Estate Planning
Tax and Business Succession Planning
Trust Creation and Implementation
Life Insurance Trusts
Trust and Estate Administration
Real Estate
Business Law
Retirement Planning
Estate and Gift Taxation
Elder Law
Guardianships
Wills
Probate
Contested Wills
Estate Planning
Do I need a revocable (living) trust in order to avoid estate taxes?
Absolutely not! Estate tax planning can be incorporated into a last will and testament just as it can be incorporated into a revocable trust.
What is the purpose of a durable power of attorney?
If you are incapacitated in any way and unable to handle your financial affairs, the durable power of attorney document appoints someone to handle your financial affairs for you. You should choose someone whom you trust completely.
Why is it not advisable to name my minor children as beneficiaries on my life insurance?
Minor children cannot own or manage assets. If a minor is named as a beneficiary of life insurance, the life insurance company often holds the assets until the child reaches the age of 18 and then distributes the proceeds to the beneficiary. When this happens, the minor child is often denied the benefits of the assets when the child most needs the money. This is not what the insured party wants to occur.
Tax and Business Succession Planning
How are buy-sell agreements funded?
Frequently life insurance is used to fund the possible buy out of a partner although if the parties are sufficiently wealthy, life insurance may not be necessary. Each situation is unique.
Do I need to be concerned only about the death of a partner?
No, you should be concerned about disability and the possibility of retirement. Each situation is unique.
Trust Creation and Implementation
What is trust implementation?
A trust is a legal document that governs the investment, administration and distribution of assets. The document can be customized to fit a person’s situation and wishes. A trustee is the person or institution responsible for following the directions set forth in the trust document.
What are the advantages and disadvantages of having a revocable trust?
Advantages:
 |
You retain control over your assets.
|
|
If you are not your own trustee, you observe the trustee in action handling your assets.
|
|
You avoid probate and the trust can be used to avoid an ancillary probate of property in another state.
|
|
You avoid the attendant publicity of probate.
|
|
You will probably save your probate estate a substantial amount of fees and court costs.
|
|
You can provide for uninterrupted management of your assets in case of your incapacity.
|
|
You can avoid interruption of asset management when disability occurs or at death.
|
|
It’s a good way to pass property to charity and save taxes at death.
|
|
You can change your mind at any time.
|
Disadvantages:
|
Initial cost and trouble of set up or “funding” of the trust. Property must be transferred to the trust.
|
|
It slightly complicates subsequent dealings with the property (but only slightly).
|
|
It may require payment of an annual trustee’s fee if someone besides you is the trustee.
|
|
At the time of termination, there may be fees to the trustee or for property recordation and transfer.
|
|
There are no immediate tax advantages. Tax planning can be done in a Will or in a trust.
|
Life Insurance Trusts
Does everyone need a life insurance trust?
No, these trusts are only appropriate in certain situations and I can quickly tell if your situation calls for the implementation of this vehicle for controlling or paying taxes after death.
Can I handle such a trust on my own?
No, it is important that the insured party NOT control any aspect of the life insurance trust, other than retaining an experienced estate planning attorney to navigate the process.
Trust and Estate Administration
Can I have an out of town person serve as personal representative (executor) of my estate?
Yes, but it is important to include specific language in your last will and testament so that this person’s expenses will be covered from the probate estate assets.
What are the key characteristics I should consider in choosing a trustee?
This depends upon the type of trust involved and its purpose. The possible players are a family member, a friend, your accountant, your business partner or the trust department of an institution like a bank.
What does a trustee do?
After death, the trustee of a trust is responsible for “running the trust”, making sure that assets are property invested and/or distributed to the beneficiaries. The trustee is also responsible for communicating with beneficiaries about his or her needs.
Real Estate
Should married couples always own their real property as joint tenants with right of survivorship (called “tenants by the entireties”)?
Joint titling of property is a good way to avoid probate on jointly titled assets. This is also an excellent method for asset protection. But joint titling is not necessarily appropriate in other situations and can often work to complicate estate tax avoidance.
