Assessing Assisted Living Facilities

June 20, 2024 No Comments

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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!

Assessing Assisted Living Facilities

As a married man, I know most married men already have assisted living. For women, not so much. In the past few years, my siblings and I had to work through the hard reality that our Mom could not be cared for in her home. Watching her health decline with age was a challenge for her and for us all.

If your parent faces a dramatic decline in the ability to self-care and needs support in daily living but is otherwise able to live independently, then assisted living may be suitable. This stage can be challenging when you cannot provide the support they need. In these instances, an assisted living community may be a suitable option. These communities provide residents with a comfortable lifestyle, the needed help, and increased social opportunities. Not all facilities offer the same level of care. Therefore, research is essential to select the best option for your loved ones.

Gathering Information Objectively

Choosing an assisted living community should be done with care. For some, the cost is an essential factor. Some individuals are willing to pay for a luxury residence with every imaginable amenity. Others prefer basic living environments with dining, social activities, and transportation provided. Learning what each community offers can help you when comparison shopping.

This sifting and evaluating process can be overwhelming. You may want to consult a geriatric counselor familiar with the local choices available to save time and gain valuable insights.

Who Regulates the Assisted Living Facility? A host of federal and state laws regulate assisted living communities. They must meet specific standards or risk losing their operating licenses. Despite these regulations, it is wise for family members to continue being involved with their loved ones after moving into an assisted living facility to ensure appropriate care is being provided.

What Questions Should You Ask?

Moving into an assisted living facility during a pandemic presents unique challenges. Onsite visits may be different, but they are important when it comes to vetting a community. Talking with staff and management will show how well the facility is run, especially during a difficult time.

If you can tour the facility, be sure to visit during mealtime. Taste the food served to the residents. Breathe in the smells. If the facility reeks of urine or disinfectant, these are warning signs. Watch how the staff treats the residents. Are they kind and caring? Listen to the sounds. Are there loud beepers, buzzers and announcements?

Ask for a copy of the contract and fee schedules. You will want to review these contracts carefully. If they refuse to share a contract with you, find another facility.
What are the costs? Are any costs covered by Medicaid or Medicare? If you are purchasing an apartment within the community, what happens when you leave? Do your heirs get any of the purchase price back? Who handles the sale of the apartment?
What is the ratio of staff to residents? Do they run employee background checks and drug testing, when hiring and randomly thereafter? Are there training manuals and is on-going training conducted?
How is the facility prepared for medical emergencies? Is there a nurse onsite at all times and is a doctor on call? How far is the nearest hospital?
What is the “culture” of the community? Do residents have freedom of choice, or does the activities schedule look limited? Request copies of activity schedules or a newsletter.
Talk to residents and their family members for candid “insider” information from those already part of the community.

Planning for the Future

When individuals move to a “continuous care community,” they are there for care as they move through various life stages. Should an illness or injury require someone to receive more ongoing medical attention, the resident would merely transfer to the nursing home branch of the facility for care and rehabilitation. This alternative would save you and your loved ones from starting a search for another facility during a trying time. Like Goldilocks, you need to evaluate a variety of senior living arrangements to find one that fits just right.

If you decide to move into such a community, and a large deposit is required, consult your attorney about how to have that fund paid out at your death.

Also, it is imperative to have an estate plan in place that allows you to control your assets and make decisions without a court.

Estate Planning and Divorce

May 7, 2024 No Comments

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Estate Planning and Divorce

In my prior life, I was a divorce lawyer for twelve years. I did a variety of different cases, but mostly divorce. I switched entirely to Estate Planning in 1995 and have never looked back on that decision. Much better from the lawyer’s side of the table.

Those years gave me a strong appreciation for the difficulties of strains on relationships. It also benefits many of my clients for their own plans, but much more often to protect their children going through marital problems.

