Read more about the article Should You Worry About Death Tax Liabilities?

Should You Worry About Death Tax Liabilities?

If you own real estate, investment accounts, or significant personal property and wish to transfer those assets to your loved ones, at a minimum, you need a will. But a comprehensive estate plan does more than just distribute assets, it anticipates and mitigates potential tax liabilities that could reduce the legacy you intend to leave behind.

A recent Go Banking Rates article, “Inheritance Tax 2025: Rates, Exemptions and How to Avoid It,” underscores the importance of proper planning. Even if your estate falls below the current federal estate tax exemption—$13.9 million for 2025—it may still be subject to state-level inheritance taxes, which are imposed independently of federal rules.

Which States Impose Inheritance Taxes?

Several states continue to levy inheritance taxes, which may be paid by the heirs rather than by the estate. Maryland and Pennsylvania, for example, impose such taxes. If you reside in one of these states, or have beneficiaries who do, it is essential to take proactive steps to avoid saddling your heirs with unexpected tax burdens.

Strategies to Minimize or Eliminate Estate and Inheritance Taxes

Fortunately, there are several legal strategies available to reduce, or in some cases eliminate, estate and inheritance tax exposure. These include:

1. Lifetime Gifting

The federal annual gift tax exclusion allows individuals in 2025 to give up to $19,000 per recipient without triggering gift tax or IRS reporting obligations. Married couples can combine their exclusions to gift up to $38,000 per person per year.

Larger lifetime gifts can further reduce the size of your taxable estate. While these may count against your federal lifetime estate tax exemption, many states with inheritance taxes do not impose tax on lifetime gifts, making gifting a useful planning tool.

2. Trust-Based Planning

Trusts can be instrumental in removing assets from your taxable estate. The type of trust selected depends on your specific planning goals:

  • Irrevocable Trusts: Transfer ownership of assets out of your estate, although they require relinquishing control over those assets.

  • Qualified Personal Residence Trusts (QPRTs): Allow you to transfer a residence to heirs at a reduced gift tax cost.

  • Bypass Trusts (Credit Shelter Trusts): Commonly used by married couples to fully utilize both spouses’ estate tax exemptions and reduce overall tax exposure.

Proper trust selection and implementation require careful drafting and should be handled by an experienced estate planning attorney to ensure tax efficiency and legal validity.

3. Charitable Giving

Charitable contributions made to qualified 501(c)(3) organizations are fully exempt from estate and inheritance taxes. Options for charitable giving include:

  • Outright Bequests: Gifts made through your will.

  • Lifetime Donations: Gifts made during your lifetime may also carry current-year income tax benefits.

  • Charitable Trusts:

    • Charitable Remainder Trusts (CRTs) provide income to your heirs for a fixed period, after which the remainder goes to charity.

    • Charitable Lead Trusts (CLTs) do the reverse, providing income to a charity first, with the remainder passing to your heirs.

Estate and inheritance tax laws are complex, frequently changing, and vary significantly from state to state. To ensure that your legacy is preserved and your heirs are protected from unnecessary tax burdens, consult with an experienced estate planning attorney.

At Sims & Campbell, we help individuals and families navigate the legal and tax implications of wealth transfer with clarity, compassion, and precision. Schedule a consultation to understand your estate tax obligations and create a tailored plan that aligns with your goals.

Reference: Go Banking ( April 14, 2025) “Inheritance Tax 2025: Rates, Exemptions and How to Avoid It”

Read more about the article What to Do After Spouse Dies

What to Do After Spouse Dies

The death of a spouse brings not only grief but also significant financial and legal responsibilities. Many surviving spouses are unprepared for the number of tasks required to settle an estate, update legal documents and secure their financial future. While it may feel overwhelming, addressing these issues promptly helps prevent unnecessary complications and ensures that assets and benefits are properly managed and protected.

Immediate Steps to Take

In the first few days following a spouse’s passing, several critical steps must be completed. Obtaining multiple copies of the death certificate is essential, as financial institutions, insurance companies and government agencies will require official documentation. A funeral home or county records office typically provides these certificates.

If your spouse had a will or trust, locating these documents should be a priority. The executor or trustee will need to begin the process of distributing assets and handling the estate. If no will exists, the estate will be administered according to the state’s intestacy laws, which determine how assets are distributed.

Contacting the Social Security Administration is also necessary. If your spouse was receiving Social Security benefits, those payments will stop. You may be eligible for survivor benefits, which can provide financial support. If your spouse had life insurance, now is the time to file a claim to receive the policy’s payout.

Managing Finances and Estate Settlement

One of the most challenging aspects of losing a spouse is adjusting to financial changes. Start by notifying banks, credit card companies and investment firms to update account ownership and remove your spouse’s name. If accounts are held jointly, they may be transferred automatically. However, individual accounts may need to go through probate before funds can be accessed.