Should an executor of a probate estate sign the standard real estate contract presented by a real estate agent?
No, it is advisable to have an experienced attorney review such a document as there are several important changes to the form.
Business Law
If I am a sole proprietor, is there any reason for me to create a business entity?
Absolutely! If you run your business in your own name, you are exposing all your assets to liability. If you run your business in the name of an entity, you may be able to shelter those assets from liability, depending upon the type of business.
If a company wants to hire me, do I need an attorney to review the proposed employment agreement?
Absolutely! I cannot tell you how many individuals have come to me after signing an employment agreement, the terms of which the person did not understand. Even if the company says that it will not entertain any changes to the document, you owe it to yourself to find out exactly what that proposed agreement says.
Retirement Planning
Do you do financial planning?
No, but I know people who are first rate performers in this field, who do not sell any products. You can trust the advice rendered because the person has no bias or conflict of interest.
What is your role in retirement planning?
I help my clients organize their materials and obtain a complete understanding of what is out there for them when they retire. Often this brings them peace of mind and sometimes it causes them to retain a financial planner to better assist them in investing their assets wisely. Understanding your retirement situation is just part of the estate planning process.
Estate and Gift Taxation
Is the level for estate tax the same at the state and federal level?
It used to be so, but now it is not. As of today, Maryland and the District of Columbia tax any estate valued above $1 million. The federal government imposes an estate tax on estates valued above $2 million.
Is there gift tax in Maryland or D.C.?
No, but there is gift tax at the federal level for gifts in excess of $1 million. This does not include the annual gift tax exclusion amount which is currently $12,000 per year.
Elder Law
Does Medicare pay for nursing home care?
Yes, in certain circumstances, Medicare will pay for several weeks of nursing home care. The rules governing Medicare coverage are strictly construed, however, and if the resident is not perceived as “improving”, then Medicare can cut off any coverage.
Can I be penniless and still not qualify for Medicaid?
Unfortunately, with the new Medicaid rules, individuals may be without any financial resources whatsoever and still not be eligible for Medicaid. Many elder lawyers are working with the legislature to fix this situation.
Guardianships
Does a revocable trust serve to avoid the need for a guardian?
Yes, at least with respect to your financial affairs. If you are elderly, it often makes sense to create a revocable trust and have title to your assets in your name as trustee of the trust. This assists in the management of your assets if you become too ill to handle the assets yourself. This also avoids the need for a guardianship through the court and avoids the necessity of your successor trustee filing any reports with a court. The cost and time savings are enormous.
Why is a guardianship so expensive?
First, the person seeking to be appointed guardian needs to hire and pay an attorney. Second, the judicial process requires that numerous individuals and agencies are sent certified letters with copies of the pleadings. Third, the court appoints an attorney to represent the prospective ward, and the fees to this attorney are paid from the prospective ward’s assets. Next, the court almost always orders a hearing at which both the attorney for the guardian and the attorney for the prospective ward must appear. Finally, the guardian must file annual accountings each year which may involve accountants and attorneys in the reviewing of the documentation.
Wills
Does everyone need a will?
If you do not have a will, then the state “creates” a will for you because of the laws of intestacy. So, in my opinion, everyone who has any assets that will be distributed through probate should have a will.
Probate
Isn’t probate something I should avoid?
Not necessarily. In Maryland and the District, probate is relatively inexpensive and efficient.
Is there any disadvantage to probate?
Yes, it is easier for a disgruntled party to challenge the validity of a will than for such a person to challenge a trust. Also, probate is a public forum whereas trust administration is more private.
Contested Wills
What is the time limit for contesting a Will in Maryland and the District of Columbia?
With some exceptions, a challenge to a will must be filed within six months of the appointment of a personal representative (the same as the executor) in the probate matter.
Who is authorized to file a challenge to a will?
Only “interested parties”, meaning individuals or entities who are beneficiaries of the will that was admitted to probate (and this includes creditors who may file a claim against the probate estate) or who would have inherited from the decedent if the will that has been admitted to probate is found to be invalid or unenforceable.
Getting Here
