Trust Administration Matters

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you save everything you love — family, friends, and favorite charities. For more information, visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Trust Administration Matters

If you have never handled funds for another person (as a “Fiduciary”) before, it might feel somewhat daunting to be appointed to serve as the trustee of a trust. In such a role, you owe high loyalty to that person or their beneficiaries if they have died.

This is true whether the trust is created under a will (i.e., a “testamentary trust”) or is an irrevocable trust created under a revocable living trust only after the maker of that trust dies.

It is preferable if the person establishing the trust notifies you before your appointment. If they did, you should ask for a copy of the legal document appointing you and ask the preparing attorney to provide you with an overview and address your questions. It is far better to know the responsibilities you will be taking on and politely refuse the appointment now than to bail out when the appointment takes effect later. But first, what are some of those responsibilities?

Trustee 101

A trustee may be a person or a financial institution, or both. The trustee holds legal title to the property for the benefit of another and acts according to the terms of the trust. The trust document will identify who the trustee is. Suppose the person who set up the trust was the initial trustee (as in a revocable living trust). In that case, you might be named successor trustee to administer the trust when the original trustee becomes incapacitated or dies. For example, John might set up a living trust and put all his assets into the trust. He is the initial trustee. John handles all the administrative matters of the trust during his lifetime. When John dies, the person and/or institution appointed as his successor trustee assumes complete control.

If a trust appoints you as the successor trustee, you do not have to do all the work yourself. Handling the assets of another can monopolize your time, so many people hire and supervise specific professionals to do some or all the work. For example, you may have an accountant take care of the taxes. Alternatively, the trust may authorize you to appoint an institutional trustee to handle all the “heavy lifting” responsibilities, with you overseeing that trustee.

Trust Administration

The specific actions that a trustee must take require the utmost integrity and care, including the following responsibilities:

• Read the trust agreement. Make sure you understand what the trust directs you to do. Get professional advice if you have questions. You need to know who the beneficiaries are, what they are supposed to receive, and when you must make distributions to the beneficiaries.
• Notify the plan’s beneficiaries and provide a basic roadmap to establish reasonable expectations.
• Marshal the assets. In other words, you must find, secure and value all trust assets as soon as possible. You may be required to file a claim to collect certain assets, like the proceeds of life insurance policies. You may need to hire a professional appraiser to value some assets, like the home’s contents, jewelry, and vehicles.
• Verify that homeowners insurance and property taxes are current and that coverage will continue until the sale or distribution is made.
• Identify and pay all final expenses, personal and trust taxes, and legitimate debts of the decedent. Some bills must be paid promptly. You also must provide proper notice to known and likely creditors.
• Provide an accounting to beneficiaries and obtain waivers or agreements before making significant distributions.
• Keep track of your time, and find out what fair compensation you deserve for taking on this significant role.
• Distribute assets. Follow the trust agreement carefully when making distributions to beneficiaries. Be prepared to say “no” to beneficiaries when they demand distributions not authorized by the trust.
• Terminate the trust. After paying all expenses, debts, and taxes and distributing all trust assets (if the trust permits), you can terminate the trust and conclude your duties as a trustee.

As the trustee, you bear significant potential liability for misdeeds. If the assets are substantial, seek an estate planning lawyer who has been through the process for many years.

To find out more about being a trustee, executor, or as the appointed person in a power of attorney, please join us at a Zoom: Thursday, April 20th, at 6:00 p.m. – “What To Tell Your Backup Person” with Tom Downs.

We also have the following other events available to you or your family, chosen successor agents, and those who you would like to invite to share a learning opportunity:

• In Person: Wednesday, March 29th, 10:30 a.m. – “Overview of Estate Planning” with Tom Downs, Stephen Wallace, and Justin Wedgewood
• In Person: Wednesday, April 12th, 5 p.m. – “Overview of Estate Planning” with Stephen Wallace
• Zoom: Thursday, April 20th, 6 p.m. – “What To Tell Your Backup Person” with Tom Downs

Click here to register.

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Estate Planning Checklist

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Estate Planning Checklist

Estate plans, like Rome, are not built in a day. It takes time to map out how you want your estate distributed after death – and decide who will be in charge of your finances and health care in case of incapacity.

An Updated Last Will and Testament

Regardless of the value of your estate, a last will legally distributes assets after death according to your wishes. Your last will should be reviewed every two to three years to reflect changes in your life and changes in the law. Your last will should also be updated when there is a death, divorce, marriage, birth, relocation, or another significant event.

A revocable living trust is a popular alternative to a last will. If properly prepared and “funded” with your assets, your living trust can avoid probate, unlike a last will. It should likewise be reviewed every two to three years.

It is not uncommon for us to meet with people after death who have no will or one that is terribly out of date. We are working with a case now where the will names a now ex-spouse to manage and receive all.