Mortgage lenders, utility companies and insurance providers should also be informed. If your spouse had outstanding debts, it is important to determine whether you are legally responsible for them. Some debts may be covered by life insurance or paid off using estate assets.

If your spouse had a trust, their assets may pass directly to beneficiaries without the need for probate. However, if they only had a will or no estate plan, probate court proceedings will be required. A probate attorney can guide you through the process, ensuring that debts are paid, and assets are distributed correctly.

Updating Legal and Financial Documents

A spouse’s death often requires updating legal documents to reflect your new situation. Suppose your spouse was listed as a beneficiary on retirement accounts, life insurance policies, or payable-on-death bank accounts. In that case, you may need to update these designations to ensure that your assets are distributed to the intended individuals.

Estate planning documents, such as your will, trust, or power of attorney, should also be reviewed. If your spouse was named as your agent, executor, or trustee, you will need to appoint a new person to handle these responsibilities. Failing to update these documents could lead to confusion or disputes in the future.

Property ownership should also be reviewed. If you and your spouse owned a home together, you may need to update the deed to reflect sole ownership. Some states allow property to transfer automatically, while others require filing new paperwork with the county.

Planning for the Future

Beyond handling immediate legal and financial matters, it is important to consider long-term financial planning. Adjusting to a single income may necessitate adjustments in budgeting, investment strategies, or retirement planning. If your spouse had pension benefits, annuities, or employer-sponsored retirement plans, determine whether you are eligible for continued payments or survivor benefits.

Your spouse’s passing may also impact taxes. Filing a final tax return for your spouse is required, and additional estate or inheritance taxes may be due, depending on the estate’s value. Consulting with a financial advisor or estate attorney can help you navigate these complexities and make informed decisions about managing assets moving forward.

Reach Out for Legal Guidance

The loss of a spouse is life changing. However, taking the right steps can help ease the burden. Seeking legal and financial guidance ensures that assets are handled correctly and that your financial future remains secure. Get in touch today to schedule a consultation with our estate administration team and find the assistance you need.

Key Takeaways

  • Gather essential documents immediately: Death certificates, wills and trust documents are needed to settle financial and legal matters.
  • Notify financial institutions and government agencies: Social Security, banks and insurance providers must be informed to update accounts and process benefits.
  • Review estate planning and beneficiary designations: Updating wills, trusts and account beneficiaries prevents complications in the future.
  • Manage property ownership and debts carefully: Contact mortgage lenders, creditors and utility companies to settle outstanding obligations.
  • Plan for financial stability: Adjusting to a single income requires reviewing budgets, investments and tax considerations.

Reference: Principal Financial Group (Dec. 19, 2023) “What to do when your spouse dies: a financial checklist”

Read more about the article The Anticipated ‘Great Wealth Transfer’ and Estate Planning

The Anticipated ‘Great Wealth Transfer’ and Estate Planning

As a huge number of baby boomers turn 65 from now through 2027, most people should be thinking about managing their money amid the so-called “great wealth transfer,” when as much as $72 trillion is expected to move from one generation to the next. A recent article from MarketWatch, “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow,” offers some tips.

Every adult should have a last will and testament and a financial power of attorney, so someone can manage their financial affairs if they become incapacitated. You’ll also need an advance medical directive to name a person who can make medical decisions on your behalf.

Update beneficiary designations on 401(k)s, investment accounts and any financial accounts naming a beneficiary. Whatever is on those documents supersedes trusts and wills. These should be reviewed every few years or after any major life events like marriage, divorce, the birth of new children or grandchildren, or the death of a beneficiary.

Secure your important documents and make sure your executor, trustee, and a trusted family member know where they are. The executor should also have contact information for your estate planning attorney, CPA and financial advisor.

Review your overall estate plan every three to five years. If your estate plan was created when your  children were minors and now they’re adults, it’s time to revisit your estate plan.

A will alone might work for a simple estate. However, if you have complicated finances or significant wealth, you should talk with your estate planning attorney about creating a Revocable Living Trust. Putting assets into trusts allows assets to pass to beneficiaries without going through probate, which is often expensive and time-consuming. Once the trust is established, you’ll need to fund it by retitling assets, so they are taken out of your estate and owned by the trust.

Wills, trusts and estate planning documents should be reviewed and updated on three occasions: every three to five years if your life doesn’t change much, every time there is a major event in your life, commonly called a “trigger” event and whenever there is a large change to tax laws.

The estate planning community is now preparing for the possible end of the Tax Cuts and Jobs Act of 2017, which raised the federal estate and gift tax exemptions to historically high levels. Unless the rule is extended, on January 1, 2026, these limits will return to previous amounts, with estates around $7 million subject to federal estate taxes. If your wealth is near the $7 million mark and you haven’t met with your estate planning attorney to prepare for this potential change, now is the time to make an appointment.

Once your estate plan is up to date, it’s a good idea to have conversations with family members, the people you’ve named as executors, power of attorneys, and beneficiaries. If you have a plan but haven’t shared it with children or beneficiaries, it could lead to family fights, even leading to litigation.

