Read more about the article What Is Needed in Estate Plan Besides a Will? Annapolis and Towson Estate Planning

What Is Needed in Estate Plan Besides a Will? Annapolis and Towson Estate Planning

Having a will is especially important if you have young children, says Fed Week’s recent article entitled “Estate Planning Doesn’t Stop with Making a Will.”  In your will, you can nominate guardians, who would raise your children in the event neither you nor your spouse is able to do so.

When designating a guardian, try to be practical.

Remember, your closest relatives—like your brother and his wife—may not necessarily be the best choice.

And keep in mind that you’re acting in the best interests of your children.

Be sure to obtain the consent of your guardians before nominating them in your will.

Also make sure there’s sufficient life insurance in place, so the guardians can comfortably afford to raise your children.

Your estate planning isn’t complete at this point. Here are some of the other components to consider:

  • Placing assets in trust will help your heirs avoid the hassle and expense of probate.
  • Power of Attorney. This lets a person you name act on your behalf. A “durable” power will remain in effect, even if you become incompetent.
  • Life insurance, retirement accounts and payable-on-death bank accounts will pass to the people you designate on beneficiary forms and won’t pass through probate.
  • Health care proxy. This authorizes a designated agent to make medical decisions for you, if you can’t make them yourself.
  • Living will. This document says whether you want life-sustaining efforts at life’s end.

Be sure to review all of these documents every few years to make certain they’re up to date and reflect your current wishes.  Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Fed Week (Dec. 28, 2022) “Estate Planning Doesn’t Stop with Making a Will”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article How Does My Co-op Fit into My Estate Planning? Annapolis and Towson Estate Planning

How Does My Co-op Fit into My Estate Planning? Annapolis and Towson Estate Planning

Parents bought a studio apartment in a New York City co-op for their adult son with special needs. He’s able to live independently with the support of an agency.

The couple asked the co-op board to let them transfer the property to an irrevocable trust, so when they die, the son will still have a place to live. However, the board denied their request.

An individual with special needs can’t inherit property directly, or he’ll no longer be able to receive the government benefits that support him. What should the parents do?

The New York Times’ recent article entitled “Can I Leave My Co-op to My Heirs?” explains that parents can leave a co-op apartment to their children in their will or in a trust. However, that doesn’t mean their heirs will necessarily wind up with the right to own or live in that apartment.

In most cases, a co-op board has wide discretion to approve or deny the transfer of the shares and the proprietary lease.

If the board denied the request, the apartment will be sold, and the children receive the equity. Just because the will says, ‘I’m leaving it to my children,’ that doesn’t give the children the absolute right to acquire the shares or live there.

In some instances, the lease says a board won’t unreasonably withhold consent to transfer the apartment to a financially responsible family member. However, few, if any, leases extend that concept to include trusts.

The parents here could wait to have the situation resolved after their deaths, leaving clear directives to the executor of their estate about what to do should the board reject a request to transfer the property into a trust for their son. However, that leaves everyone in a precarious position, with years of uncertainty.

Another option is to sell the co-op now, put the proceeds in a special-needs trust and buy a condo through that trust. The son would then live there.

Unlike co-ops, condos generally allow transfers within estate planning, without requiring approval.

While this route would involve significant upheaval, the parents would have more peace of mind.

However, before buying the condo, an experienced estate planning attorney should review the building’s rules on transferring the unit.  Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: New York Times (Oct. 1, 2022) “Can I Leave My Co-op to My Heirs?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Why Do I Need an Estate Plan? – Annapolis and Towson Estate Planning

Why Do I Need an Estate Plan? – Annapolis and Towson Estate Planning

Money Talks News’ recent article entitled “Why Everyone Needs an Estate Plan” reminds us that estate plans aren’t just for the wealthy. People of all ages and income levels can benefit from drafting an estate plan. An estate plan provides instructions about how your assets will be distributed, as well as how you’ll pay for your debts, final arrangements and even your medical care if you become incapacitated.