Review Named Beneficiaries

Any asset with a named beneficiary is distributed outside of your probate estate. For example, perhaps you started a retirement plan (e.g., whether employer-sponsored or your own individual IRA) years ago. Have you forgotten who you designated as the beneficiary at your death? Whoever is designated will inherit the asset. This could be someone who is no longer part of your life or can manage assets. If the designated beneficiary is now deceased, then the retirement plan will become part of your probate estate. It is a prudent practice to regularly review your beneficiary designations for retirement plans and life insurance. Make sure that you also have both primary and contingent beneficiaries.

Failing to have a beneficiary named or deceased beneficiaries named are all too frequent problems we encounter while providing post-death assistance.

Create an Inventory of Assets

Whenever someone dies, they take information when they go. Recreating this information is time-consuming and often imperfect. An inventory of all assets every few years is a necessary act of love. The inventory should include account names and numbers, contact information if the asset was purchased through a financial advisor or broker, the original “basis” of the asset when acquired, and the asset value at the time of the inventory. Passwords to your digital life are also very helpful to pass on.  This information, and other private information, should not be included in your last will. It becomes a public document when filed with the probate court after death.

Our clients have the start of this process in your binder under the personal information tab. Check out how much you have filled in.

Planning for Incapacity

A general durable power of attorney (POA) appoints someone you know and trust to be in charge of your financial life if you are ever incapacitated. This person, known as an agent or an “Attorney-in-fact,” can then legally perform tasks as simple as paying household bills or as complex as selling your home or business. Ask any candidates you are considering whether they are willing and able to serve before committing them to the POA. While you’re at it, always name several alternative backup agents in case the first predeceases you or cannot serve.

As with the POA, a medical or healthcare power of attorney is used to appoint your healthcare agent in the event of incapacity. Your healthcare agent can make your medical decisions, talk with doctors and other healthcare providers, and be involved in your ongoing care. The agent will also talk with your loved ones during critical times. This is ideally someone who can stay clear-headed during emotionally-charged situations.

Have you emailed your documents to the agents? Have they stored them on their smartphones?

End-of-Life Planning

A living will and healthcare treatment directive guides your healthcare agent and loved ones regarding your wishes in the event of a terminal illness or injury when you have little chance of recovery. It clearly states your wishes about being kept alive through artificial means, whether to exhaust all options or to allow you to die.

This document can be difficult to contemplate and should be given careful thought. Not only should it be discussed with your physician, but also with your loved ones. Having these difficult discussions will take the burden from your agent and loved ones, who otherwise would be left to guess about your wishes. In the absence of such planning, too many families fight for control over such decisions in court.

Estate Taxes and Inheritance Taxes

Given the current high federal estate tax exemption of $12.6 million per person, few American households need to be concerned with federal estate taxes for the next year or so. However, some states have their own estate taxes with much lower exemption limits. Maryland’s Estate tax threshold is now Fove Million dollars. Some states have inheritance taxes, which are levied on heirs based on their relationship to the deceased. Maryland taxes people who are not close relatives, like nephews and nieces, 10% on an inheritance of over $1,000. We have both their own estate taxes and inheritance taxes! Consequently, estate tax planning is part of every comprehensive estate plan.

Summary

This brief “checklist” is a good starting point for creating and maintaining your estate plan. As you can see, proper estate planning is not a “set it and forget it” experience. Like your home or automobile, your estate plan requires ongoing maintenance to perform as intended when needed. While thinking about it, take some time to pull out your estate plan and see what might be outdated.

Upcoming Seminar February 22 at 6:00 pm

We have a  Basis Estate Planning Seminar at our office on February 22 at 6: pm. We estimate One hour in length. To register, click here.

This is a discussion about joint ownership, beneficiary designations, wills and how probate works, and living trusts. It is a helpful overview for future financial and medical decision-makers and can be a springboard to introduce your family to your decisions and preferences.

Please join us if you want a refresher on your own planning and want to introduce your family to basic estate planning tools. Also, if you’re going to give a friend a chance to find out about their options for planning, please pass this invitation on to them.

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Our New Lawyer

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, visit our website, where you can access our blog, events schedule, and complimentary newsletter!

A New Lawyer Has Joined Our Team

We are proud to announce that a new attorney has joined our firm.

Justin Wedgewood is an Estate Planning Attorney who resides in Silver Spring, Maryland. He is blessed to be the father of a beautiful daughter named Emmeline.

What Needs to be Done When a Loved One Dies?

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter!

What Needs to be Done When a Loved One Dies?

Once the initial shock has subsided, many tasks must be done when a loved one dies. Unfortunately, many of them are time sensitive and cannot be delayed. Most of these tasks fall to the surviving spouse unless a trustworthy and well-organized sibling or adult child can help. They include:

• Making funeral arrangements if they have not been done previously.
• Contacting family members and close friends.
• Securing the home or apartment.
• If there is a pet, find someone to care for them, even if it’s a short-term arrangement.
• I am locating the will and estate planning documents.
• Contacting Social Security, Medicare, Medicaid, and the Veterans Administration.
• Contact the U.S. Post Office to have mail forwarded.
• Obtain ten (10) original death certificates.
• If the decedent was working, notify their employer.
• Unless you had joint accounts or POD accounts, notify financial institutions.
• Notify the CPA, financial advisor, and any attorneys.
• Notify credit card companies and freeze the cards.
• Verify that property taxes have been paid and that homeowners insurance coverage is in place.