Estate planning is very important to address both during and after a divorce. Divorces typically take several years to be finalized. Consequently, waiting to update every part of your estate plan until a divorce is completed can lead to unintended consequences. Spouses still have legal rights while a divorce is in process. Therefore, it is wise to take steps during this time to create legal and financial distance between you and your soon-to-be ex-spouse.

Laws regarding wills and certain retirement plans, such as pensions and some 401(k) plans, vary from state to state. These require due diligence before changes may be made.

Health Care Proxy, Living Will, and HIPAA Release Forms

Once divorce proceedings are underway; new documents should be created naming a new agent under your health care proxy, living will, any other advance directives, and HIPAA release form. You may choose a trusted friend, sibling, or other person to take control of your healthcare decisions in the event of an emergency or incapacity. The last person you want to make healthcare or end-of-life decisions is your future ex, even in an amicable divorce. DNR

Update Your Power of Attorney

The same steps must be taken for power of attorney forms. Start by revoking any prior power of attorney documents and creating a new one, naming a primary and secondary agent to act on your behalf. A power of attorney will only be effective for assets directly titled in your name alone. However, it is necessary to protect these assets. Depending on your state laws, you may need to provide formal notification to your ex of this change.

Changing Beneficiary Designations

Certain states do not permit spouses to be removed from beneficiary designations for pension plans or some retirement accounts until a divorce is finalized. Make a comprehensive list

of all accounts with beneficiary designations and make the beneficiary changes wherever

possible.

If your estate includes a trust, the trust document needs to be reviewed. Is your ex a beneficiary? If so, this should be changed immediately. If you were generous with members of your ex’s family, you may also want to remove them as beneficiaries.

If you have minor children and the goal of the trust is to provide for them, is your ex named as trustee? If yes, you may want to remove your ex from the role of trustee and name a sibling, close friend, or perhaps a professional to serve as trustee.

Revising Your Will

Laws regarding ex-spouses and wills are state-specific. However, the best option is always to start with a completely new will. In some states, failing to update a will after a divorce leads to wills being declared invalid, and the estate is treated as if there was no will. Assets are distributed according to the laws of intestacy.

Most importantly, if your spouse is listed as an executor, revoke the will and name a new primary and a new secondary executor.

Your will is used to name guardians for minor children. Your ex will most likely be named guardian if you should die. However, if you have questions about their ability to be a safe and effective parent or are concerned about their choice of future partners, you can nominate an alternate guardian in your new will.

General Concerns

Divorce can be a stressful process, and adding more tasks may seem onerous. However, these estate planning steps are extremely important. In the long run, getting them done may help avoid unpleasant, larger problems for you and your loved ones.

Guardianship Duties for An Incapacitated Adult

April 17, 2024 No Comments

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Guardianship Duties for An Incapacitated Adult

When an adult becomes incapacitated, and no advance planning has been done, someone needs to become a guardian to care for the incapacitated person. That individual is then known as the “ward.” This requires a court proceeding to decide who should become the guardian. In Maryland, the process included the appointment of an attorney for the alleged disabled person, paid for by the family, and often a jury trial. When this happens, the incapacitated person loses many of their fundamental rights, including the right to vote.

Guardianship procedures are more costly than creating a comprehensive estate plan, which includes planning for incapacity.

How does a guardian handle the ward’s finances?

The guardian is required to act as the ward’s fiduciary, putting the ward’s interests before their own. The guardian must keep meticulous records and be able to account for every dollar spent. In most cases, the guardian reports to the court annually. The guardian’s finances must be kept separate from the ward’s accounts. No funds from the ward’s accounts or any trusts created for the ward should ever find their way into the guardian’s account (known as “commingling”), even if it would be far more efficient for cash management.

The guardian may also be responsible for applying for government benefits on behalf of the ward, overseeing the sale of the ward’s home, and managing the ward’s investments. If the guardian is only responsible for finances, they are often known as a “conservator” to distinguish this more limited role.

Does a guardian get involved in day-to-day living arrangements?