Your estate planning attorney will help create an estate plan to meet your needs and protect your loved ones. It’s a task to tackle sooner, rather than later. Contact us today to schedule a consultation with one of our experienced estate planning attorneys in our Annapolis and Towson offices.

Reference: MarketWatch (April 3, 2025) “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow”

Read more about the article Removing a Trustee Due to Incapacity

Removing a Trustee Due to Incapacity

A trustee is responsible for managing and distributing assets according to the terms of a trust. However, when a trustee becomes mentally or physically incapacitated, they may no longer be able to fulfill their legal and fiduciary responsibilities. In such cases, the beneficiaries or co-trustees may need to take steps to remove the incapacitated trustee and appoint a capable replacement.

Removing a trustee due to incapacity is a sensitive legal matter. It requires careful planning and adherence to the terms of the trust. Understanding the process and potential challenges can help protect the trust and ensure that assets continue to be appropriately managed.

Identifying Signs of Trustee Incapacity

A trustee’s incapacity is typically related to cognitive decline, physical illness, or other conditions that prevent them from effectively managing the trust. Common signs that a trustee may no longer be fit to serve include:

  • Forgetting important financial obligations or failing to distribute assets as required
  • Making poor financial decisions that jeopardize the value of the trust
  • Neglecting record-keeping responsibilities, leading to missing or inaccurate financial reports
  • Becoming unresponsive to beneficiaries or failing to communicate about trust matters
  • Receiving medical diagnoses, such as dementia or severe physical impairments, that prevent them from fulfilling their duties

Incapacity can be gradual or sudden, so it is crucial to monitor the trustee’s ability to manage the trust effectively and act when necessary.

Reviewing the Trust Document for Removal Provisions

Most well-drafted trusts include guidelines for removing a trustee in the event of incapacity. These provisions often specify:

  • Who has the authority to remove a trustee (e.g., beneficiaries, co-trustees, or a trust protector)
  • What evidence is required to prove incapacity, such as a physician’s certification or court determination
  • The process for appointing a successor trustee to take over management responsibilities

If the trust document clearly outlines removal procedures, the process can be relatively straightforward. However, if the document does not specify incapacity procedures, court intervention may be required.

Seeking Medical and Legal Evidence of Incapacity

In cases where a trustee’s incapacity is disputed, gathering medical and legal evidence is necessary. This often includes:

  • Medical documentation from a licensed physician stating that the trustee is no longer capable of making financial decisions
  • Statements from beneficiaries or co-trustees detailing instances of mismanagement or neglect
  • Court petitions, if necessary, to legally establish the trustee’s incapacity and authorize their removal

Having clear documentation can prevent unnecessary legal disputes and ensure a smooth transition of trustee responsibilities.

Initiating the Removal Process

If the trust document provides a process for removal, the first step is to follow the outlined procedures. This may involve notifying the incapacitated trustee, obtaining required medical opinions and formally naming a successor trustee.

If no removal process is specified in the trust, the beneficiaries or co-trustees may need to file a petition in probate court to request judicial intervention. The court will review medical evidence, evaluate the trustee’s condition, and determine whether removal is in the best interest of the trust and its beneficiaries.

Appointing a Successor Trustee

After the incapacitated trustee is removed, a new trustee must be appointed to manage the trust. The trust document typically designates a successor trustee. However, if no successor is named, the beneficiaries or the court may need to appoint one.

Choosing a responsible and qualified individual or corporate trustee ensures that the trust remains properly managed and continues to serve its intended purpose.

Preventing Future Issues with Trustee Incapacity

To avoid future complications, it is essential to include clear incapacity provisions in a trust. These provisions should outline who has the authority to remove a trustee, what documentation is required and the process for appointing a successor.

Families can also consider appointing co-trustees or a trust protector who can step in if the primary trustee becomes incapacitated. Taking these steps ensures that the trust remains in capable hands and that assets are protected for beneficiaries. If you are concerned about a loved one’s capacity to serve as trustee, contact us to speak with one of our experienced estate planning attorneys.

Key Takeaways

  • Incapacity can severely impact trust management: A trustee who can no longer fulfill their duties may mismanage funds or neglect important responsibilities.
  • Trust documents often outline removal procedures: Many trusts include specific guidelines on how to remove an incapacitated trustee and appoint a successor.
  • Medical evidence is essential in disputed cases: A physician’s certification and legal documentation help confirm a trustee’s incapacity.
  • Court intervention may be required: If the trust lacks removal provisions, beneficiaries may need to petition the court for the removal of the trustee.
  • Proper estate planning prevents future issues: Including incapacity clauses and naming a successor trustee in advance ensures a smoother transition.