With everything stated explicitly in an estate plan, your family can work through their grief after your death instead of battling each other about who gets what.

An estate plan describes your wishes regarding how assets such as your house, vehicle bank accounts, investments and valuables will be transferred to your beneficiaries after you die. Most of this is included in your will. You’ll also name the executor of your estate in your will, as well as a guardian for your minor children, and even someone to take care of your pets when you’re no longer here.

Many people will confuse an estate plan with a will. However, that’s just a part of a comprehensive estate plan. There is much more involved in an estate plan than just who gets what after you die. An estate plan can also include your wishes, if you’re medically unable to manage your own affairs. Your plan can designate your durable power of attorney (DPA), who can make medical and financial decisions in your stead, along with medical directives on what medical procedures you do or don’t want to prolong your life.

One of the most compelling reasons to have an estate plan is that it can help avoid probate and prevent your family from winding up in court to access the assets you’ve left behind for them. Another reason to have an estate plan is to help reduce any estate or inheritance taxes imposed on your estate when your assets are transferred to your beneficiaries.

Federal estate taxes typically only apply to the very wealthy. In 2022, the threshold, or estate tax exemption, is $12.06 million, for 2023 that number is $12.93 million.

Unless your assets are valued over the applicable exemption in the year of death, you’re exempt from federal estate taxes. However, while you may be exempt from federal-level estate taxes, the state you live in may impose its own estate taxes. Some states also levy inheritance taxes on beneficiaries who receive assets from your estate.

If you are interested in designing your estate plan, contact us to speak with one of our experienced estate planning attorneys.

Reference: Money Talks News (Oct. 21, 2022) “Why Everyone Needs an Estate Plan”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article The Basics of Estate Planning – Annapolis and Towson Estate Planning

The Basics of Estate Planning – Annapolis and Towson Estate Planning

No matter how BIG or small your net worth is, estate planning is a process that ensures your assets are handed down the way you want after you die.

Forbes’ recent article entitled “Estate Planning Basics” explains that everybody has an estate.

An estate is nothing more or less than the sum total of your assets and possessions of value. This includes:

  • Your car
  • Your home
  • Financial accounts
  • Investments; and
  • Personal property.

Estate planning is the process of deciding which people or organizations are to get your possessions or assets after you’ve died.

It’s also how you leave directions for managing your care and assets if you are incapacitated and unable to make financial or medical decisions. That is done with powers of attorney, a healthcare directive and a living will.

Your estate plan details who gets your assets. It also designates who can make critical healthcare and financial decisions on your behalf should you become incapacitated. If you have minor children, your estate plan also lets you designate their legal guardians, in case you die before they reach 18. It also allows you to name adults to safeguard their financial interests.

Your estate plan directs assets to specific entities or people in a legally binding manner. If you want your daughter to have your coin collection or your favorite animal rescue organization to get $500, it’s all mapped out in your estate plan.

You can also create a trust to safeguard a minor child’s assets until they reach a certain age. You can also keep assets out of probate. That way, your beneficiaries can easily access things like your home or bank accounts.

All estate plans should include documents that cover three main areas: asset transfer, medical needs and financial decisions. Ask an experienced estate planning attorney to help you create your estate plan.

Reference: Forbes (Nov. 16, 2022) “Estate Planning Basics”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Who Needs a SLAT Trust? – Annapolis and Towson Estate Planning

Who Needs a SLAT Trust? – Annapolis and Towson Estate Planning

The most common estate planning technique used in 2020-2021, according to a recent article from Think Advisor, was the Spousal Lifetime Access Trust (SLAT). The SLAT has become increasingly popular for married couples at or above the current estate planning exemption level, as described in the article “9 Reasons This Popular Trust Isn’t Just for the Super-Wealthy.”

SLATs allow couples to move assets out of their estates and, in most cases, out of the reach of both creditors and claimants. Each spouse can still access the assets, making the SLAT a valuable tool for retirement.