These are the more immediate tasks. In the weeks and months to come, there will be many more. In the early weeks, you will need to submit the decedent’s will to the court, known as probate, identify all assets and liabilities, pay utility bills and create a list of personal effects. Find the most recent tax returns to prepare the last tax return. Tax filings contain a wealth of information about assets, accounts, and property.

You’ll also need to notify the life insurance company. Find out how policy proceeds will be distributed and if any outstanding premiums can be returned.

The Department of Motor Vehicles needs to be notified to cancel the driver’s license, and you may want to inform the local Board of Elections.

It can take a year from when a person dies until their estate is settled. A complex estate can take several years, especially with no estate plan.

What If You Need Help?

Unless you have done this before, it’s hard to imagine how difficult it is. There are seemingly endless boxes of documents, and often directives for funeral planning and disposition of personal effects are buried in paperwork.

For some people going through a loved one’s documents offers a window into the details of the past and can be comforting. But for most, it’s a painful, long, and frustrating process. Today, this is further complicated by online accounts, which are harder to identify and often protected by passwords, two-factor identification, and facial recognition.

If you need help, ask a trusted family member or professionals who worked with the deceased.

What Can Be Done in Advance?

Just as estate planning is a kindness for loved ones, so is planning for the practical side of death. Whenever a person dies, information is lost. Taking sets to leave helpful hints and breadcrumbs for your survivors to use to figure things out can be very helpful during these difficult moments.

While it may not be admissible in court, a detailed description of the person’s wishes for their funeral, instructions for the care of their animal companions, and the location of important documents are a great help to surviving spouses and family members.

To you and yours, we extend our best Holiday wishes and hopes for a great 2023.

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Gifting to Minors with Custodial Accounts

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Gifting to Minors with Custodial Accounts

Legally speaking, a minor is a person under the “age of majority,” which defines the transition from childhood to adulthood. The age of majority depends upon the jurisdiction and application, but it commonly occurs at age 18 in most states.

While minors cannot legally own assets outright, you can transfer assets to your minor child or any minor children, regardless of whether they are related to you. However, you must adhere to specific rules to ensure these transfers are legal and tax efficient. There are several options for gifting to minors, depending on your situation and goals. This article will introduce one of these methods: the custodial account.

UGMA and UTMA

Have you heard of the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA)? Parents often set up custodial accounts, as either UGMA or UTMA accounts, to make gifts to their minor children, usually for college education. These accounts are popular and are a simpler, less expensive alternative to creating and administering a formal trust for the minor child.

You are making an irrevocable gift to a minor child with either account, and the account is held under the child’s Social Security number. As a result, any taxes on the bill are reported on the child’s income tax return. These two accounts also have subtle but significant differences.

For example, UTMA accounts can hold a wider variety of assets for longer than UGMA accounts. Whereas UGMA account investment options are limited to traditional financial products, like savings accounts, certificates of deposit, stocks, and bonds, the UTMA account investment options are much broader, extending to nearly any manner of tangible or intangible asset. Limitations are typically in place to prevent the custodian from higher-risk investing, like buying securities on margin.

The accounts also differ regarding how long they can be withheld from the minor child’s direct control after attaining the majority age under state law. UGMA accounts become fully available at age 18, while UTMA accounts can be withheld until age 21. This delayed availability age under a UTMA account can prove invaluable, especially if the newly-minted young adult is financially immature. Consequently, funds held in a UTMA account are more likely to be used for college when controlled by a parent until the child is age 21.

Older age controls are available in other trusts, which an estate planning attorney can help you create.

How They Work

While underage, the beneficiary cannot serve as the custodian of a UGMA or UTMA account. Consequently, an adult or financial institution will act as the account’s custodian. The parent who contributes the funds into the account usually also serves as its custodian. Once the account is opened, any friend or family member can make deposits into the account for the child. At that point, assets in the account belong to the child beneficiary. If the beneficiary applies for federal financial aid for college, the account will be considered an asset of the beneficiary when determining student loan eligibility.

Tax-Free Gifting Rules

The law limits how much can be added to either of these accounts per year without triggering gift taxes. Under current law, the “annual gift exclusion” amount is $16,000 per donee (to increase to $17,000 on January 1, 2023). In other words, you and your spouse could each deposit $15,000 into your son’s UTMA account each year without triggering gift taxes. By not exceeding this $16,000 limit, no Form 709 Gift Tax filing is required. “Gifts” include all gifts made during the year, even birthday gifts. Your gifts to your son are not considered “income” reportable on his tax return, but they are not “deductible” on your tax return.