Reference: ACTEC Foundation (January 2024) “Practical Considerations in Dealing with Incapacity”

Read more about the article Managing a House After a Relative’s Death
house after death

Managing a House After a Relative’s Death

When a loved one passes away, their home is often one of the most significant assets left behind. However, managing an inherited property can be complicated, involving legal procedures, financial obligations and potential family conflicts.

Knowing what steps to take can help heirs navigate the probate process, handle property expenses and decide whether to sell, rent, or keep the home.

Understanding Probate and Property Transfers

1. Determining Ownership and Title

Before making any decisions, confirming who legally owns the property is essential. Ownership depends on:

  • Whether the deceased had a will or trust specifying beneficiaries
  • The state’s inheritance laws if no will exists (intestate succession)
  • Whether the home was jointly owned by a surviving spouse or co-owner

If the property is included in a will, it must go through probate before transferring it to heirs. However, probate may not be necessary if it was placed in a living trust, owned jointly with survivorship rights, or a life estate deed.

2. Navigating the Probate Process

If the home is subject to probate, the executor of the estate is responsible for:

  • Filing legal documents to initiate probate
  • Paying outstanding debts and property taxes before distributing assets
  • Determining if the house must be sold to settle debts or be transferred to heirs

Probate can take months or even years, depending on the complexity of the estate. If multiple heirs inherit the home, they must agree on how to proceed with the property.

Financial Responsibilities of Inheriting a Home

1. Covering Mortgage and Property Expenses

If the home still has a mortgage, the heir must continue making payments or risk foreclosure. Other financial obligations include:

  • Property taxes and homeowner’s insurance
  • Utility bills and maintenance costs
  • Homeowners’ association (HOA) fees, if applicable

If the deceased had a reverse mortgage, the estate may need to sell the home or pay off the loan before inheriting it.

2. Selling vs. Keeping the Home

Once ownership is settled, heirs must decide whether to:

  • Keep the home – Ideal if a family member plans to live in it or use it as an investment.
  • Sell the property – A common choice to divide assets among heirs and cover expenses.
  • Rent the home – Provides an income stream but requires property management.

A legal dispute may arise if multiple heirs inherit the home but disagree on what to do. Having a clear estate plan can help prevent these conflicts.

Steps to Take When Managing an Inherited Home

  1. Secure the Property – Change locks, check for damages and notify homeowners insurance of the owner’s passing.
  2. Review Debts and Expenses – Determine if the home has outstanding loans, unpaid taxes, or liens.
  3. Get a Home Appraisal – Assess the market value to guide selling, renting, or estate distribution decisions.
  4. Settle Ownership and Probate Issues – Work with an attorney to transfer the title to heirs or sell the property.
  5. Decide on Next Steps – Weigh financial and personal factors before keeping, selling, or renting the home.

Get Legal Guidance for Managing an Inherited Home

Inheriting a home can be complex, requiring careful legal and financial planning. Whether you need to navigate probate, resolve title issues, or explore selling options, our law firm can help ensure a smooth transition.

Key Takeaways

  • Property transfer depends on probate: If a will exists, the executor must navigate probate before heirs can claim ownership.
  • Financial obligations continue after inheritance: Mortgage payments, taxes and maintenance costs must be managed immediately.
  • Heirs must decide whether to sell, rent, or keep the home: Each option has legal, financial and emotional implications.
  • Legal conflicts may arise with multiple heirs: Having a clear estate plan helps prevent disputes over inherited property.
  • Professional guidance ensures a smooth transition: An estate attorney can assist with probate, property transfers and tax implications.

Reference: AllLaw (Aug. 03, 2022) “Transferring Real Estate After Death”

Read more about the article How to Choose the Right Guardian for Your Minor Child

How to Choose the Right Guardian for Your Minor Child

No parent wants to imagine being unable to care for their child. However, planning for the unexpected is essential. If both parents pass away or become incapacitated, a court will decide who takes custody of the child—unless a legal guardian has already been named in an estate plan. Without a clear designation, children could end up in lengthy custody disputes or with someone who does not align with the parent’s wishes.

Choosing the right guardian involves careful consideration of financial stability, emotional readiness, values and long-term commitment.

What Does a Guardian Do?

A legal guardian assumes full responsibility for a minor child’s upbringing, including:

  • Providing a stable home environment
  • Managing the child’s education, healthcare and emotional needs
  • Handling financial matters related to the child’s well-being

If a guardian is not legally designated, a court will decide based on what it considers to be the child’s best interests, which may not align with the parent’s preferences.

Key Factors to Consider When Choosing a Guardian

1. Parenting Ability and Stability

The guardian should be emotionally, physically and financially capable of raising a child. Consider:

  • Age and health – A younger guardian may have more energy, while an older relative may have more life experience.
  • Emotional capacity – Does the person have the patience and dedication required for parenting?
  • Current family dynamics – Will the child be able to fit into the guardian’s household without disruption?

A guardian should be someone who can provide a nurturing, stable and loving environment.

