Downs Law Firm, P.C.

Living Trust

A Revocable Living Trust Might Be a Good Fit

There are many kinds of trusts. They aren’t just for the wealthy. Our practice has featured the preparation of wills and trusts exclusively since 1995. In the intervening years, we have prepared thousands of each such plans, and now work extensively implementing them after a client has died. Our caseload is now about 45% administration of wills and/or trust. We are often asked by clients which is better. That depends on many factors. But Trusts seem like a much better choice often, after the time comes to use the planning. If maintained and funded, a trust can be more cost effective, private and easier to administer. On the other hand, I know many attorneys who scoff at the notion of using a trust for people who are not millionaires. Probate, they often assure, is not so bad. And is a trust necessary? Everyone needs an estate plan.  However, everyone should also at least consider a trust, according to The New York Times in “Life After Death? Here’s Why You Should Have a Trust.”It turns out that many people who are not wealthy, can also benefit from having a trust. There are many different kinds of trusts which serve different purposes. One is a revocable trust, which the owner can change. They are considered by many to be the “work horse” of modern estate planning. A revocable trust can avoid the need for a public probate court proceeding after the person dies, saving time and keeping money from being immediately available to heirs and executors alike. Trusts are also useful for times when people become incapacitated and need someone else to take care of their finances. Because many more people are living longer and the number of people with dementia is increasing, there are more situations where trusts are useful to the family and caregivers. A will is different than a trust and is a public document. The probate process requires a disclosure of assets, bank and other financial accounts and the names of beneficiaries. That information remains private with a revocable trust. Other considerations regarding trusts: You should have any type of trust set up by an estate and trust attorney. A house, real property, bank or investment accounts can be placed into a trust. A revocable trust does not always end at the death of the original owner. However, just how long it may last, depends upon the laws of your state. People also use trusts to protect their assets from others or to assure the long-term care of someone who is disabled. You can have a professional manager, family member or friend as a trustee or co-trustee of a trust. Sometimes having a licensed professional who has federal reporting requirements can provide an extra layer of protection. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include taking a close look at trusts. Reference: The New York Times (March 22, 2018) “Life After Death? Here’s Why You Should

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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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