Estate Planning: Wills/ Trusts

Will

A Will is a written document, signed by the testator and must be attested to and signed by two credible witnesses. It states who your beneficiaries are and how much they will inherit from your estate. It is effective upon the death of the Will maker.

Pros: 

• Name a guardian for your minor children and/or pets
• Distribute your real and personal property consistent with your wishes in the Will and not per the State laws
• Appoint your executor who you trust instead of Court appointing one
• Express your funeral or burial instructions
• Include healthcare directives

Cons:

• It is a public record – the list of all your assets is potentially exposed to the public
• Your beneficiary’s information is public
• It must go through a probate process if property is owned in your name
• Probate is a long and expensive court process
• Beneficiaries must wait for the probate process to completed before they get their distributions, which can take a long time (several months, up to a year or more)
• It depletes your hard-earned assets due to costs associated with the probate process

In specific circumstances, a Will may be the right choice to simply express your wishes and bequeath your estate to your loved ones. However, more often than not, a Will subjects the loved ones to hardships of the probate process when they are already grieving and does not provide adequate protection to the assets.

Schedule an appointment with us to see how our planning process will work for you and help you tailor a plan that best fits your needs. We will explain all the options available to you and help you make the right decision in your estate plan. 

Revocable Living Trust

A trust is an agreement through which one party “the trustor” or “the settlor”, gives another party "the trustee," the right to hold legal title to property for the benefit of an other party, " the beneficiary." A Living trust is revocable and is an excellent vehicle to transfer assets both real and personal to your beneficiaries. It is a set of documents which once executed goes into effect immediately during your lifetime. All your assets must be funded to the trust for it to work as planned.

Pros:

• You can manage all your assets during your lifetime and name successor trustees to take care of them after your death
• A Trust helps take care of you if you become incapacitated
• Trust documents are not public records and can be administered privately in your attorney’s office
• Probate is not required avoiding the time-consuming court process
• Assets in Trusts can be distributed much faster than in a Will
• Assets in Trusts are not depleted by expensive probate process of a Will allowing beneficiaries to get more
• Provides ample planning for tax exemptions to keep up with the changes in law, family members, and personal circumstances
• Distribution to beneficiaries can be spread out over their lifetime and provides options to protect assets for your beneficiaries
• A variety of Trusts are available to fit your unique situation
• A Trust can eliminate the need for probate proceedings in all the states, if you have property in multiple states

Cons:

• The cost of setting up a Trust is relatively higher than drafting a Will
• Drafting a Will is relatively quicker than making a Trust

Schedule an appointment with us to see how our planning process will work for you and help you tailor a plan that best fits your needs. We will explain all the options available to you and help you make the right decision in your estate plan. 

Advanced Medical Directive

During your lifetime if you become incapable of making decisions on your own, you can execute a Healthcare Directive to express your wishes. It includes a Healthcare Proxy  that give you the power to choose your health agent to make decisions on your behalf when you cannot. It also includes a Living Will that enables you to let your family members and/or medical professionals know how to make certain end-of-life decisions per your wishes such as Do Not Resuscitate (DNR) orders, feeding tubes, or keeping you alive, should such situations arise.

Without an Advance Medical Directive, these decisions put your loved ones in a situation where they are unsure or may disagree over the proper decisions to make, and those decisions may or may not be per your wishes. This stressful situation can be eased by communicating your wishes and decisions in advance.

Schedule an appointment with us to see how our planning process will work for you and help you make the healthcare decisions per your wishes, as a part of your estate plan. We will explain all the options available to you and help you make the right decision in your estate plan.

Financial Power of Attorney

During your incapacitation (due to an injury or illness) when you are unable to handle your own financial affairs temporarily or for a long-term, a Durable Power of Attorney can be prepared by naming an agent, a trusted person of your choice, to take decisions on your behalf. If this document is not prepared in advance as part of your estate plan, a court may intervene to decide and appoint a stranger or professional institution to manage your affairs.

Schedule an appointment with us to see how our planning process will work for you and help you name a trusted agent for financial decisions when you cannot make those decisions, as a part of your estate plan. We will explain all the options available to you and help you make the right decision in your estate plan. 