In most cases, the guardian is also responsible for the person’s care, including housing and daily living. Accordingly, the guardian’s responsible for ensuring the ward has a safe and clean place to live and receives any care needed. This may be at the ward’s home with a caretaker, at the guardian’s home, or in an assisted living or full-care facility. The guardian is expected to be actively involved in the ward’s life while overseeing the ward’s general well-being.

What kind of health care decisions is the guardian responsible for?

Healthcare decisions are also the guardian’s responsibility. The guardian is charged with making medical decisions in the ward’s best interest and, to the best of their ability, to make decisions just as the ward would have if the ward were able to do so. The guardian speaks with the ward’s health care providers and works with them to make sure that the ward gets any needed care. If possible, the guardian should honor the preferences and consult with the ward.

Am I responsible for the ward’s expenses?

The guardian is responsible for managing the finances of their ward. However, they are not expected to use their own financial resources for their ward. Nevertheless, a guardian may be held responsible if assets are available and the guardian is not keeping bills current. The guardian needs to disclose the legal status consistently to avoid potential personal liabilities for expenses. Simple errors or oversights may be treated severely by the court. Therefore, detailed records and attention to due dates are very important for the guardian.

Generally speaking, if you act in good faith, with diligence and care, the guardianship should not be an overly burdensome responsibility. In an ideal situation, even if one person in the family is the legal guardian, other family members are involved in their loved one’s life to ensure the best possible quality of life.

It is much better to make plans to handle disability without court involvement. Talk to an estate planning attorney to get that process protected.

Estate Planning Considerations for Women

March 13, 2024 No Comments

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Estate Planning Considerations for Women

Women face particular challenges in estate planning, which do not always present themselves until after a spouse has died or when a divorce occurs.

Statistically, women live longer than men. Therefore, it is essential for them to have a complete understanding of the couple’s estate plan and finances. There will be a greater chance they will need assets to last for a more extended period of time than for their husbands, in addition to planning for incapacity.

Overcoming Traditional Financial Roles Through Estate Planning

One spouse often takes care of finances, leaving the other with no knowledge of how assets are managed or how to access accounts. Upon the death of the first spouse, the surviving spouse is left to identify accounts, untangle how payments are made, etc. Addressing this information gap so both spouses are familiar with all assets and liabilities leads to better estate planning and avoids additional stress after the first spouse dies.

Women in second marriages may be more at risk for financial hardship if the estate plan has not been updated since their spouse’s prior marriage. If beneficiaries on a will, insurance policy, or retirement accounts have not been updated, the prior spouse could inherit the lion’s share of the current spouse’s estate. All estate planning and financial documents should be updated.

The task of raising children or caring for elderly parents continues to fall on women more than men. This results in lower lifetime earnings, which leads to smaller Social Security benefits. Married women who expect to claim their spouse’s Social Security benefits should educate themselves about survivor benefit claims. If a woman has been divorced after a marriage lasting at least ten years and has not remarried, she may claim benefits based on her ex-spouse, regardless of whether her ex has remarried.

grandparents raising grandchildren — Grandparents raising grandchildren

Planning for Life is Part of Your Estate Plan

After devoting decades to raising children and caring for elderly parents, women are apt to brush off concerns about aging. Single, divorced, or widowed women, with or without children, need to have an estate plan to protect them during their lifetime.

A general durable power of attorney is needed to name an agent (also known as an attorney, in fact) to act if a single woman cannot manage her financial affairs because of illness or injury. Similarly, an advance healthcare directive, which includes a durable power of attorney for healthcare decisions, names a trusted person to make healthcare decisions in the event of incapacity. Married couples also need these documents. However, they are even more critical for a single woman, so family or friends may step in when needed.