In the past, SLATs were not used as often for clients with $1 million to $10 million in net worth. However, the SLAT accomplishes several objectives: optimizing taxes, protecting assets from creditors and addressing concerns related to aging.

Lock in Estate Tax Exemptions Among Uncertainty. SLATs are a good way to secure estate tax exemptions. Various proposals to slash the current estate tax exemptions before the sunset date (see below) makes SLATs an attractive solution.

Potential Restrictions to Grantor Trusts. There has been some talk in Washington and the Treasury about restricting Grantor Trusts. The SLAT eliminates concern about any future changes to these trusts.

Upcoming Change in Estate, Gift and GST Exemptions. When the 2017 tax overhaul expires in 2026, the gift, estate and generation skipping trust exemption will be cut in half. Now is the time to maximize those exemptions.

A Possible Planning Tidal Wave. There may be a big movement to act as 2026 draws closer and SLATs become a tool of choice. Before the wave hits and Congress reacts, it would be better to have assets protected in advance.

SLATs Work Well for Married Couples. Each spouse contributes assets to a SLAT. The other spouse is named as a beneficiary. The assets are removed from the taxable estate, securing the exemption before 2026 and assets are protected from claimants and creditors.

You Might Meet the Estate Tax Threshold in the Future. Even if your current estate doesn’t meet the high threshold of today, if it might reach $6 million in 2026, having a SLAT will add protection for the future.

Income Tax Benefits. A trustee can distribute funds and income to a beneficiary in a no-tax state, saving state tax income tax, or if the trust may be formed in a no-tax state and possibly avoid the grantor’s high home state income tax.

Asset Protection Planning. Many people don’t think about asset protection until it’s too late. By starting now, when assets are below $10 million, the asset protection can grow as wealth grows.

Shrinking the Need for Other Trusts. Depending on their financial situation, a couple may be able to use a SLAT trust and avoid the need for other trusts requiring annual gifts and Crummey powers. The SLAT may also eliminate the need to have a trust for their children.

Speak with your estate planning attorney to learn if a SLAT is appropriate for your family, now and in the near and distant future. These are complex legal instruments, requiring skilled professional help in assessing their value to your estate.

Reference: Think Advisor (Nov. 16, 2022) “9 Reasons This Popular Trust Isn’t Just for the Super-Wealthy”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Does My College Kid Need an Estate Plan? – Annapolis and Towson Estate Planning

Does My College Kid Need an Estate Plan? – Annapolis and Towson Estate Planning

When it comes to estate planning, we usually think of older adults. However, it’s a topic that we should also consider for college students.

WDIO’s recent article entitled “Estate planning is for college students too” reminds us that there’s a number of documents you can put into place in the case of an emergency.

Power of Attorney. There are two types of POAs. The financial power of attorney allows a named agent to make financial decisions on behalf of the college student, in the event they are unable to do so. A medical power of attorney names a healthcare agent.

These can have HIPAA language written into them that authorizes their medical provider to release information about them. Remember, if your student travels away from home for college, you may need a POA for that state.

Will. A typical college student might not have a lot of money. However, they do have their own stuff, and someone needs to make the decision regarding what happens to that stuff. Ask the student to name the parents as the executor of his or her will.

FERPA Waiver. FERPA stands for the Family Educational Rights and Privacy Act. Without this waiver, a parent has no authority to call the college and request information about your student if they are over 18. With a waiver, you can request a transcript and student loan information.

HIPAA Waiver. A HIPAA waiver allows an adult child’s health information to be disclosed. It’s usually for medical facilities, doctors, schools, or any other person where they are in possession of the health information of a person where that individual authorizes the release of the information to a designated person.

If you have a child in college, contact us to schedule a time for your child to discuss creating an estate plan with one of our experienced estate planning attorneys.