What if you want to gift more than the annual exclusion amount in a given year? What if you want to leverage a “down market” and transfer currently undervalued assets to take advantage of potential exponential appreciation later? In 2020, the maximum transfer you and your spouse may make to your son without triggering gift taxes is $23,190,000! You would need to file a Form 709 Gift Tax Return to report the value of your gift in 2022 when filing your personal income tax return. Giving more than $20 million to any newly minted adult may not be a wise move. Therefore, a custodial account may not be the best option if you are considering a substantial gift to a minor child.

Trust a Trust?

Therefore, what is an alternative to a custodial account when making a substantial gift (or series of gifts) to a minor child over the annual gift exclusion? As a famed jurist, Oliver Wendell Holmes Sr., famously quipped, “Put not your trust in money, but put your money in trust.” Consequently, consider creating an irrevocable trust with your minor child as the beneficiary. This approach provides many benefits not available with a UGMA or UTMA account. For example, a trust can be designed to protect the inheritance from and for your son.

An irrevocable trust can shield gifted assets from being squandered or lost to potential divorces, lawsuits, or bankruptcies. There are very few negatives to using an irrevocable trust when making substantial gifts to loved ones. Creating, funding, and administering an irrevocable trust is not a do-it-yourself project. Work with an experienced estate planning attorney when considering your gifting alternatives.

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Frightening Estate Planning Mistakes

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

What are the Most Common Estate Planning Mistakes?

The most common estate planning mistake is failing to have a plan. Estate planning attorneys know people prefer not to address their own incapacity and death. They also know the problems that result when there is no plan. Having a properly prepared estate plan alleviates some of the financial and emotional stress for a surviving spouse and other family members.

Failing to Fund Trusts Undermines the Best Estate Plan

If you have a revocable living trust, then “funding” the trust is required to take assets out of your direct ownership and make your trust the owner. This is the process through which homes, vehicles, and any other assets owned through titles or deeds are formally transferred to your trust. A properly funded revocable living trust can help your estate avoid probate. Depending on your state of residence, this can expedite settling your estate, save unnecessary legal expenses and keep your private matters private.

Neglecting Incapacity Planning

Planning for incapacity due to illness or injury is as important as planning for the eventual administration of your estate at death. Without proper legal documents—advance health care directive, HIPAA authorization, healthcare proxy, living will, and general durable power of attorney —family members, including spouses, may not be able to access medical information or be part of your health care and financial decision-making process, without first going to court. At a time of family stress, this is no time to pile on any additional legal red tape.

Also, part of this planning is having a good backup for the depth of your planning. We want at least three possible successive decision-makers.

Creating an Estate Plan Without Professional Guidance

Expecting an online, DIY last will and testament to replace a comprehensive estate plan prepared by an experienced estate planning attorney is risky at best and disastrous at worst. Not surprisingly, each state has its own laws regarding the proper preparation and execution of a last will and testament. If your last will fails to comply with state law, it may be declared invalid. In that case, the only option for your surviving spouse or other family members will be to process the estate under the intestate succession law of your state. In other words, when your last will is declared invalid, state law decides who will inherit what and when from your estate. This is best avoided. The good news? You will not be around to see the mess you left. The bad news? Your loved ones will have to clean up your mess.

Remember that when the family needs legal advice the most, they will start searching for the right law firm to help without your assistance or input.

Leaving Original Beneficiaries on Non-Probate Assets

Every account with a designated beneficiary transfers on death to that beneficiary. However, failing to review and update those beneficiary designations may result in unwittingly disinherited loved ones. For example, take life insurance. It is not uncommon for an ex-spouse to

receive an unintended windfall when the policy owner dies. Fortunately, such outcomes can be easily avoided simply by updating the beneficiary designations on all assets for which beneficiaries have been designated. Review them regularly or whenever a major life event occurs, like a divorce or the death of a spouse.

Not Updating Estate Plans to Stay Current with Changes in Estate and Tax Law

Just as changes happen throughout our lives, estate and tax laws change also. In the coming year, major changes will occur in estate and tax laws. An estate plan created five to ten years ago may not provide the same financial protection or legal outcomes as one created last year. Changes coming in 2021 may require further updating.

Let Adult Children or a Trusted Friend Know Where Documents Can be Found

An estate plan is a gift to your loved ones—unless they cannot locate the documents in a timely fashion following your incapacity or death. Would those appointed to have an active role in your estate plan know where you keep your essential estate planning, financial, tax, and personal documents? Would they be able to access them? Do you want them to wade through file drawers and boxes of thirty, forty, and fifty-year-old paper records to find important information? While a safe is a great place to store original documents, it can defeat the purpose if the password is unknown or available. Similarly, a safe deposit box may require a court order to access the contents unless you include your spouse, adult children, or others on the signature card at the bank.

