
Posted in Advance Directive, Estate Planning
Tagged advance directive, agent, CPR, DNR, do not resuscitate, emergency, end-of-life, estate planning, health care agent, health care power of attorney, hospital, incapacity, living will, medical order, MOLST, nursing home, Will
The Maryland legislative session of 2014 began with a bang. Specifically, the House introduced HB 739 that presumably could cause major changes to the way you and I plan for the inevitable. Yesterday, the Maryland Senate approved HB 739 that will recouple the Maryland estate tax exclusion with that of the federal government.
For over a decade, Maryland has taken the position that it would operate separate from the federal system regarding the taxation of estates. When the federal government began making changes to the federal estate tax system in the early 2000’s, Maryland froze the estate tax exclusion at $1,000,000 per estate and capped the tax rate on any amount in excess of the exclusion at 16% and completely decoupled itself from the federal system. Continue reading
Posted in Estate Planning, tax
Tagged credit shelter trust, decouple, estate planning, estate tax, exclusion, maryland estate taxes, Maryland Legislation, portability, portability of spousal exclusion, recouple, spouse, state estate tax, tax, taxable estate
Estate planning in Maryland for same sex couples is dramatically different as a result of two groundbreaking legal developments in 2013. On January 1 same sex marriage became legal in Maryland and on June 26 the Supreme Court struck down portions of the Defense of Marriage Act (DOMA). As a result, same sex married couples in Maryland have all the state and federal benefits afforded to their heterosexual counterparts. I underlined “married” to remind you that these benefits require a marriage (i.e., don’t dilly dally). Here are the five most important things to understand going forward: Continue reading
Posted in Estate Planning, Probate, tax, Trust, Wills
Tagged Defense of Marriage Act, disinherit, disinheritance, DOMA, estate tax, executor, inheritance tax, intestacy, marital deduction, personal representative, Question 6, same sex couple, same sex marriage, spouse, taxable estate, unlimited marital deduction
Dealing with the death of a loved one both before and after death are the two most difficult situations in our lives. In addition to the emotional toll, there are also innumerable details, practical and legal, surrounding a loved one’s death. Most people are not aware of the steps that need to be taken in preparation or after death. And even if they are aware, most people have a difficult time focusing on these tasks in such a fragile emotional state. In an attempt to help during this difficult time I wrote a manual of sorts. Death of a Loved One contains checklists to assist both before and after death. You can download a free copy of the booklet here.
Managing Partner – Estates and Social Security Practice
Berman, Sobin, Gross, Feldman & Darby, LLP
Posted in Advance Directive, Power of Attorney, Probate, Wills
Tagged advance directive, booklet, death, gude, guidance, living will, loved one, power of attorney, Will
On January 2, 2013 the American Taxpayer Relief Act of 2012 was enacted, avoiding the so-called “fiscal cliff.” In addition to income tax changes, the law contained provisions on estate taxes which certainly did avoid something very cliff-like. Had the law not been enacted, the federal estate tax exemption would have reverted to $1 million per person. The “exemption” is the amount that passes free of estate tax. Under the last change to the estate tax law in 2010, the exemption had been at $5 million (See 5 Important Facts About the New Estate Tax). Avoiding this significant (i.e., cliff-like) change in the estate tax exemption was an important feature of the new act. Continue reading
Posted in tax, Wills
Tagged american taxpayer relief act, bypass trust, credit shelter trust, DC estate taxes, estate tax, estate taxes, exemption, fiscal cliff, maryland estate taxes, portability, state estate taxes
The Problem. You have a disabled child who is currently receiving need-based public assistance such as Supplemental Security Income (SSI) and Medicaid. Your child is receiving those benefits because he or she is disabled and because he or she does not have sufficient income and resources. As a parent, you want to make sure that your child is provided for after your death. This is especially true in the case of a disabled child. Your plan to provide for your disabled child probably includes a life insurance policy in addition to assets you have accumulated over your life time. But what happens to your child’s eligibility for SSI and Medicaid if they suddenly receive a significant amount of money in the form of inheritance and life insurance proceeds. The answer is that your child will lose the monthly SSI check and, more importantly, health insurance coverage through Medicaid. Is there a way to provide for your disabled child after your death without endangering their public disability benefits?