Reference: WDIO (Sep. 28, 2022) “Estate planning is for college students too”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Is Your Business Included in Estate Plan? – Annapolis and Towson Estate Planning

Is Your Business Included in Estate Plan? – Annapolis and Towson Estate Planning

Forbes’ recent article entitled “The Importance of Estate Planning When Building Your Business” says that every business that’s expected to survive must have a clear answer to this question. The plan needs to be shared with the current owners and management as well as the future owners.

The common things business owners use to put some protection in place are buy-sell agreements, key-person insurance and a succession plan. These are used to make certain that, when the time comes, there’s both certainty around what needs to happen, as well as the funding to make sure that it happens.

If your estate plan hasn’t considered your business interests or hasn’t been updated as the business has developed, it may be that this plan falls apart when it matters the most.

Buy-sell insurance policies that don’t state the current business values could result in your interests being sold far below fair value or may see the interests being bought by an external party that threatens the business itself.

If your agreements are not in place, or are challenged by the IRS, your estate may find itself with a far greater burden than anticipated.

Your estate plan should be reviewed regularly to account for changes in your situation, the value of your assets, the status of your (intended) beneficiaries and new tax laws and regulations.

There are a range of thresholds, exemptions and rules that apply. Adapting the plan to make best use of these given your current situation is well worth the effort. Contact us to talk to one of our experienced estate planning attorneys about your plan.

Including your estate planning as part of your general financial planning and management will frequently provide a valuable guidance in terms of how best to set up and manage your broader financial affairs.

Financial awareness can not only inform how you grow your wealth now but also ensure that it gets passed on effectively. The same is also true of your business.

A tough conversation about what happens in these situations can be a reminder to management that over dependence on any key person is not something to take for granted.

Reference: Forbes (Sep. July 12, 2019) “The Importance of Estate Planning When Building Your Business”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article What is a Life Estate? – Annapolis and Towson Estate Planning

What is a Life Estate? – Annapolis and Towson Estate Planning

A life estate is a type of property ownership that divides the control and ownership of a property. The person who creates the life estate for their home and assets is known as the “life tenant.” While a tenant retains control of the property, he or she shares ownership during their lifetime with the remainderman (the estate’s heir).

Quicken Loans’ recent article entitled “What Is A Life Estate And What Property Rights Does It Confer?” explains that while the life tenant lives, they’re in control of the property in all respects, except they can’t sell or encumber the property without the consent of the remaindermen. After the life tenant passes away, the remainderman inherits the property and avoids probate. This is a popular estate planning tool that automatically transfers ownership at the life tenant’s death to their heirs.

The life estate deed shows the terms of the life estate. Upon the death of the life tenant, the heir must only provide the death certificate to the county clerk to assume total ownership of the property.

Medicaid can play an essential role in many older adults’ lives, giving them the financial support needed for nursing facilities, home health care and more. However, the government considers your assets when calculating Medicaid eligibility. As a result, owning a home – or selling it and keeping the proceeds – could impact those benefits. When determining your eligibility for Medicaid, most states will use a five-year look-back period. This means they will total up all the assets you’ve held, sold, or transferred over the last five years. If the value of these assets passes above a certain threshold, you’ll likely be ineligible for Medicaid assistance.

However, a life estate can help elderly property owners avoid selling their home to pay for nursing home expenses. If your life estate deed was established more than five years before you first apply for benefits, the homeownership transfer would not count against you for Medicaid eligibility purposes.

To ensure you’re correctly navigating qualifying for Medicaid, it’s smart to discuss your situation with an attorney specializing in Medicaid issues.

Reference: Quicken Loans (Aug. 9, 2022) “What Is A Life Estate And What Property Rights Does It Confer?”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article The Difference between Revocable and Irrevocable Trust – Annapolis and Towson Estate Planning

The Difference between Revocable and Irrevocable Trust – Annapolis and Towson Estate Planning

A living trust can be revocable or irrevocable, says Yahoo Finance’s recent article entitled “Revocable vs. Irrevocable Trusts: Which Is Better?” And not everyone needs a trust. For some, a will may be enough. However, if you have substantial assets you plan to pass on to family members or to charity, a trust can make this much easier.

