Read more about the article Three Ways to Making Trusts Millennial Friendly – Annapolis and Towson Estate Planning

Three Ways to Making Trusts Millennial Friendly – Annapolis and Towson Estate Planning

If your named beneficiaries are Millennials—born between 1981-1996—you may want to consider three essential points about your trusts, as explained in the recent article “Trusts for Your Millennial Beneficiaries” from The Street. They’re different from their parents and grandparents, and disregarding these differences is a missed opportunity.

This generation’s distinguishing characteristics and traits include:

  • Valuing relations with superiors with a passion for learning and growth.
  • Desire to live a life with meaning and make a positive impact on the world and causes.
  • Creative and free thinking, looking for outside-the-box solutions and opportunities.

If your estate plan benefits Gen Y, some trust features recommended for Millennials may not be optimal for them. They’re different than their older Millennial counterparts.

Have your beneficiary serve as a co-trustee of their trust alongside an experienced advisor. Millennials appreciate the opportunity to ask for advice from a trusted advisor, secure positive reinforcement and get constructive feedback. Many heirs set to come into money are likely to work with an advisor once they inherit. For them, a co-trustee arrangement could be perfect. Consider naming a family member or friend with a background in finance as their co-trustee or naming a corporate trustee.

Consider giving your beneficiary a limited testamentary power of appointment to support their favorite charity. Millennials want to make a positive impact on the world, and there’s a trust feature you can build into a trust to support this goal: a limited testamentary power of appointment. In broad strokes, this gives the trust beneficiary the power to redirect where assets go upon their death. If the scope of power permits, they could redirect assets to charitable organizations of their choice.

Most people design trusts to last for the beneficiary’s lifetime and then structure the trust so assets remaining at their death will pass in trust to their children in equal shares. Trusts can also be created to change the distribution percentages between recipients. For instance, instead of a 50-50 split, the trust can redirect shares of 70-30 to better accomplish their personal objectives. You can also provide for new beneficiaries, like charities, if they weren’t part of the original trust.

Powers of appointment can be complicated and making them overly broad can have serious and adverse tax consequences. Therefore, speak with your estate planning attorney to make sure the scope of power is clear and properly designed.

Broadly define the standards for which distributions can be made to your beneficiary. Millennials think differently, so the commonly used trust distribution standards of health, education, maintenance and support (“HEMS”) may stop them from being able to tap into trust funds for philanthropic or entrepreneurial efforts. The HEMS standard only allows for distributions generally for purposes to align with the beneficiary’s current standard of living. If you want beneficiaries to be able to do more, they need to be given the ability to do so.

Another way to accomplish this is to allow a disinterested trustee (someone who is not a beneficiary) an expansive distribution authority. Having the ability to make a distribution of trust funds to your beneficiary for any purpose can be a little unsettling. However, naming a disinterested trustee you trust will ensure that funds are distributed responsibly.

Leaving assets in trust for beneficiaries can be part of an effective estate plan supporting planning goals and your loved one’s future. However, if the trust’s structure doesn’t meet their unique needs and talents, then their potential may be dimmed.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: The Street (Feb. 24, 2023) “Trusts for Your Millennial Beneficiaries”

 

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

Read more about the article Does Divorce Have an Impact on Estate Planning? Annapolis and Towson Estate Planning

Does Divorce Have an Impact on Estate Planning? Annapolis and Towson Estate Planning

Even the most amicable divorce requires a review and update of your estate plan, as explained in a recent article from Yahoo finance, “I’m Divorcing. Will That Impact My Estate Planning?” This includes your will, power of attorney and other documents. Not getting this part of divorce right can have long-term repercussions, even after your death.

Last will and testament. If you don’t have a will, you should get this started. Why? If anything, unexpected occurs, like dying while your divorce is in process, the people you want to receive your worldly goods will actually receive them, and the people you don’t want to receive your property won’t. If you do have a will and an estate plan and if your will leaves all of your property to your soon-to-be ex-spouse, then you may want to change it. Just a suggestion.

State laws handle assets in a will differently. Therefore, talk with your estate planning attorney and be sure your will is updated to reflect your new status, even before your divorce is finalized.

Trusts. The first change is to remove your someday-to-be ex-spouse as a trustee, if this is how you set up the trust. If you don’t have a trust and have children or others you would want to inherit assets, now might be the time to create a trust.

A Domestic Asset Protection Trust (DAPT) could be used to transfer assets to a trustee on behalf of minor children. The assets would not be considered marital property, so your spouse would not be entitled to them. However, a DAPT is an irrevocable trust, so once it’s created and funded, you would not be able to access these assets.

Review insurance policies. You’ll want to remove your spouse from insurance policies, especially life insurance. If you have young children with your spouse and you are sharing custody, you may want to keep your ex as a beneficiary, especially if that was ordered by the court. If you received your health insurance through your spouse’s plan, you’ll need to look into getting your own coverage after the divorce.