Funeral Expenses and Final Arrangements

You can express your wishes either to be buried or cremated,and also include organ and body donation preferences. You can buy a lot for your burial, or prepay for funeral or burial expenses, or set up a bank payable-on-death account by depositing funds in preparation for your last disposition and related expenses.

Schedule an appointment with us to see how our planning process will work for you and help you plan for your final arrangements per your wishes, as a part of your estate plan. We will explain all the options available to you and help you make the right decision in your estate plan. 

Estate taxes and Inheritance Taxes

Currently, many estates do not owe federal estate taxes due to its high exemption limit. Federal Estate tax exemption is $11.58 million, is indexed for inflation, and is doubled for married couples. Maryland is one of the states which levies both state estate taxes and inheritance taxes upon your death. Maryland Estate tax exemption is $5 million and is doubled for married couples.This exemption varies each year. All assets passed to a U.S. citizen spouse has unlimited tax-exemption. These exemptions are limited for a non-US citizen spouse. Any assets passed to charity are also tax exempt.

Schedule an appointment with us to see how our planning process will work for you and help you plan around estate taxes. We will explain all the options available to you and help you make the right decision in your estate plan. 

Advance Estate Planning

Our office can also assist you with advance estate planning. There are a variety of trusts, each offering a different flavor or protection, that can be planned and implemented to protect your assets. Advance planning can help you exempt taxes or provide additional levels of protection if you have high net worth assets, debts, real properties, rental properties, businesses, life insurances, retirements, disabled child, medicaid claims, or many other situations where this can become very relevant. For example: If you own a business as a sole proprietor, or in partnership, or as LLC or corporation, we can help you with an advance estate planning to protect your business and assets for your beneficiaries from your creditors, lawsuits, divorces, future spouses etc.

Overall, an estate plan is a huge vehicle with many parts to take care of different aspects of your life and your loved ones when you are not there to help them. We do not believe in “one size fits all” because each situation is unique that needs very careful consideration and proper guidance to set up a personal plan. An effective and proper estate plan will serve your loved ones in an efficient manner and avoid estate taxes, probate process, depletion of your assets, and other unnecessary delays for your loved ones after your death.  It will ensure that your estate is being distributed in the most cost efficient and timely manner, in accordance with your intentions.  It will protect your loved ones and help you leave a legacy for generations to come.

Schedule an appointment with us to see how our planning process will work for you and help you tailor a plan that best fits your needs. We will explain all the options available to you and help you make the right decision in your estate plan. 

Review, Amend, or Update Plan

Both Will and Trust must be updated every few years to make sure they reflect your current situation and law.

Some examples of such changes include:

• Change in your personal circumstances:
  • New additions to family
  • Children growing to adulthood
  • Divorced or widowed
  • Other unique circumstances
• Change in Assets:
  • Bought or sold real estate
  • Acquisition or liquidation of other significant assets
• Change in your wishes to add or disinherit beneficiaries

Schedule an appointment with us and to how our planning process will work for you and help you keep your estate plan updated. We will explain all the options available to you and help you make the right decision in your estate plan.

What happens if you do not have an Estate Plan

If you have no plan in place because either you are uncomfortable or fearful thinking about the inevitable, or have been simply procrastinating, be aware that the state of Maryland has a plan for you, regardless of your wishes. If you die without any estate plan in place, you are said to die “intestate” and the state laws of “intestate succession” applies to you.

In Maryland, your assets will be distributed as follows:

• If survived by spouse and minor children:

       – ½ of estate to spouse; ½ to children

• If survived by spouse and adult children:

       – $40,000 to spouse plus ½ of estate

       – ½ of estate to children (not including step- children)

• If survived by spouse and parents:

       – $40,000 to spouse plus ½ of estate

       – Balance to parents

• If no living heirs or stepchildren:

      – Estate goes to the Board of Education

Don’t let the State dictate your legacy. Schedule an appointment with us to see how our planning process will work for you and help you tailor a plan that best fits your needs. We will explain all the options available to you and help you make the right decision in your estate plan.