Last Will and Testament

The last will and testament is used to distribute assets, including real estate, financial accounts and personal possessions. It is also used to name an executor. This person will be in charge of managing the estate: gathering assets, paying creditors, filing with the probate court, filing final personal income tax returns, paying estate taxes (state and federal), and at the appropriate time, distributing assets as per the directions in the last will. Make sure that the person you wish to serve as your executor can carry out these tasks. A spouse, adult child, niece, nephew, or trusted friend may be your executor.

Estate Planning for Women at Any Age or Stage

Whether business owners, homemakers, stay-at-home moms, or dedicated caregivers, women need estate planning to protect themselves, their loved ones, and their futures. An estate plan is one of many ways to accomplish this.

Finding Fiduciaries

February 20, 2024 No Comments

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Finding Fiduciaries

Selecting fiduciaries becomes easier when the role is understood. A fiduciary is a person empowered to control different types of assets for another person, usually the intended beneficiary of the assets. The fiduciary must put the fiduciaries own interests aside and act in the best interest of the beneficiary, even when doing so is contrary to the fiduciary’s own interests.

Who Can Be a Fiduciary?

A fiduciary can be any person who has legal capacity, including family members. If you are not comfortable with a relative controlling your assets as a fiduciary, then you may prefer to have a non-family member or even a financial institution serve in that role. For example, an

electoral college — Clear and convincing evidence

estate planning attorney is a fiduciary by the nature of the legal and ethical role to act in the best interest of his or her clients, but an attorney also may serve as a fiduciary for an estate, a person, or a trust.

The fiduciary appointed to administer a trust and manage its assets is known as a trustee. If the trust is created under your last will and testament to administer the inheritance for your beneficiaries, then such trust is known as a “testamentary” trust. On the other hand, if the trust is created under your revocable trust established during your lifetime, then the inheritance trusts come into play upon your death. Both of these inheritance trusts are irrevocable, the difference is that the “testamentary” trust requires probate and the other does not.

The fiduciary nominated by you to carry out the probate and administration of your last will and testament is known as an executor (or personal representative). The executor must first receive permission from the court to carry out the executor’s responsibilities. This happens only after the last will has been presented for probate and the court has validated the last will and approved the executor’s appointment.

How Do I Select the Best Candidate to Be My Fiduciary?

Selecting a fiduciary to take care of your financial and legal decisions in the event of incapacity or death can be more difficult than deciding who you want to inherit your estate. If your family includes multiple marriages or there are long-standing conflicts among siblings, an impartial professional or institution may be a better choice.

We spend considerable time in many consultation meetings weighing out the pros and cons of alternative choices.

Selecting a fiduciary from an online platform is not recommended, but researching candidates online does make sense. Fiduciaries do not all have the same professional credentials. Conduct your own due diligence and comparison shop. Ask for fee schedules and an explanation of the decision-making process. With a nonfamily member fiduciary, drafting in the document a mechanism for removing without litigation, such as a trust protector, allows for checks and balances.

A recommendation from a trusted legal or financial professional, supported by research into the background of the potential fiduciary and a conversation that includes the question “Are you a fiduciary?” is how most people find their fiduciary.

What Should I Consider When Picking a Fiduciary?

Trust. Do you trust this person or institution to make decisions for you and to carry out your instructions, even if it is not the same decision that person or institution would choose?

Skilled with asset management. A fiduciary must have a wide skillset in managing investments, real property, and personal possessions. They need to be able to handle detailed transactions from beginning to end.

Able to work with your heirs. The fiduciary needs to be able to balance a good working relationship and deal with challenges, including personality clashes. Not all heirs appreciate having an outsider manage their inheritance.

Closing Thoughts

When choosing a fiduciary, it is important not to be swayed by personality or personal relationships. This is a business decision and one that needs to be made solely based on the evidence of competency and trust.

When Should an Estate Plan Be Reviewed?

January 10, 2024 No Comments

When Should an Estate Plan Be Reviewed?

Like a car, home, or garden, estate plans require ongoing care. Estate plans reflect the wishes and goals at a particular time in a person’s life. For example, when drafting a last will and testament during a person’s 30s or 40s, two key goals are protecting minor children by naming a guardian and ensuring the surviving spouse’s legal and financial protection if the chief breadwinner should

die unexpectedly. We suggest you revisit and review your estate planning documents every three years. For our clients, we don’t charge for the meeting, which can be in person or by Zoom.

Time for a Review

We have a Zoom online training session on “Reviewing Your Estate Plan” on Tuesday, February 6, 2024, at 6:30 pm. It will help you find the basic choices you made in creating your plan.

To register, you can click here.

Time brings changes to life and laws.

You may divorce and remarry, have children from a second marriage, or wish to be sure that children from your first marriage are not disinherited. Adult children don’t need guardians, but a developmentally disabled adult may require Special Needs Planning to protect their eligibility for government benefits while having access to money from the family to maintain their quality of life.

Life’s changes are one reason why estate plans need reviewing and updating on a regular basis. An annual review may be necessary for more complex estates, while for more straightforward, more modest estates, a review every three to five years should suffice.

Recent years have seen dramatic changes in state and federal laws regarding taxes and retirement accounts. An estate plan created ten years ago will likely contain many out-of-date strategies and missed opportunities.

Changes in relationships impact estate plans.

Most trusts and wills include people with roles like trustees, executors and guardians who are alive and well at the time of the last will’s drafting. However, if the executor of your last will has died, moved to another state, or isn’t a part of your life and refuses to serve, an out-of-date last will presents several problems. Did the last will include the name of a secondary executor, and is the second executor still available to serve? If not, your family may have to accept decisions a court-appointed administrator makes. Your family may petition the court to have a family member appointed. However, there’s no guarantee the court will honor this request.

Changing tax laws call for estate plan reviews.

Changes to tax laws in recent years have dramatically altered the estate planning landscape. Any estate plan created before the SECURE Act (January 1, 2020) needs a review.

The 2017 Tax Cuts and Jobs Act dramatically increased federal estate tax exemption levels. However, this is expected to be cut by half when the law sunsets on January 1, 2026. An estate plan based on the 2017 TCJA with no provision for a federal estate tax exemption sliced in half may present significant estate tax issues for many Americans.

Last-minute changes create challenges.

Procrastination is part and parcel of estate planning, even for the most diligent people. Planning for incapacity and mortality is far better than putting family members in the position of guessing what their loved one would have wanted or battling with the court or each other over property distribution. Promptly updating a comprehensive estate plan also avoids the stress of needing last-minute changes.

If you haven’t visited your planning in the last three years, please call and schedule a review meeting. We look forward to catching up.

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information, visit our website, where you can explore details about our firm, gain access to our informative blog, and enjoy a complimentary newsletter subscription.

Exercise the Will to Plan

December 11, 2023 No Comments

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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!

The Will to Plan

Despite the hectic pace of life in America today, most of us still enjoy a fair amount of leisure time. Almost all Americans (95 percent) engage in some leisure activity every day. In fact, according to the Bureau of Labor Statistics, we get about five hours of leisure time a day and spend most of it (almost three hours) watching television. The rest of the time, we do other activities like reading, relaxing and thinking, socializing, playing games, surfing the web, and participating in sports and exercise.

Conspicuously absent from that list is estate planning. Americans are almost overwhelmingly opposed to the idea. Harris Interactive recently polled more than 2,000 adults on the subject and found that 28 percent of us would rather do anything else, and nearly one-third said they would rather do their taxes or get a root canal.

Most Don’t Have a Will

Little wonder then, most of us (61 percent) don’t even have a Will, one of the most basic of estate planning documents. Dig a little deeper, though, and the numbers are even more disturbing. Among parents with minor children in the household, only 30 percent have a Will – the most universally accepted legal document for naming backup parents in the event the children are orphaned.

Of course, Wills are not the only documents needed to protect you (and your assets) in the event of death or incapacity. Another Harris survey found that only 29 percent of us have a Living Will to direct end-of-life medical procedures. Even older Americans are hardly prepared. The same Harris survey found that only 48 percent of those over age 65 have a financial power in place authorizing someone to make financial decisions for them if they are incapacitated, and only 51 percent said they had a healthcare power in place.

Even though estate planning is not on anyone’s list of Top Ten Favorite Activities, most of us realize the need to get at least basic planning in place to protect ourselves, our loved ones, and our assets from life’s uncertainties (and the one certainty of death). And yet, most of us haven’t done it.

Despite Good Intentions

Why not? The number one reason, given by more than 55 percent of respondents, is simple procrastination. Most people say they just haven’t gotten around to it.

If you’ve ever made a New Year’s Resolution, you know we all have good intentions … but our follow-through could use some work.

Piers Steel, a psychologist at the University of Calgary and one of the leading experts on procrastination, says it’s a “common pulse of humanity” to procrastinate despite our best intentions. “One thing that defines procrastination isn’t a lack of intention to work,” Steel says. “It’s the difficulty of following through on that intention.”

Steel goes on to say that for most of us, procrastination isn’t a pleasant experience. It’s a feeling of growing pressure – of knowing we will have to deal eventually with whatever it is we’re putting off … like creating the necessary legal documents to name backup parents for minor children, state our preferences for end-of-life medical care, designate financial and health care decision-makers in the event of our incapacity or death, and outlining a plan to distribute our assets after death. As difficult as those decisions can seem – putting them off by procrastinating only adds to the pressure and makes us feel worse. In fact, Steel writes in his book, “The Procrastination Equation,” that procrastination leads to lower overall well-being, worse health, and even lower salaries.

Beating Procrastination

If you have resolved to get your estate plan in place or up to date in 2024 – good for you!

Now, here’s a plan to beat procrastination: Steel says the trick is to reframe broad, ambitious goals into concrete, manageable, immediate chunks.

So, instead of saying, “This year, I’m going to get my entire estate plan in order,” break that down into smaller, less formidable goals. For example, the first step is to call our office and schedule an initial consultation of review meeting. Don’t let yourself get stalled by thinking of all the decisions you must make to complete a comprehensive plan. Focus on one quick, easy decision. a

Get a date on your calendar in January 2024.

Young Adults and College Planning

November 1, 2023 No Comments

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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 a complimentary newsletter subscription!

College and Estate Planning

College and estate planning intersect at several points that should be considered when planning for the future. When applications and essays are due, let’s talk about some consequences of the college transition to the family.

Planning for College Costs

Opening and funding a 529 College Savings Account to benefit a child or grandchild helps family members invest tax-free for educational expenses. Each state has its own plan. If you invest in your own state’s plan, you may get a healthy deduction on state income taxes. In addition, funds in the account grow tax-free, and there are no taxes on capital gains. For grandparents, funding a 529 account is an excellent way to help pay qualified education costs, while reducing their taxable estate. However, there are limits to contributions, which vary from state to state.

Another means of funding a family member’s educational expenses while reducing the taxable estate is for grandparents to pay for tuition and other qualified expenses. These payments must be made directly to the educational institution to qualify for an exception to the annual gift exclusion limit of $17,000.

Estate Planning for Young Adults

Preparing young adults for the future includes planning for the unexpected. Once young adults become of legal age under state law, their parents lose legal authority to be involved in the children’s financial or legal matters. Parents do not automatically inherit a child’s estate, so those who have inherited family wealth or are entrepreneurially minded may have enough assets to warrant having a last will.

Once their children are legally adults, parents also lose legal authority to be involved in their children’s health care, even in an emergency. Parents may not speak with doctors of their children, access their medical or health insurance records, or make health care decisions if a young adult child is incapacitated. This may seem shocking, but it’s the law. Physicians and hospital systems today don’t have the flexibility to bend the rules as they may have done in the past.