Leave a Legacy by Preparing for the Future

The loved ones you leave behind will recognize your effort to address your estate planning. It is part of caring for your family and the legacy you will leave with them.

Activities this Month

The Downs Law Firm will be sponsoring two events for Laurel Main Street for the Laurel Board of Trade:

 

First, we are hosting the Main Street Trivia Contest that the Laurel Main Street Festival on October 15, from 9 to 4.

 

After October 15, check our website, where you can test your knowledge with the quiz yourself.

 

 

 

 

Second, with the help of convicts and ghouls, we are handing out candy and fright for Main Street Trick or Treat on October 27 from 6 to 8.

 

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Special Planning Considerations for Alzheimer’s and Dementia

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Special Planning Considerations for Alzheimer’s and Dementia

If you receive an Alzheimer’s or dementia diagnosis, planning for the future must begin as soon as possible.

Preparing for incapacity must be done while you still have legal capacity: the ability to express your own wishes and understand the implications of documents that are created to enforce and protect them. Once you become incapacitated, you may not sign legal documents. In the absence of proper incapacity legal planning in advance, a court process will then be required to appoint financial and health care decision-makers for you. This process can be lengthy and expensive. It also will expose your private personal, health, and financial circumstances to the public record.

What Documents are Needed for a Person with Dementia?

Through a general durable power of attorney (POA), you can appoint a trusted individual as the agent (also known as the attorney-in-fact) to manage your financial and legal matters. While a POA can give limited powers, in cases of Alzheimer’s or dementia, broader powers should be given to the agent. Why? Your appointed will most likely need such authority to conduct all and any financial and legal matters on your behalf. A complete list of all assets, including bank accounts, pension, retirement plans, investment accounts, real property, and digital assets, should be created and provided to the agent appointed under your POA.

If you have executed a last will and testament, it should be reviewed and probably updated without delay. Make sure that it still reflects your wishes, especially regarding the executor you have appointed and the distributions you want to be made to your beneficiaries. If you have any minor children, you should also make sure that the guardians you have nominated are still willing to serve.

When one spouse has a diagnosis of oncoming cognitive impairment, some difficult decisions should be considered with an estate planning lawyer, such as shifting some assets to a Medicaid Asset Protection Trust, or transferring assets to children or the healthy spouse, with some trusts created in the healthy spouse’s will to protect some asset if the caretaking spouse dies and the disabled spouse’s needs to be cared for in a nursing home. If more than five years at home is likely, some proactive planning can greatly increase the options available for caring with greater flexibility. If a crisis is at hand, more drastic planning can preserve some assets for care once the state takes over payments.

This is now an instance where a trust created in a will can have significant advantages over the assets being held in a revocable trust, even if probate is required. Which planning options make sense depends greatly on how much time is anticipated before nursing care is required.

What Healthcare-Focused Documents Should Be Prepared?

While executing your POA, remember to execute a healthcare power of attorney as the agent. This document is also known as an advanced directive or health care proxy in some states. The individual who you appoint as the agent will be authorized to make your fundamental health care decisions if you are incapacitated. The same individual is sometimes appointed to serve as an agent for financial and health care decisions. However, this is not always the case. Each situation is different. You know the pool of candidates’ strengths (and weaknesses) for these important roles.

A living will, also known as an advance health care directive, documents your wishes regarding end-of-life care. It must address some hard questions concerning medical treatment: do you want your life extended through artificial means? Would you want to donate your brain or other organs for scientific research?

You should execute a HIPAA release form, so doctors and attorneys may speak with your financial and health care agents, family members, and caregivers as issues arise. In addition, those you authorize will also be able to access your medical records. This access is essential and is very practical for uses ranging from obtaining second opinions to pursuing potential malpractice claims. The HIPPA release form is also needed to interface with the health insurance provider. The right to speak with medical providers based on being a spouse or descendant should not be assumed.

Trusts are Commonly Used to Manage Assets for Incapacity Planning

You can create a fully-funded revocable living trust to address the management of your assets while you are living and to distribute your assets postmortem according to your instructions. As long as you have the capacity, you are in charge as the original trust and beneficiary. You can even make any changes you desire. Upon your incapacity, the trust becomes irrevocable and continues to provide for you. Your trust becomes irrevocable upon death since it carries out your distribution instructions. The successor trustee you appoint can be the same person appointed as the agent under your POA, the executor under your last will, and even your health care agent.

Planning for Final Arrangements

It is wise to discuss whether you want to be buried or cremated. You should also provide guidance regarding what, if any, kind of funeral service you would like and any other related arrangements. The more decisions you can make now, the fewer your loved ones will need to decide later on when grieving your loss.

Incapacity Planning for Alzheimer’s or Dementia

Planning for incapacity can be part of coming to terms with an Alzheimer’s or dementia diagnosis for you and your loved ones. Memorializing your wishes helps keep you in control of the process since your wishes are expressed and documented. You and your loved ones will be empowered to move forward with a plan in place.