2. Financial Preparedness

While a guardian does not need to be wealthy, they should have the means to support a child. Life insurance policies and trust funds can help ensure financial stability. However, the guardian should be capable of managing those resources responsibly.

3. Shared Values and Beliefs

The chosen guardian should align with the parents’ values regarding:

  • Education and discipline
  • Religious or cultural beliefs
  • Lifestyle and moral outlook

Selecting someone who shares similar principles helps provide continuity in the child’s upbringing.

4. Willingness and Legal Readiness

A guardian should be willing to accept the responsibility and fully understand the commitment that comes with it. Before deciding, parents should:

  • Have an open discussion with the potential guardian
  • Ensure that the individual is comfortable with long-term caregiving
  • Formalize the decision in a legally binding document to avoid disputes

Naming a backup guardian can also provide security in case the first choice is unable to serve.

How to Legally Appoint a Guardian

To ensure that the court honors their wishes, parents must:

  1. Include a guardian designation in their will – This document provides clear legal authority.
  2. Create a letter of intent – While not legally binding, it offers guidance on the child’s upbringing.
  3. Establish financial plans – A trust or life insurance policy can provide financial security for the child’s future.

Working with an estate planning attorney ensures that all legal formalities are in place to appoint a legal guardian for minor children, preventing complications in the event of a tragedy. Contact us today to ensure that, even in the worst-case scenario, your child will be raised in accordance with your wishes.

Key Takeaways

  • A legal guardian ensures a stable future for a child: Without a designated guardian, the court decides who assumes custody.
  • Parenting ability and stability are top priorities: A guardian should be emotionally and financially prepared for long-term care.
  • Choosing someone with shared values provides continuity: Similar beliefs regarding education, discipline and lifestyle create a smoother transition for the child.
  • Formal legal designation prevents disputes: Including guardianship in an estate plan ensures that the court honors parental wishes.
  • Backup guardians provide additional security: If the primary guardian is unable to serve, an alternate can step in to avoid potential legal complications.

Reference: Forbes (Jan. 29, 2020) “10 Tips For Choosing A Guardian For Your Minor Child”

Read more about the article Digital Assets and Estate Planning

Digital Assets and Estate Planning

Digital assets, such as online accounts, social media profiles, cryptocurrency, digital photos, and documents, are becoming an increasingly important consideration when planning your estate. These assets are generally governed by the terms of your will and any power of attorney (POA) document, but there are specific legal rules you should be aware of to ensure everything is handled properly.

Some people keep even more assets in cyberspace: client records, patient records, inventory, customer databases, websites, blogs and cryptocurrency. There are also digital assets like non-fungible tokens, NTFs, online gaming and Metaverse assets.

With fewer than a third of all adults in the US having a last will in 2024, even fewer have planned for digital assets. Failing to plan for digital assets leaves a nightmare for loved ones when settling an estate. It puts assets at risk of being stolen or lost completely. Identity theft is also far easier when no one’s taken control of or deleted digital assets.

Start preparing for your digital demise by creating a thorough digital inventory. Include URLs for the accounts, your username and password, the account number and value and how the account is accessed. If the account requires two-factor identification through email or text, ensure that your digital executor has this information and access to the physical device.

The next step is to review which platforms allow you to designate a person to take control of your assets if you become incapacitated or die. Google, Facebook and Apple let you designate someone to be a “legacy” contact—the name of the role changes with the platform.

There are nuances to be aware of. You’ll need to decide whether you want someone to have access to the account and the ability to read its contents or just access the account to delete it. If you have private emails, documents, or electronic materials you don’t want anyone to access, you’ll need to be very specific about what you do and don’t want your designated digital person to do.

Figuring out how to manage digital assets isn’t just about what happens when you die. If you become incapacitated, would your spouse be able to pay the electric bill, access mortgage statements, or pay the phone bill?

Also, you may want to reconsider if you manage your personal life through your work email. Your work email does not legally belong to you but to your employer. Your emails can be read by anyone at your workplace with access and authority, including the IT department, supervisors and CEOs. Most employers shut down email access immediately after a person leaves their job or when they learn of an employee’s death. It is wiser to have a personal email for your personal life.

Digital assets require estate planning, just as tangible, traditional assets do. You’ll want to name an executor in your will and/or trust to manage your digital assets. Additionally, Make sure your POA explicitly grants the agent authority to manage your digital assets. If you own cryptocurrency or NFTs, talk with your estate planning attorney about protecting them as part of your estate plan.

By addressing these issues in your estate planning documents and making the proper provisions, you can ensure that your digital assets are managed according to your wishes after death or incapacity. Schedule a consultation with one of our experienced estate planning attorneys at Sims & Campbell in Annapolis and Towson, Maryland.

Read more about the article Pitfalls of Joint Ownership
house after death

Pitfalls of Joint Ownership

Many people add family members or spouses as joint owners of bank accounts, real estate, or investments to simplify estate planning and avoid probate. While joint ownership can offer convenience and asset access, it also presents serious risks that can lead to financial disputes, tax liabilities and legal challenges.