There are many different types of trusts you can establish, and a revocable trust is a trust that can be changed or terminated at any time during the lifetime of the grantor (i.e., the person making the trust). This means you could:

  • Add or remove beneficiaries at any time;
  • Transfer new assets into the trust or remove ones that are in it;
  • Change the terms of the trust concerning how assets should be managed or distributed to beneficiaries; and
  • Terminate or end the trust completely.

When you die, a revocable trust automatically becomes irrevocable, and no further changes can be made to its terms. An irrevocable trust is permanent. If you create an irrevocable trust during your lifetime, any assets you transfer to the trust must stay in the trust. You can’t add or remove beneficiaries or change the terms of the trust.

The big advantage of choosing a revocable trust is flexibility. A revocable trust allows you to make changes, and an irrevocable trust doesn’t. Revocable trusts can also allow your heirs to avoid probate when you die. However, a revocable trust doesn’t offer the same type of protection against creditors as an irrevocable trust. If you’re sued, creditors could still try to attach trust assets to satisfy a judgment. The assets in a revocable trust are part of your taxable estate and subject to federal estate taxes when you die.

In addition to protecting assets from creditors, irrevocable trusts can also help in managing estate tax obligations. The assets are owned by the trust (not you), so estate taxes are avoided. Holding assets in an irrevocable trust can also be useful if you’re trying to qualify for Medicaid to help pay for long-term care and want to avoid having to spend down assets.

But again, you can’t change this type of trust and you can’t act as your own trustee. Once the trust is set up and the assets are transferred, you no longer have control over them.

Contact us to speak with one of our experienced estate planning attorneys to see if a revocable or an irrevocable trust is best or whether you even need a trust at all.

Reference: Yahoo Finance (Sep. 10, 2022) “Revocable vs. Irrevocable Trusts: Which Is Better?”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Actress Helen McCrory Leaves Money in Trust – Annapolis and Towson Estate Planning

Actress Helen McCrory Leaves Money in Trust – Annapolis and Towson Estate Planning

Late British actress Helen McCrory left her entire $1 million estate in the name of her husband and actor Damian Lewis and their two children. The will states that the Harry Potter star had put her money into a trust.

Her will appointed Damian as one of the trustees of the 125-year-long fund – along with HM the Queen’s bankers Coutts – with the power to make payments out of the trust to himself and the other beneficiaries.

SK Pop’s recent article entitled “What was Helen McCrory’s net worth at the time of her death?” reports that her children, Manon (15), and Gulliver (14), along with any future grandchildren, have been named beneficiaries.

McCrory, who last starred in Netflix’s Peaky Blinders, died in April 2021 after secretly battling breast cancer for years. She was 52 and had been married to Lewis since 2007.

Her net worth was combined with her husband’s and was around $25 million at the time of her death.

In 2017, Helen was awarded an OBE for her services in drama. McCrory  was most remembered for playing Aunt Polly, the Shelby family matriarch in Netflix’s crime drama series Peaky Blinders. She died during the filming of the show’s final season.

She also starred as Narcissa Malfoy in the Harry Potter film series and played roles in Skyfall and the 2006 film The Queen.

McCrory received many accolades during her lifetime, including a BAFTA award for Streetlife (1995), a Broadcasting Press Guild Award for North Square and a Golden FIPA at the Biarritz International Festival of Audiovisual Programming.

The National Theatre’s artistic director Rufus Norris said she was “unquestionably one of the great actors of her generation.”

McCrory and Lewis made contributions during the pandemic and helped raise $1.8 million for Feed NHS.

Her actor husband was the Emmy Award-winning star of Band of Brothers, Homeland and Wolf Hall.

Reference: SK Pop (July 23, 2022) “What was Helen McCrory’s net worth at the time of her death?”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys