Downs Law Firm, P.C.

Basic estate planning tools

Four Basic Estate Planning Tools

It was reported on the news recently that some of Aretha Franklin’s family members have found what they believe to be her will. It was handwritten, stained, and crumpled up in a couch. The courts may or may not choose to honor it, depending on whether or not they are able to verify its authenticity.

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Guardian

Is a Guardian needed? Take a Look at All the Options

Some of the options are less intrusive than a guardianship or a conservatorship. Sometimes guardianships and conservatorships are necessary when some members of a family believe a loved one is becoming mentally or physically incapacitated. However, there are other options, according to On Common Ground News in the article “Alternatives to guardianship and conservatorship.” What is the difference between the two? These are legal proceedings that vary in name from State to State. In Maryland, these proceedings are guardianships and take two forms: Guardian of the person and guardian of the property. A Guardian of the person decides on living situation and most medical care: Guardian of the property handles the property and lets the appointed person their ward’s finances and assets, buy and sell businesses and enter into commercial transactions. Either process will involve a court proceeding, ordinarily with an attorney representing the family and a separate attorney representing the incapacitated person. Guardian of the person can sometimes be avoided by relying on the Maryland Health Care Surrogate law, that basically allows next of kin to make medical decisions for someone who does not sign a living will or health care power of attorney. This can be a good alternative to Court if the family is united in their decision making. It doesn’t work well if they are not. Alternative options to Guardian of the property include a Durable Power of Attorney (DPA), which permits a competent individual to name another person as their legal representative regarding finances and other matters. There can be specific instructions, and this also can include an agent who is named to make health care decisions. A DPA is broader in power than a living will and applies any time the individual becomes incapable of either making or communicating health care decisions on their own behalf. A second alternative is the creation and funding of a revocable living trust, where you can appoint a chain of command for the management of assets in the Trust. Many of our clients name a trustee child or other individual to be a Co-Trustee, to be in the wings to manage assets at disability. An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference: On Common Ground News (Nov. 29, 2018) “Alternatives to guardianship and conservatorship”

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Income taxes for a decedent

The Twilight of Capacity for a Parent?

The path from capacity to incompetent can be slow and difficult to analyze. Some of the most difficult calls we handle involve the question of when a parent can still make his or her own decisions. As your Mother of Father ages, there may be times that you question if they are still competent because you wonder about some decision, such as money use or decisions about friends. Bringing up that question can be a difficult challenge, as Forbes discusses in the article in “Aging Parents at The In-Between Stage: Partially Competent and Partially Not.” In that example, the aging parent presents well to the outside world, socializes well and seems to have all his faculties. The problem is, the children who know him see changes and worry about what might happen in the near future. Their father had always handled his own finances, and now he’s giving money away to anyone who asks for it. He is going through his accounts at a surprising rate, unlike his lifetime behavior of being an extremely careful money manager. In this case, the first step for this family: a meeting with all the adult children and an estate attorney. [Note that an independent attorney may be required, as the attorney drafting the document represents the father, and could have a conflict of interest not including the father in the discussion]. They start with a review of the legal documents that had been prepared previously by the attorney. A Durable Power of Attorney had been put in place, when the oldest child had been appointed as his agent, with unrestricted powers. She had the legal authority to take over the management of her father’s accounts. By using the Durable Power of Attorney, she was able to gain online access to all her father’s accounts to see what was actually going on. It was worse than the family expected. He had given money away to charities and to strangers. Armed with this information, she had to speak with her father. He bristled, but she persisted, knowing that she had the legal right to do this and the support of her siblings. She suggested that she visit him to help out. It took several weeks of suggesting it, but at last, he relented. On his desk, she found collection notices and a cancellation notice from his car insurance company for failure to make payments. By presenting the prospect of not being able to drive because of a lack of insurance, she got his attention to the seriousness of the matter. Next, his assets were moved out of accounts where he had access. He continued to give away his money, but she controlled how much damage he could do. This family was able to protect their father from a free-fall into poverty and dependency, because proper estate planning had been done well in advance, and they sought out proper advice. An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference:

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Your Estate Plan’s Right Documents

There are some important documents that should always be in your estate plan to protect your family. However, some people still leave them out, according to Consumer Reports in “8 Essential Steps for Estate Planning.” A survey from Caring.com showed that as many as 60% of adults don’t have estate planning documents. When they asked families with young children, fewer than one in ten have even designated a guardian to take care of their children, if both parents should die. Worse yet, we have worked with numerous cases where people thought they had documents in place, but due to their own misunderstanding of the law or requirements, their plans were agonizing disappointments of what should, and could have been… What happens when there’s no planning in place? Even the simplest things become more complicated, and complicated things become financial and legal nightmares. When there’s an emergency and decisions need to be made, the entire family is subjected to more stress and costs than would otherwise be necessary. Here are the eight steps you need to take, right now, to protect your family: Get the professional help you need. The change to the tax law may or may not impact your family and your estate plan, but you won’t know until you sit down with an estate planning attorney. Trying to do this online, may seem like a simpler way, but you will not have the same peace of mind as when you sit down with an experienced attorney—and one who knows your state’s laws. Create a will. This is a legal document that explains how you want your assets to be distributed after you die. It names an executor to carry out your instructions. If you have minor children, this is an especially important document, since it is used to name their guardian. If you have no will when you die (called dying “intestate”), then the laws of your state determine how your assets are distributed and who rears your children. Depending on where you live, your spouse might not automatically inherit everything. Discuss whether you need a Revocable Living Trust. In most states, when you pass away, your estate goes through a process called “probate.” The courts basically review your estate plan and determine whether everything looks right. The problem is that your will becomes a public document—and so does information about your assets. Some people prefer to keep their lives private by transferring assets to a revocable living trust, which distributes assets according to your instructions at your death. Titles to the assets must be changed so they are “owned” by the trust. This is known as “funding” the trust. You still retain complete control of your assets, since you are the trustee. However, if you fail to retitle assets, the estate goes through probate. You will also still need a will to protect your minor children. Review your beneficiaries. Whether you remember it or not, when you open many different kinds of accounts—banking, investment—you assign a beneficiary

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