Downs Law Firm, P.C.
Downs Law Firm, P.C.
Your estate plan isn’t finished just because your attorney has drawn up a will. Proper asset titling is the next step.
Probate is what’s left over I draw about ten frying pans a week on a legal pad. This is not due to my great artist ability. We offer fee consultations to our client’s named financial successor after a person dies. That would be the Personal Representative, or executor, of a Last Will and Testament, or the Successor Trustee of a Revocable Living Trust. For trust clients, they are almost always the same person(s). In those consultations, I draw a frying pan. You see, Wills work through a Court process called probate. They are not effective until a Court appoints you as the actual representative, in Maryland by passing an Order and issuing Letters of Administration. Probate is the process of “Proving” the Will, meaning that interests parties are notified, and have a chance to object to the will. It is not necessarily good or bad. It is necessary if a will is to be used to distribute assets. Assets don’t necessarily go through this process: Often nothing does. The process is avoided by either Title or Contract. Title is by the form of ownership: Most husbands and wives own virtually everything this way as tenants by the entireties (T by E). If your spouse dies and the house, bank accounts and vehicles are in both names, then they are not in the frying pan. They get diverted by the title. You can own assets jointly with rights of survivorship (JWROS). At the death of one joint owner, the assets go to the survivor. You can also own property with another person as tenants-in-common, meaning that title of your portion does not convey by title at death. Like everything in life, title transfer can be good and bad. It’s great because it’s free. It’s bad because it can have unintended consequences. I transfer my house to myself and my son as joint owners, to “avoid probate”. My son has a car accident, and suddenly I may lose my home because my son owns part of it. Adding someone to the deed is simple, but not necessarily a good idea. I had a client who had two nieces that she put on her two investment accounts, each with a balance of about $200,000. One niece was named as a joint owner of each account. She later entered a long-term care facility. Her one niece dutifully paid the bill for over a year. The other decided to wait and see. When my client died, the niece who was faithful to her got next to nothing, while the other got her full account. How do you think they are now getting along? Also, it may be that a beneficiary should receive their inheritance in a controlled manner. Special needs beneficiaries need may want their benefits preserved. Someone with a drug problem might be best served with specific controls. A child getting divorced might want to buffer their inheritance. Title transfers are simple but don’t allow for any controls. They say there is more than one
Snowbirds Checklist Heading is a good idea but consider legal issues before leaving. If you are a retiree who heads south after the holidays, it might be wise to create a checklist of at least four personal legal business items, according to LimaOhio.com in “Extra checklist before heading south for the winter.” Not that January and February aren’t delightful here in the Baltimore-Washington area… First, make sure that your living will and healthcare power of attorney documents have been updated. Does your family have copies of these documents? Or do you emailed copies to them ? If you have these documents with us, we now scan them and forward a copy to you to send on to your decision makers. If they save that email, they will also have our contact information to access your Property Power of Attorney if needed. Second, discuss the location of your estate planning portfolio with them, and how to contact your estate planning attorney. Update them if changes need to be made and get copies to your children and/or friends. Third, make sure that your last will and testament is updated. Have you had any big changes in your life since the last time it was reviewed? Marriages, deaths, divorces, births, and adoptions are the typical “trigger” events that signal a need for review. Being out of town for an extended time is a good prompt to review how current your documents are, and how they address your concerns. Who will have that document? If your estate planning attorney maintains original copies for clients, then make sure to have another original on your person or safely secured with a loved one. Lastly, and this takes a little time but is well worth doing, create a list of all your assets. Make sure they are properly titled for your situation. Should you have all your bank accounts become Payable on Death to your spouse? When was the last time you checked your beneficiary designations? Chances are good there are beneficiary designations on your bank, investment, and retirement accounts and on your life insurance policies. Wherever you have a beneficiary designation, you should also have a contingent beneficiary. An estate planning attorney can advise you snowbirds on creating an estate plan that fits your unique circumstances and may include a trip in a southerly direction. Reference: LimaOhio.com (Oct. 13, 2018) “Extra checklist before heading south for the winter”
“Put not your trust in money, put your money in trust”, per Oliver Wendell Holmes, Sr. is embraced by estate planning lawyers and shows that trusts are not a passing fad. Everyone needs an estate plan, and when you understand what a trust does, your plan should probably include one, at least conditionally. 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. I consider a trust essentially a box to manage assets. There are many different kinds of trusts which serve different purposes and can be effective now or at death. 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. Such a trust is created and holds assets during your lifetime. Other considerations regarding revocable 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. They are not a public record, unlike your will. 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 trust can also be created in your Last Will and Testament. We rarely create a will without a trust. A trust created in a will is a “Testamentary Trusts” because it is within your Last Will and Testament, but it can manage assets in much the same way as a revocable trust would. The difference is mechanical: the Testamentary Trust receives asset often through a probate process, because wills work through probate. A Testamentary Trust can be a designated beneficiary of life insurance, retirement plans and annuities. Care should be taken in drafting and when doing so because of issues like stretching out IRA withdrawals. 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