The sooner you seek professional help, the better the planning choices that you will have.

Upcoming Webinar September 27 at 6:00 PM

We have a basic estate planning webinar on September 27 at 6:00 pm. Please join us if you want a refresher on your own planning, and want to introduce your family to what you have done. Also, if you want to give a friend a chance to find out about their options for planning, please pass this newsletter on.

To register for the seminar, please click here.

Copyright © Integrity Marketing Solutions. All Rights Reserved.

Estate Planning Hazards

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everyone you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Estate Planning Hazards

Figuratively speaking, life is chock full of road hazards. If we know where they are, then we can avoid them. It is the unknown hazards that are the problem. Just like when traveling on an unfamiliar road, it is best to learn from the experiences of those who have been down that road before. For example, if that automobile in front of you swerves to miss a crater in the street, then you may want to do the same. So it is with your estate plan. We can learn a lot from the failures and near misses of others. In that spirit, consider two familiar sources of dangerous estate planning hazards: beneficiary designations and joint tenancy ownership.

Beneficiary Designations

Depending on the state in which you live, virtually any titled asset may pass directly upon death simply by adding a beneficiary designation. Likely, many of your assets will pass by a beneficiary designation, including life insurance, annuities, and retirement funds. In addition, the non-probate transfer laws of many states provide for “pay on death” or “transfer on death” designations that work in much the same manner. Consequently, you may even designate beneficiaries for bank accounts, CDs, stocks, and other assets. Some states provide for the transfer of real estate through a special transfer on death deed.

Arranging for transferring your assets at death by beneficiary designations is attractive for several reasons, including its simplicity and the fact that little to no attorney work is required. While all of this looks smooth on the surface, beneficiary designations can become severe hazards regarding your estate planning objectives.

Beneficiary Designation Hazards

For example, did you know that any assets designated to pass directly to your beneficiaries are not subject to the terms of your estate planning legal documents like your will or trust? Consequently, you may be disinheriting some of your heirs in whole or part. In addition, any asset protection or special needs planning you created in your will or trust may not take effect as intended. Keeping your beneficiary designations current is vital to the success of your estate plan. You cannot simply take a “set it and forget it” approach.

Joint Tenancy Ownership

If you own any assets jointly with others, then you are in good company. Joint tenancy is one of the most common forms of asset ownership. If you own a bank account, brokerage account, or perhaps real estate with one or more persons, then chances are pretty good that you and they may be joint tenants. The full legal expression for this form of ownership is joint tenants with rights of survivorship (JTWROS).

Although JTWROS is most often found on the title to assets owned by married couples in common law states, residents of community property states also should understand JTWROS given the mobile nature of our society. In some states, a particular form of joint ownership called tenancy by the entirety is available to assets held solely between spouses. There are unique “asset protection” aspects to tenancy by the entirety ownership that can be very beneficial.

When one or more persons hold title to an asset as joint tenants, each owns the asset. In most cases, if one joint tenant becomes incapacitated, then the other joint tenant may continue to fully control their JTWROS assets without interference because of their concurrent ownership rights. When one joint tenant dies, the remaining joint tenants continue to own the asset without the need for probate. Ultimately, the sole surviving joint tenant owns the entire investment. This “right of survivorship” is one of the attractive legal features of JTWROS.

Not surprisingly, many JTWROS relationships are between family members. It just seems like the natural thing to do and, especially between spouses in a long-term marriage, reflects their commitment’s financial partnership.

For this reason, many widows, widowers, and other single adults may add trusted family members or friends as JTWROS to their assets. Nevertheless, as with most things in life, there are hidden hazards regarding this form of asset ownership.

Joint Ownership Hazards

While it is true that JTWROS may avoid probate at death, this is true only if at least one living joint tenant is not also incapacitated. To ensure this, however, most people add non-spouses as joint tenants.

Whether it is children, siblings, or friends, resist the temptation! Once you add a joint tenant to a given asset, they also own the given asset just as you do. What you may have intended merely as a convenience has instead subjected the control, use, and enjoyment of such asset to the potential liabilities of each joint tenant. These liabilities may come in many forms through your joint tenant, including divorces, lawsuits, or creditors.

Your intentions for the eventual distribution of your assets may be frustrated due to JTWROS ownership. For example, your will or trust may not control assets held in JTWROS. Often, assets passing to a surviving spouse later end up in JTWROS with a new spouse. That new spouse (and stepchildren) ultimately may receive assets from the previous marriage instead of the children you intended to protect. Considering the disinheritance risks in every blended family situation would be best.

Easy May Not Be Better

As with any decisions affecting beneficiary designations and asset titling, consult with an experienced estate planning attorney. Otherwise, you may fall victim to some highly unpleasant legal hazards.

To Learn More

Upcoming Seminars

We are having basic estate planning seminars. If you want a refresher on your own planning, want to introduce your family to what you have done, or want to give a friend a chance to find out about their options for planning, please pass this on.