Understanding the downsides of joint ownership is essential before making decisions that could impact your estate and beneficiaries.

What Is Joint Ownership?

Joint ownership means that two or more people share legal ownership of an asset. There are different forms of joint ownership, each with unique rights and implications. Some common types of joint ownership include:

  • Joint Tenancy with Right of Survivorship (JTWROS) – If one owner dies, the other owner(s) automatically inherit the asset. Common among spouses.
  • Tenancy in Common – Each owner holds a separate, distinct share of the property. Shares can be passed down in a will instead of automatically transferring to co-owners.
  • Tenancy by the Entirety – A unique form of joint ownership for married couples that offers protection from creditors in some states.
  • Joint Ownership of Bank Accounts – Gives all owners full access to funds, even if one person contributed all the money.

While these arrangements may seem beneficial, they can create unintended financial and legal consequences.

The Risks of Joint Ownership

1. Loss of Full Control Over the Asset

Adding a co-owner means you no longer have sole decision-making power. If you own property or an account jointly, the other person:

  • Must approve any sale or significant financial decision
  • Can legally withdraw funds or take actions you may disagree with
  • May refuse to cooperate in estate planning decisions

For example, if you add an adult child to your house deed, you cannot sell or refinance the home without their approval. If your relationship changes, legal conflicts may arise.

2. Exposure to the Co-Owner’s Debts and Liabilities

If a joint owner has debt, gets sued, or divorces, creditors can go after jointly owned assets. This means:

  • A co-owner’s financial troubles can result in liens or judgments against your property
  • The asset may be subject to seizure by creditors or division in a divorce settlement
  • You could lose control over the asset due to someone else’s financial mistakes

This is particularly risky when adding children or relatives with unstable finances or creditor issues.

3. Unintended Tax Consequences

Joint ownership can create tax problems, especially when transferring assets. Common tax issues include:

  • Capital gains taxes – If a property or investment is sold, the IRS may assess capital gains based on the original purchase price, not the market value at death.
  • Gift tax liability – Adding someone as a joint owner may be considered a taxable gift, requiring IRS reporting if it exceeds the gift tax exemption limit.
  • Loss of step-up in basis – Heirs who inherit assets outright get a “step-up” in tax basis to current market value, reducing capital gains taxes. With joint ownership, this benefit may be lost.

Without proper estate planning, heirs may owe more in taxes than necessary.

4. Complications in Estate Planning

Many people use joint ownership to avoid probate. However, this strategy can backfire. Risks include:

  • Disinheriting intended beneficiaries – If one joint owner survives, they get full ownership—even if your will says otherwise.
  • Unequal distribution of assets – If you own multiple assets jointly with different people, some heirs may receive more than intended.
  • Legal disputes – Family members may contest asset distribution if joint ownership conflicts with your will.

A well-structured trust or beneficiary designation often provides a more reliable way to pass down assets.

When Joint Ownership Might Be Appropriate

Despite its risks, joint ownership can be helpful in certain situations. For instance, it’s suitable if you trust the co-owner completely and want them to have full rights to the asset. There are also few drawbacks if the asset has minimal value or no tax consequences or if both parties contribute equally to the asset.

In most cases, estate planning tools such as trusts, payable-on-death accounts, or transfer-on-death deeds provide greater protection and control.

Protect Your Assets with Smart Estate Planning

While joint ownership may seem easy, it often creates more problems than it solves. Before adding someone to your assets, it’s essential to consider the legal, financial and tax consequences.

Our law firm helps individuals and families navigate estate planning strategies that protect assets, minimize taxes and meet inheritance goals. Schedule a consultation today to explore better alternatives to joint ownership.

Key Takeaways

  • Joint ownership limits control over assets: Adding a co-owner means they have equal decision-making power and access, which may not align with your intentions.
  • Co-owners’ financial troubles can affect you: Debts, lawsuits, or divorce can place jointly owned assets at risk of seizure or legal disputes.
  • Tax implications may be significant: Gifting rules, capital gains taxes and loss of step-up in basis can create unexpected tax burdens.
  • Joint ownership can override estate plans: If a surviving joint owner is not your intended heir, your assets may not be distributed according to your wishes.
  • Alternative estate planning tools may be better: Trusts, payable-on-death accounts and clear beneficiary designations provide more control and protection.

Reference: Investopedia (March 02, 2024) “Joint Tenancy: Benefits and Pitfalls”

Read more about the article Obtaining Power of Attorney for Parents

Obtaining Power of Attorney for Parents

As parents age, it becomes increasingly important to plan for the possibility that they may need assistance managing their financial affairs or making healthcare decisions. Without proper legal documentation, adult children may face significant obstacles in handling their parents’ needs, especially in cases of cognitive decline or medical emergencies. A power of attorney (POA) is a legal document that designates a trusted individual to act on another person’s behalf in financial, medical, or personal matters. Obtaining a POA before a crisis arises ensures a smooth transition of responsibilities and prevents costly legal battles.