The Solution. The Special Needs Trust (SNT) is the answer. If your Will and beneficiary designations direct the assets into a properly drafted SNT, your disabled child will continue to receive their SSI and Medicaid coverage. Continue reading
Posted in Beneficiaries, Medicaid, Trust
Tagged (d)(4)(a), (d)(4)(c), beneficiary, disabled beneficiary, disabled child, life insurance, medicaid, payback, pooled, pooled special needs trust, self settled, self settled special needs trust, SNT, special needs trust, SSI, supplemental needs trust, supplemental security income, third party, third party special needs turst, trustee, Will
This is not an easy time and, emotionally, there is not much that your lawyer can do to help. What we can to is to assist you in understanding some of the practical issues involved. Below we describe seven recommendations of things to do before your loved one passes. At a minimum, this list will provide some guidance during this trying time and, at best, maybe it might even free up some extra time to spend with your loved one. Continue reading
1. It’s All About Who Inherits
Maryland has both an estate tax and inheritance tax. The estate tax is assessable if more than one million dollars passes at death. The total dollar value of the property determines whether there is an estate tax. The inheritance tax is not dependent upon the value of the estate, as even very small estates can have inheritance tax imposed. Inheritance tax is assessed on property given to a person who is further removed in relationship than a sibling. Thus, for example, a 10% tax will be assessed on property passing to a cousin, niece, nephew or friend. Continue reading
The idea behind a Durable General Power of Attorney (POA) is to appoint someone (your agent) who can manage your financial affairs if you (the principal) are unable to do so. The overwhelming majority of the language in the document describes the various things that your agent can do. Most POAs (including mine) contain language to allow the agent to make gifts on the principal’s behalf. After receiving their draft POAs, my clients will often call asking why we are allowing their agent to give their stuff away! This post explains the purpose of the gifting power. Continue reading
The question I get about online Wills (or do-it-yourself kits often purchased at office supply stores) is whether they are “valid.” I cannot answer the question in a global fashion. It is certainly possible to have a technically “valid” Will without using an attorney. It is also possible that the document will fail as a Will for a variety of reasons. In that case you will die intestate which is not a good idea. (See The 5 Most Important Reasons to Have a Will). Without reviewing the completed document, however, I cannot determine whether any Will is “valid.” As important as whether the Will is valid is whether it is a good Will. Does it accomplish your goals? Does it protect your family and loved ones? Does it ease their burden after your passing? Continue reading
In this modern era, families come in all shapes in sizes. It has become fairly common for same sex couples to buy a home and raise children. Then there are opposite sex couples who share their lives, including buying a house together, but forego the formalities of marriage. In 2009 the Maryland legislature enacted legislation providing some measure of protection to these more nontraditional families. Specifically, the legislature created “domestic partnerships” and imbued them with one of the legal advantages of marriage. Continue reading
Posted in tax
Tagged affidavit, domestic partner, domestic partnership, family home, gay, inheritance tax, joint ownership, mutual interdependence, nontraditional family, primary residence, register of wills, same sex, same sex couples
Instead of drafting a Will, many people just put their child’s name on the deed to their house. Their goal is to make things easier for their child by eliminating the need to go through probate. If the house is the only asset, this can be an effective way to avoid probate. (If there are other assets besides the house which they still own in their sole name – their child will still have to go through probate.) In Maryland, though, probate is not a particularly daunting or expensive procedure. In my opinion, the disadvantages of putting your child’s name on the deed far outweigh the advantage of avoiding probate. Continue reading
Posted in Probate, Wills
Tagged capital gains tax, co-owner, creditor, deed, gift tax, joint owner, joint ownership, medicaid, medicaid penalty, probate, taxable gift
In giving estate planning seminars, I am always trying to impress upon my audience the importance of planning while young and healthy. One of many reasons to plan sooner rather than later is to avoid being the subject of a news story like the one ran by the Associated Press on October 31, 2011: “Maryland Feeding-Tube Case Pits Wife Against Mother.” My job as an estate planning attorney is to prevent tragic headlines like this.
The answer is the first one or the second one and the third one. The problem with answering the question is first and foremost one of terminology. For starters, each state calls these legal documents by different names. For instance, Maryland has an Advance Directive, Virginia has an Advance Medical Directive and the District of Columbia has a Power of Attorney for Health Care and Declaration of Living Will. In addition, as a legal community we have simply not standardized our terms. What one lawyer calls a Health Care Power of Attorney, another calls an Advance Directive. In this blog I will attempt to clear up the confusion. (At least for Maryland residents). Continue reading
Posted in Advance Directive, Power of Attorney
Tagged advance directive, advance medical directive, agent, durable power of attorney, end-of-life, health care agent, health care power of attorney, living will, power of attorney for health care, Terry Schiavo, ventilator
So you stopped procrastinating, hired a lawyer, and executed a Will. Now what should you do with it? To fully understand the following five recommendations it is essential that you understand the importance of the original Will. After your death, the original Will needs to be delivered to the Register of Wills (or its corollary in your state). The Register requires the original, not a copy. The reason for the insistence upon the original is that the decedent may have purposefully destroyed his or her Will before death — because he or she no longer wanted it to control the distribution of his or her assets. Continue reading
Despite your good intentions, naming your disabled niece as the beneficiary of your life insurance policy may not do her any good whatsoever. In this final installment in this series, I explain why disabled beneficiaries should be handled with extreme caution. This advice actually applies to all manner of property given to a disabled person – including property distributed under a Will. The reason for caution is this: an inheritance from any source could disqualify the disabled person from receiving public benefits.