Parents and their young adult children can prepare for worst-case scenarios with several estate planning documents: General Durable Power of Attorney, Healthcare Power of Attorney, Living DNR Will, and HIPAA form.

A General Durable Power of Attorney allows another person to manage finances. The Health Care Power of Attorney allows another person to discuss medical care and be involved in decision-making. HIPAA forms are needed to permit another person to access health care and insurance records.

An 18-year-old seems like the last person needing a Living Will. However, it is necessary. A Living Will is used to give directions about the kind of care they would want if they had a terminal illness or were critically injured in an accident and unable to convey end-of-life wishes. The Living Will should be specific, especially relating to CPR, resuscitation, the use of a ventilator, or the use of a feeding tube.

Most young adults aren’t thinking about final wishes or handing over the ability to manage their finances. However, these documents are still just as necessary for a newly minted-adult as for a senior. They provide peace of mind, make difficult situations more manageable, and are an emblem of maturity—planning for the future, whatever it may bring.

Another Prospect: Our City of Laurel Elections are on November 7th

If you are within the City of Laurel, please vote for my associate attorney, Stephen J. Wallace, for Ward One, and my Accountant, Adrian Simmons, who is also running for an At-Large Seat on the City Council.

They are both honest, smart, and hard-working men with families and business interests. They will work hard for Laurel.

Multiple Marriages and Blended Families Create Unique Situations

September 13, 2023 No Comments

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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!

Multiple Marriages and Blended Families Create Unique Situations

Planning for incapacity and death in a blended family requires a more complex approach than for traditional families. By its very nature, the blended family has more fault lines. As parents and stepparents age, planning needs to take this fact of modern life into consideration.

Clarifying Roles and Making Decisions About Responsibilities

Roles and responsibilities should ideally be assigned in advance based on skills and availability. This is not the time to make up for past slights. All of the stepsiblings should be considered in light of their abilities to manage finances, follow instructions for health care decisions, and communicate with all step-siblings. The nature and quality of the relationships should be considered in weighing out responsibilities. Dividing along biological lines may not be the right solution. This needs to be discussed and resolved.

Someone needs to be appointed as the primary decision-maker (known as an agent or attorney in fact) under a health care power of attorney (or proxy) and a financial power of attorney. If a revocable living trust is created, someone will be named to serve as a trustee. Commonly, the person appointed as trustee also serves as an executor under a last will and testament. All children need to know their tasks and who has been chosen for which role. Appointing successors for each of these roles is a smart and practical move.

Incapacity Can Be More Challenging than Death

If one spouse becomes incapacitated, usually the healthy spouse steps in to make medical decisions, manage finances, provide care for the spouse, and run the household. If the relationship with stepchildren is good, the well spouse may be able to continue as the primary family contact.

Unfortunately, the family dynamic deteriorates in many cases when one parent becomes incapacitated. The well spouse may attempt to limit children’s access to visit their ailing parent, claiming their parent is not well enough to see them. Assets may be moved to hide them from biological children. If Medicaid planning is done without any involvement from the children, it may appear that assets are being secreted away. Communication between aging parents and stepsiblings needs to address these issues in advance, especially if there are issues within the family.

Managing Expectations for Inheritances

To avoid children being disinherited, trusts can be structured to distribute wealth in a deliberate manner. One strategy is to place assets in a trust for the surviving spouse, so when the second spouse passes, assets will be transferred either to an individual trust for each of the stepsiblings or directly to the stepsiblings as beneficiaries. If all assets from the first spouse pass to the surviving spouse, there is no means of protecting the assets for the biological children of the first spouse and litigation may ensue.

Family Meetings with Professional Advisors

To avoid the potential issues described above, a series of family meetings where all parents and all stepsiblings are present should be scheduled. Video meetings allow everyone to be included, regardless of where they live. Incapacity planning, finances, end-of-life wishes, and even funeral arrangements should all be discussed. Expectations should be set for inheritances now—it is best for stepsiblings to know what the future holds to eliminate surprises.