What Is a Power of Attorney?

A power of attorney grants legal authority to a designated person, known as an agent or attorney-in-fact, to make decisions on behalf of another individual, known as the principal. The scope of authority varies depending on the type of POA.

Types of Power of Attorney

  • Financial Power of Attorney – The agent can manage financial matters, such as paying bills, handling investments and managing property.
  • Medical Power of Attorney (Healthcare Proxy) – Authorizes the agent to make healthcare decisions if the principal becomes incapacitated.
  • General Power of Attorney – Grants broad authority over financial and legal matters. However, it typically ends if the principal becomes incapacitated.
  • Durable Power of Attorney – When “durable,” the POA remains in effect even if the principal is unable to make decisions due to illness or injury.
  • Limited (or Special) Power of Attorney – Provides authority for a specific transaction or period.

Choosing the right type of POA ensures parents receive the support they need while maintaining as much independence as possible.

Steps to Obtain a Power of Attorney for Your Parents

1. Start the Conversation Early

Many families delay discussing estate planning because of discomfort around aging and incapacity. However, waiting too long can result in complicated legal hurdles if a parent becomes unable to grant POA due to cognitive decline.

Approach the conversation sensitively, emphasizing that a POA protects their wishes and prevents unnecessary stress. Highlighting real-world examples of families who struggled without one may encourage proactive decision-making.

2. Determine the Right Type of POA

Assess your parent’s needs and preferences to determine the most appropriate POA. A durable financial POA may be suitable if they require help managing finances. A medical POA is essential to ensure that future healthcare decisions align with their wishes.

Some states, such as Maryland, have a standard statutory power of attorney. The State of Maryland recently made changes to their statutory document in October 2023, so it is important to consult with one of our experienced estate planning attorneys to determine if the changes are applicable to you.

3. Choose a Trusted Agent

The person granted POA should be responsible, financially stable and able to handle difficult decisions. While many parents choose an adult child, they may also select a trusted family friend, financial advisor, or attorney.

The agent should be someone who:

  • Understands the parent’s values and preferences
  • Is capable of managing finances and healthcare decisions responsibly
  • Will act in the parent’s best interests without personal bias

Naming an alternate agent is also recommended if the primary agent is unable or unwilling to serve when needed.

4. Draft the POA Document

A POA must be properly drafted and executed according to state laws to be legally valid. While online templates exist, they may not provide the necessary legal protections. An estate planning attorney ensures that the document:

  • Complies with state-specific legal requirements
  • Clearly defines the agent’s powers and limitations
  • Includes provisions to prevent abuse or mismanagement

5. Sign and Notarize the POA

Most states require signing the POA in front of a notary public. Some states also require witnesses, particularly for medical POAs.

Once signed, distribute copies to relevant parties, including:

  • Financial institutions (for financial POAs)
  • Healthcare providers (for medical POAs)
  • Family members involved in caregiving

Keeping the original document in a secure but accessible location ensures that it is available when needed.

What Happens If No Power of Attorney?

If a parent becomes incapacitated without a POA in place, family members must petition the court for guardianship or conservatorship. This process is:

  • Time-consuming – Court proceedings can take months, delaying essential decision-making.
  • Expensive – Legal fees can accumulate quickly.
  • Emotionally challenging – Family members may disagree over who should be appointed guardian.

A properly executed POA prevents court involvement and ensures that a trusted individual is legally authorized to act on the parent’s behalf.

Common Misconceptions about Powers of Attorney

“I’ll Just Handle It when the Time Comes”

Many adult children assume they can automatically step in and manage a parent’s affairs in an emergency. However, financial institutions and healthcare providers will not grant access to accounts or medical records without a POA.

“A Will Covers Everything”

A will governs estate distribution after death—it does not grant decision-making authority during a parent’s lifetime. A POA is essential for managing affairs while they are still alive.

“POAs are Only for the Elderly”

While POAs are critical for aging parents, they are equally important for adults of any age. Unexpected accidents or illnesses can leave individuals unable to make decisions, making a POA a valuable safeguard for all adults.

Key Takeaways

A POA ensures financial and medical decision-making: Without it, family members may need to go through costly court proceedings to obtain legal authority. Contact us today to plan for incapacity.

  • The right POA depends on the parent’s needs: Financial, medical and durable POAs serve different purposes and should be chosen carefully.
  • A POA must comply with state laws: Improperly executed documents may not be legally valid, making professional guidance essential.
  • Without a POA, court intervention is required: If a parent becomes incapacitated without a POA, family members may need to pursue guardianship, which can be time-consuming and expensive.
  • Starting the conversation early prevents future stress: Delaying POA discussions can lead to legal complications and unnecessary burdens for family members.