To find out more about the seminar, please click here.

     THESE SEMINARS ARE AT OUR OFFICE NEXT TO THE POST OFFICE ON MAIN STREET

Tuesday, August 16,                 1:00 PM-2:30 PM

Wednesday, September 14,    2:30 PM-4:00 PM

Seating is limited, so call at 301-776-7900, or go to the events tab on our website to reserve your seat

 Light refreshments will be served. We hope you can make it to one. 

We are also holding the program as a Webinar on September 27 at 6:00. Visit the website for details

Copyright © Integrity Marketing Solutions. All Rights Reserved.

DIY Estate Planning Pitfalls

Find Us Online

Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

DIY Estate Planning

Being economically prudent can be a virtue. There is certainly wisdom in having a budget and weighing the cost-benefit of every purchase before parting with your hard-earned cash. However, pinching pennies can backfire and cost you more in the long run. Sometimes, hiring a professional is the best choice.

Unless you are a certified electrician, wiring your house could send your dream home up in smoke as you stand powerless to fix your faulty work. Do-it-yourself estate planning presents a similar risk. Without a thorough understanding of state and federal laws governing taxes and asset transfers, you could endanger your estate and loved ones with the plan you created.

Estate planning mistakes are easier to make than you might think. Consider these eight basic DIY estate planning pitfalls.

• Not using available tax-effective transfer strategies.

Lifetime giving and estate planning provides means for transferring assets to loved ones. However, both of these can trigger taxes when done without the knowledge of current laws. The estate tax exemption threshold has seen significant changes throughout the years. Only estates with total assets exceeding $12.06 million for an individual and $24.12 million for a married couple are subject to federal estate taxes. Certain states also impose their state estate taxes and have their own rules regarding exemptions. Lifetime giving can serve the dual purpose of transferring assets while reducing your taxable estate. However, there is an annual limit on how much you can give a person without triggering a gift tax. At present, that amount is $16,000. Going over this amount when making lifetime gifts will reduce your federal estate exemption at death. Filling out the appropriate tax forms and acting under current tax law is vital to tax-efficient planning.

• Not reviewing and updating estate planning documents.

Creating a will and trust is the start of a good estate plan. An effective estate plan is designed to satisfy your current needs and the relevant laws. However, laws and family circumstances change over time. If your estate plan does not change with legal and family changes, then your estate plan could undermine your own goals. To avoid leaving a mess for your loved ones, review your estate plan every few years and make the appropriate changes.

•  Using a “one size fits all” plan.

You can find generic wills, trusts, and other estate planning documents online. These documents may seem like a fairly simple solution to creating an estate plan. Unfortunately, like deceptive clothing labels, “one size fits all” estate plans cannot meet the needs of every individual. If you have minor children or a shady son-in-law, you may need more advanced legal planning to protect the inheritance for and from your financially immature heirs. While a simple will may work for someone else, your family might require the probate avoidance privacy of a funded revocable living trust with inheritance protection. A penny of prevention is worth a pound of cure!

• Selecting the wrong executor or trustee.

The roles of executor and trustee carry considerable responsibility. We spend time on client meeting exploring the candidates. Not everyone is capable of filling these roles. The person you select should be someone who is mature, organized, and will likely outlive you. If the dead could execute estates or administer trusts, there would be no need for you to name someone other than yourself. An experienced estate planning attorney can help you evaluate your options.

• Not funding your trust.

A revocable living trust can be an effective estate planning tool. It allows you to distribute assets to your heirs while bypassing lengthy and public probate proceedings. A trust gives you greater control over the management of these assets and how thy are to be used to benefit your successors. However, the trust can only control and distribute assets when it has title to the assets. You will need to “fund” your trust. However, not all assets need to be titled to your trust. Certain assets transfer through their own beneficiary designations. In fact, placing certain assets in your trust could have negative consequences. There is more to “funding” a revocable living trust than any DIY estate planning website can properly advise.

• Overlooking witness qualification.

Estate plans are not legally binding simply because you typed out your wishes and printed them from your computer. For a court, bank, or hospital to accept your documents, the documents must be “legally” executed with all the required formalities. For example, the requirements for a valid last will and testament vary from state to state, especially regarding witnesses and notaries. If your DIY estate plan is not “technically” legal, then it is not legal. The good news? When the estate plan fails to work, you will not know it. You will be dead. The bad news? The loved ones you leave behind will be left with your estate mess to clean up. Is this how you want to be remembered?

•  Lack of Assistance when it is needed most

The quality of the estate plan you put in place is tested when it is needed: When you are incapable of helping tg guide and protect your loved ones. At death or disability, how well will your planning be implemented? What needs to be done at these stressful times is where the rubber meets that road.

These mistakes are easy to make if you do not work with an experienced estate planning attorney. Spending money to work with a professional in any field is a small price to pay for peace of mind.