Many disabled people (children and adults) receive disability benefits through the Social Security Administration (SSA). The SSA administers two separate disability programs, disability insurance and supplemental security income (SSI). (See Have I Worked Enough to Qualify for Social Security Disability Benefts?). The SSI program is means tested. Thus, in addition to proving disability, the applicant must be below a certain level of means (e.g. income and resources). SSI benefits are particularly important as the disabled person receives not only a monthly cash benefit but health insurance through Medicaid. A sudden increase in resources may disqualify the person from both their cash benefits and, more importantly, Medicaid. Continue reading
Posted in Beneficiaries, Trust
Tagged available resources, disability insurance, disabled, income, medicaid, resources, SNT, special needs trust, SSA, SSI, supplemental needs trust, supplemental security income
The last place you want your life insurance, retirement account, or pay-on-death (POD) account to go upon your death is to your Estate. Thus, do not name your “Estate” as the beneficiary on the designation form provided by your insurer, broker, or financial institution. However, even if you don’t make this mistake on the designation form, the Estate can still end up being the beneficiary. For instance, if you fail to designate any beneficiaries, the funds are paid to the Estate. Also if the beneficiary you designated has already died, the funds are paid to the Estate. This is why naming contingent beneficiaries is so important. There are three main reasons to keep these funds out of the Estate.
Posted in Beneficiaries
Tagged creditors, extended IRA, IRA, legacy IRA, life insurance, pay on death, POD, required minimum distribution, retirement plan, stretch IRA, tax deferred
Beneficiary designations can be an effective tool to avoid probate, if used appropriately. (See Beneficiaries Instead of Probate: Use Caution). Assets can go quickly and directly to loved ones after your death. However, there are certain types of beneficiaries that should be avoided. First and foremost – no minor beneficiaries!
I recently represented a widowed mother of three minor children. Her husband had named as beneficiaries on his life insurance policy his wife (50%) and his three minor children (50%). After his death, my client contacted the insurance company and provided the death certificate and requested payout of the insurance proceeds. However, because half of the proceeds were going to minor children – the insurance company required that a guardianship of the property of the minors be established prior to the issuance of the checks. Continue reading
Posted in Beneficiaries, Probate, Trust
Tagged accounting, custodian, guardianship, life insurance, minor, trust, trustee, uniform transfers to minors, UTMA
The term “probate” refers to the court process whereby a decedent’s assets are gathered together and, after the payment of the decedent’s debts, distributed to the decedent’s heirs. One way to avoid probate is through the use of beneficiary designations. The only assets that pass through probate are assets the decedent owned in his or her sole name without any beneficiary designations. Any asset that contains a beneficiary designation passes directly to the beneficiary without any court intervention. Life insurance is a classic example of an asset that passes directly to the beneficiary. Retirement plans (e.g. IRAs, 401ks) also usually pass to a designated beneficiary. Other examples are “pay on death” designations on bank accounts or investment accounts.
Posted in Beneficiaries, Probate, tax, Wills
Tagged 401k, beneficiary, beneficiary designation, IRA, life insurance, pay on death, probate asset, retirement, tax liability, taxable estate
So you are now convinced that you need a Power of Attorney (POA) in place to help your family and loved ones take care of you in your time of need. Or maybe you and your aging parent have decided that a POA needs to be executed in anticipation of deteriorating health. Below are three items to consider prior to meeting with an attorney.
1. Avoid Joint Powers
On October 1, 2010, a new power of attorney act went into effect in the State of Maryland. Efforts had been made for a number of years to get legislation passed that would govern the use of power of attorneys. The new Act should assist the general public by making power of attorneys easier to create, interpret, and use.
In December 2010 Congress enacted the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This law created an entirely new estate tax regime. To understand the extent of the change, it is important to remember where we were prior to the new law.
In 2009, the maximum federal estate tax was 45 percent and the maximum amount that one person could give away without estate tax (exclusion amount) was $3.5 million. Estate planners believed that a new law would have been enacted before the end of 2009 because the then current federal estate tax law was due to expire by the end of the year. Congress did not act and, thus, in 2010 there was no estate tax. This meant that no matter how much money there was in the estate, there was no tax in 2010. No doubt this was good news for George Steinbrenner’s heirs! Continue reading
So many people come in to see me and are convinced that they need a Durable Power of Attorney (DPOA). When I ask them why, they don’t know. Further probing usually reveals that they aren’t quite sure what a DPOA actually is. Let me see if I can explain the idea.
1. Avoid Intestacy Laws
If you never get around to getting a Will, don’t worry – the legislature will write one for you. If you die without a will you are “intestate” and the intestacy laws of your state govern what happens to your property. In almost all situations the legislature’s idea of what should happen to your property is very different than yours.