Distributing Personal Items to Prevent Family Fights

The biggest fights are often over sentimental items with the least value. To preclude post-mortem quarrels at a time when emotions are running high, a written memorandum disposing of tangible personal property (whether a ceramic frog collection or an heirloom Civil War sword) can be written to clarify which items should pass to which child. The laws of most states provide for this approach, especially when the memorandum is incorporated by reference in a last will and testament. Appointing a fair-minded person who can handle some stress is the key.

In explaining the decisions may be helpful to keep arguments at a minimum. Alternatively, some parents give sentimental items away while they live, gifting with warm hands. Both the giver and the recipient can share the sense of passing family belongings to the next generation.

Maryland’s New Law: Inheritance Tax Exemption for Domestic Partners

August 14, 2023 No Comments

If you know a couple that is living together in a committed relationship and are not married, there is a significant change in Maryland Law that could save them many thousands of dollars.

Maryland has an inheritance tax of 10% if you leave property to people who are not close relatives. Exempted from that tax are spouses, descendants, parents, grandparents, and brothers and sisters. Among the people who pay 10% are “Domestic Partners:” people who live together in a committed relationship but are not married. As Maryland does not recognize common law marriage, a long-time “Significant other” pays a 10% tax.

One exemption to this tax is for jointly owned real estate of a Domestic Partner.

“Domestic partnership” is defined according to the definition of the term under the Health-General Article (relating to hospital visitation and medical emergencies). “Domestic partnership” is a relationship between two individuals who (1) are at least 18 years old; (2) are not related to each other by blood or marriage within four degrees of consanguinity under civil law rule; (3) are not married or in a civil union or domestic partnership with another individual; and (4) agree to be in a relationship of mutual interdependence in which each individual contributes to the maintenance and support of the other individual and the relationship, even if both individuals are not required to contribute equally to the relationship.

Several years ago, I had a client who was terminally ill. He was leaving his “Significant other” over $600,000 from his retirement plan. I told her of the tax she would need to pay. He discussed the possibility of marriage. He said he talked to his CPA, who assured him there was no such tax.

CPAs generally don’t work on inheritance tax issues and the CPA was wrong. When my client died, the inheritance taxes exceeded $60,000.

NEW MARYLAND LAW

Maryland has a new law taking effect October 1, 2023, that exempts from inheritance taxes all tax property owned by domestic partners if the Couple files a Domestic Partner Certification with the register of wills and it is accepted. Although the forms are not yet in, the register of wills has presented a basic overview.

Parity with “Marriage” and “Spouse”
The bill alters various definitions and provisions in the Estates and Trusts Article so that, in many cases, a “registered domestic partnership,” and a “registered domestic partner” are treated the same as a marriage, and a spouse, respectively. In the following statutory provisions of the Estates and Trusts Article, the bill adds “registered domestic partnership” where the term marriage appears, and adds “registered domestic partners” where the term spouse appears:

definition of a child;
provisions related to intestate succession, including share of the surviving spouse, division among surviving issue, distribution when there is no surviving issue, and inheritance from a person born to or conceived by individuals who are not married;
family allowance; and
order of priority for letters of administration, appointing a successor personal representative, or appointing a special administrator, as specified.W

While you may not be living with someone you are not married to in a romantic relationship, you likely know someone who is cohabitating. If you do, I strongly suggest that you pass this newsletter on to them and recommend that they see an estate planning attorney as soon as possible. You could save a friend many thousands of dollars with this important information.

Conclusion:

The new law in Maryland regarding domestic partners and inheritance tax represents a significant step towards achieving equality, recognition, and financial security for domestic partners in Maryland. By providing the same inheritance tax exemptions as married couples, Maryland recognizes the value and validity of domestic partnerships and aims to eliminate disparities in tax burdens.

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