Wills, Trusts, and Estates
Basics of Wills, Trusts, & Estates in Maryland
An estate is simply the property of a deceased person, or decedent. A will is a statement outlining how a testator’s property is to be distributed after their death. This includes property that the testator owned individually or as a tenant in common. Having a well-crafted and properly executed helps to avoid any confusion and family disputes in the future.
A will must be in writing and signed by the testator, as well as two credible witnesses. Testators will also name a personal representative who will handle their final affairs. It is common to set up a trust in a will, so a trustee will also be appointed. Your will can also contain a plan for your Online Accounts and Digital Property Keep copies of your will in safe place, like a safe deposit box, and let the person you have named personal representative know where your will is.
Register of Wills
Each county in Maryland has a Register of Wills, which performs many functions including overseeing the administration of decedents’ estates, collecting inheritance taxes and probate fees, and verifying compliance with court orders. Living persons can file their original will with the Register of Wills for safekeeping. It is kept in a sealed envelope, and during your lifetime, it cannot be opened for anyone except you or someone you have authorized in writing.
What is Probate?
The only property that passes through the probate process are those held in the decedent’s name only. When assets and property are not passed down via will or trust, they must be addressed through the probate process.
In order to avoid probate, all of the decedents’ assets must pass automatically – such as through trusts, insurance beneficiaries, joint ownership, or property held as payable on death, such as a bank account. Assets owned individually by the decedent are passed in accordance with their will, but if there is no valid will, they will be dealt with in the probate process.
Assets held in living and testamentary trusts pass to named beneficiaries outside the probate process, unless the trust specifies otherwise. The creator of the trust names a fiduciary to oversee the assets in the trust. It can be a person or an institution, such as a bank. There are many types of trusts and potential benefits and drawbacks for each. As with all aspects of estate planning, and it is best to consult an attorney that can help you create an approach that suits your unique needs.
Revocable (or “Living Trusts”)
With a living trust, the grantor (creator of the trust) is treated as the owner of the trust assets during the grantor’s lifetime. Income earned by the trust assets is included in the grantor’s income, and when the grantor dies, these assets are also included in the grantor’s estate for federal tax purposes. Traditional methods of reducing federal estate taxes used in wills can also be used with living trusts, including the unlimited marital deduction and charitable deductions. Since the assets are taxable to the grantor, the goal of a living trust is not to reduce the grantor’s taxes, Instead, by transferring all of their assets into the living trust before their death, the grantor can help their beneficiaries avoid taxes and probate.
A testamentary trust, i.e. a trust created by a person’s will, go into effect only after the grantor (creator of the trust) has died. These trusts are often used for tax planning purposes.
Living Wills and Power of Attorney for Health Care
An advanced directive (often called a living will) is a legal document that allows you to plan for your future health care needs. This is an important step in ensuring that your personal and religious beliefs are respected. Living wills can prevent misunderstanding or arguments among family members regarding your medical care. Two main components of an advanced directive are the appointment of a health care agent (or durable power of attorney for health care) and health care instructions.
One purpose of an advance directive is to speak for you in the event you are unable to do so. Your health care instructions will let others, especially medical personnel, know in advance what types of treatments you do and do not want. This is especially important for end of life treatment. An advanced directive also lets you decide who will make health care decisions for you in the event you cannot. Make sure the person you appoint understands your wishes and is willing to take on this responsibility.
Keep Your Estate Plan Current
As your family changes, perhaps because of marriage, divorce, adoption, etc., you may want to modify aspects of your estate plan. For example, beneficiary designations and personal representative appointments you made years ago may not reflect your current wishes.
Hiring an Experienced Maryland Wills, Trusts, and Estates Attorney
The estate plan you create will depend on your goals and unique circumstances. To discuss your needs, contact Z Family Law today.