Reference: A Place for Mom (Aug. 5, 2024) “A Beginner’s Guide to Power of Attorney for Elderly Parents”

Read more about the article Special Needs Planning Improves the Lives of People with Developmental Disabilities

Special Needs Planning Improves the Lives of People with Developmental Disabilities

Families of individuals with developmental disabilities face unique challenges when planning. Beyond daily care and medical support, they must ensure that their loved ones have financial stability, legal protections and access to essential services even after caregivers can no longer provide direct support.

As March is Developmental Disabilities Awareness Month, it’s an opportune time to recognize the importance of long-term estate planning for people with disabilities. With the right legal and financial tools, families create a secure future where their loved ones live with dignity and independence.

The Importance of Special Needs Planning

Many families assume that personal savings or inheritance will be enough to support a child or family member with developmental disabilities. However, without proper planning, those funds may disqualify individuals from critical government benefits, such as Medicaid and Supplemental Security Income (SSI).

Special needs planning ensures that financial resources enhance a person’s quality of life without jeopardizing access to essential benefits. A well-structured plan includes legal protections, funding strategies and long-term care considerations.

Special Needs Trusts and Other Key Legal Tools

A special needs trust (SNT) is one of the most effective ways to provide financial support, while maintaining eligibility for government programs. Trusts allow families to set aside money for expenses not covered by Medicaid or SSI, such as housing, education, and recreational activities.

There are three main types of special needs trusts:

  • First-party SNT: Funded with assets belonging to the individual with disabilities, often used for lawsuit settlements or inheritances
  • Third-party SNT: Created by parents or relatives, funded with private assets for the beneficiary’s lifetime care
  • Pooled SNT: Managed by a nonprofit, allowing families with fewer assets to benefit from professional trust administration

Without a properly structured trust, assets left to a disabled individual could unintentionally disqualify them from vital support programs.

Guardianship and Decision-Making Support

Many individuals with developmental disabilities need assistance managing finances, healthcare and daily responsibilities. Depending on their level of independence, families may consider:

  • Guardianship: A court-appointed legal arrangement giving a caregiver authority over personal and financial decisions
  • Power of Attorney (POA): A document allowing a designated person to manage financial or medical decisions on behalf of the individual
  • Supported Decision-Making Agreements: A legal framework that allows individuals to retain autonomy, while receiving guidance from trusted supporters

Each option provides varying levels of control, allowing families to choose the least restrictive alternative that meets their loved one’s needs.

ABLE Accounts

Achieving a Better Life Experience (ABLE) accounts are tax-advantaged savings accounts for individuals with disabilities. They allow beneficiaries to save money for qualified expenses without affecting SSI or Medicaid eligibility.

ABLE accounts can be used for education, housing, healthcare and assistive technology. Unlike traditional savings accounts, these funds are not counted toward asset limits for public benefits.

Individuals with a disability that occurred before age 26 who meet certain criteria are eligible to open a Maryland ABLE account.

Life Insurance and Estate Planning

Many parents worry about what will happen to their children when they can no longer provide care. Life insurance policies can ensure ongoing financial support, with funds directed into a special needs trust. Families should also update their estate planning documents to reflect their child’s needs and appoint trusted individuals to oversee their care.

The Role of an Attorney in Special Needs Planning

Creating a financial and legal plan for a loved one with disabilities requires careful attention to detail. Without proper structuring, even well-intended gifts or inheritances could create financial hardship.

An elder law and special needs planning attorney ensures that:

  • Trusts and financial accounts are properly structured to maintain government benefit eligibility
  • Legal documents, such as guardianship agreements and powers of attorney, are tailored to the individual’s needs
  • Families are aware of state and federal programs that can provide additional resources

Working with an attorney provides peace of mind, ensuring that a loved one’s future is secure, and their quality of life is protected.

Secure a Better Future for Your Loved One

Planning for a family member with developmental disabilities is an act of love and responsibility. The proper legal and financial steps ensure that they have lifelong support and access to the care they need. Our special needs planning law firm helps families create comprehensive special needs plans that protect assets, maximize benefits and ensure peace of mind. Schedule a consultation today with one of our experienced estate planning attorneys to start planning for a secure future.

Key Takeaways

  • Special needs trusts protect assets: These trusts allow families to provide financial support without jeopardizing eligibility for Medicaid or SSI.
  • Guardianship and decision-making tools offer support: Legal arrangements, such as POAs, guardianship, and supported decision-making agreements, ensure that a loved one’s needs are met.
  • ABLE accounts provide tax advantages: These accounts allow individuals with disabilities to save money without affecting government benefits.
  • Estate planning ensures long-term security: Life insurance, updated wills and carefully structured inheritance prevent financial disruptions.
  • Legal guidance prevents costly mistakes: An attorney helps families navigate complex rules and secure the best possible future for their loved ones.

References: National Association of Councils on Developmental Disabilities “Developmental Disabilities Awareness Month” and Special Needs Alliance “Long-Term Care Planning for Children with Disabilities”