Upcoming Seminars

We are having basic estate planning seminars. If you want a refresher on your own planning, want to introduce your family to what you have done, or want to give a friend a chance to find out about their options for planning, please pass this on.

To find out more about the seminar, please click here.

     THESE SEMINARS ARE AT OUR OFFICE NEXT TO THE POST OFFICE ON MAIN STREET

Tuesday, July 19                 10:00 AM-11:30 AM             

Thursday, July 21                10:00 AM-11:30 AM

Wednesday, August 3         2:30 PM-4:30 PM 

Tuesday, August 16              1:00 PM-2:30 PM

Seating is limited, so call at 301-776-7900, or go to the events tab on our website to reserve your seat

 Light refreshments will be served. We hope you can make it to one. 

Copyright © Integrity Marketing Solutions. All Rights Reserved.

Happy Father’s Day

Happy Father’s Day

I lost my Father in October, suddenly and unexpectedly. John F. Downs Jr. was 91 but still had impressive energy, zest for life, and a strong desire to be with and care for his loved ones, especially his wife of 69 years, my mother, Dee. Sunday will be our first Father’s Day without him. I often see on Facebook frequent tributes for deceased mothers or fathers and am at a loss for what to say to acknowledge the loss and void involved. Now I understand a bit more of the ache of grief. It was a great blessing to our family to Dad for so long. It is a gift granted to me that a few of my friends or clients.

In the ordinary shuffle of the day-to-day busyness, I have a kaleidoscope of impressions and sensations just getting from morning to night and have taken precious little time to mourn and appreciate Dad for all he meant to me.

My seven siblings and I, as well as Mom, all deal with the impact of Dad being gone differently. I have had the duties of estate management and coordination of benefits. In working with many people serving as executors or trustees, Grieving can be delayed or buried altogether with the distractions afforded by having multiple tasks one needs to pay attention to manage the affairs of the person we have lost.

Happy Father’s Day, Dad. Thanks for the love, support, and encouragement you always have given me. I strive to do the same for my kids.

If you have lost your Dad, take some time Sunday to appreciate and regret a few things said and not over a lifetime.

I know some people have a biological father who never rose to be active in their lives. If that is your case, there may be another man, be it stepfather, uncle, or brother, who was effectively your Father.

If you still have your Father, take a moment to reach out and tell him one thing you appreciate that he did for you that he would have forgotten. It will make his day. He has made many of yours.

Here are some gratitude from our team to Fathers, both living and deceased:

Thank you for being my hero in every conceivable way! -Patty Perez

 

Thank you for teaching me to appreciate the beauty of nature.-  Sheree Tiller

 

Dad, thank you for letting me work with you in the summers during college, and for modeling St. Joseph the Worker for me.- Justin Wedgewood

 

For teaching me to “Dance.”- Jackie LeCompte

 

Thank you, Dad, for being a very kind and understanding man. One summer, he taught us kids geometry in our kitchen so we could

skip a whole class in high school. He was a good teacher!- Wendy Krehbiel

 

Thank you for your sense of humor, for passing on your faith, for teaching us important life skills, and for making fun a priority.- Daina Bowen

 

Dad, thank you for leading our family and honoring Mom in our daily life.- Stephen Wallace

 

Thank you, Dad, for always being willing to play ball with us after you got home from work.-  Tom Downs

 

 

Best wishes.

 

Summer Is Upon Us

A new season. Don’t they change now so quickly?

I know I’m old because I already long for the end of summer. Chalk it up to global warming, but heat doesn’t give me the thrill it once did. Have I become the old man next door who will keep the ball if it comes into my yard? Yep.

My sister Teresa has a retreat in West Virginia called “Three Otters.” It is a magical place to visit because, while only two and a half hours from Laurel, it lacks the internet. No cell phone signal. You can take the kids there and then will enjoy a game of cards after a day or so.

When my Father died in October, we held Dad’s Covid-safe celebration of life there. There is enough open space to entertain 60+ people with plenty of social distancing. It was fitting because it was a place my parents loved and supported enthusiastically.

When my mother-in-law died in March, I told my Grandson that we were going to a funeral for her. He said excitedly, “Are we going to Three Otters?”

What a significant, if short-lived, association of a funeral with the river and campfires. I wish it would always be so.

Upcoming Events

We will have seminars to educate people about Estate Planning in July and August. This is a good basic overview of the choice you have in putting your affairs in order, wherever you are in your life’s journey. Also, inviting someone to a seminar is a great way to nudge a loved one to get their own will or trust completed. After attending a seminar, it may well be their idea that doing so makes sense. If you are interested or know someone who might be, the scheduled seminars will be at our office, in our seminar room.

Tuesday, July 19 at 10:00 AM  or

Thursday, July 21, at 10:00 AM or

August 3, at 3:00 PM.

Seating is limited, so call for reservations. We will serve light refreshments.

Find Us Online

Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!