Power of Attorney. If your spouse is listed as your financial power of attorney and your healthcare power of attorney, there are steps you’ll need to take to make this change. First, you have to notify the person in writing to tell them a change is being made. This is especially urgent if you are reducing or eliminating their authority over your financial and legal affairs. You may only change or revoke a power of attorney in writing. Most states have specific language required to do this, and a local estate planning attorney can help do this properly.

You also have to notify all interested parties. This includes anyone who might regularly work with your power of attorney, or who should know this change is being made.

Divide Retirement Accounts. How these assets are divided depends on what kind of accounts they are and when the earnings were received. The court must issue a Qualified Domestic Relations Order (QDRO) before defined contribution plans can be split. The judge must sign this document, which allows plan administrators to enforce it. This applies to 401(k) plans, 403(b) plans and any plans governed under ERISA (Employment Retirement Income Security Act of 1974).

Divorce is stressful enough, and it may feel overwhelming to add estate planning into the mix. However, doing so will prevent many future problems and unwanted surprises.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo finance (Feb. 3, 2023) “I’m Divorcing. Will That Impact My Estate Planning?”

 

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

Read more about the article What are the Advantages of Putting Your Home in a Trust? Annapolis and Towson Estate Planning

What are the Advantages of Putting Your Home in a Trust? Annapolis and Towson Estate Planning

Property trusts allow you to place your personal residence or any property you own into a trust to be given to a beneficiary, explains a recent article, “When Should I Put My Home in a Trust,” from yahoo!life.com. Placing your home in a property trust makes it far more likely your home will go to its intended beneficiary.

The property trust can be a revocable or irrevocable trust. Which one you use depends on your unique circumstances. If it’s a revocable trust, you can change the terms of the trust up until your death. However, because you maintain control of the asset in a revocable trust, it’s not protected from creditors.

If the main reason you’ve put the house into a trust is to protect it from creditors, a court could reclaim the asset if it were determined the sole reason for the transfer into the trust was to elude creditors.

Generally speaking, people have three basic reasons to place their homes into property trusts—to avoid probate, to keep their transaction private and to keep the transfer simple.

Avoiding probate. People who put their homes in a property trust often do so to avoid having their home going through the probate process. When the owner dies, their estate goes through this court process and any debts or taxes owed on the property are paid. If there is no will giving direction to how the property should be distributed, then it is distributed according to the state’s laws.

If the home is not in a trust and not mentioned in a will, the property will usually go to a spouse or child, although there’s no guarantee this will happen. If there is no spouse and no offspring, the property will go to the next closest living relative, such as a parent, sibling, niece, or nephew. If no living relative can be found, the state inherits the property.

Chances are you don’t want the state getting your family home. Having a will, even if you don’t put your property into a trust, is a better alternative.

The cost and time of probate is another reason why people put their homes in trusts. Probate costs are borne by the estate and thus the beneficiaries. Probate also takes time and while probate is in process, homes need maintenance, taxes need to be paid and costs add up. If the house is sitting empty, it can become a target for thieves and property scammers.

Another benefit of a property trust is to keep the transfer of the home private. If it goes through probate, the transfer of property becomes part of the court record, and anyone will be able to see who inherited the home. When family dynamics are complicated, this can create long-lasting family battles.

A property trust is also far simpler for your executor, especially if the home is in another state. If you have a vacation home in Arizona but live in Michigan, your executor will have to navigate probate in both states.

Speak with an estate planning attorney about whether a property trust is right for you. They will create a property trust and transfer the property into the trust. This is a straightforward process. However, without the guidance of an experienced professional, mistakes can easily be made.

Contact us to review your estate plan with one of our estate planning attorneys.

Reference: yahoo!life.com (Jan. 31, 2023) “When Should I Put My Home in a Trust”

 

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Read more about the article What are the Components of an Estate Plan? Annapolis and Towson Estate Planning

What are the Components of an Estate Plan? Annapolis and Towson Estate Planning

Estate planning doesn’t have to be challenging. It’s also one of the most thoughtful steps you can take for the people you care about. Estate planning is the process of who will handle your estate and receive possessions after your death, according to a recent article titled “10 Essential Estate Planning Documents You Need” from The Street.

There are important legal documents making up your estate plan, each with different options.

Last will and testament. The will designates who receives specific assets and property after you die.  However, it is only such assets or property subject to probate. This includes tangible assets, like your home and personal belongings, as well as intangible assets, like bank and investment accounts and digital assets. Beneficiaries are those who will receive assets. They may be family members, close friends, or charitable organizations. Your will is also used to specify guardians for your children and choose an executor, the person you trust to carry out the wishes expressed in your will.

Revocable living trust. This is a legal entity created to distribute possessions after you pass away. However, it is different than a will. A revocable living trust is a legal entity that owns the assets placed in the trust, while permitting you, the grantor, to have access to them while living. The revocable living trust spares heirs from having to wait until probate is completed to receive inheritances. The living trust allows for rapid and private transfer of assets after death.

Beneficiary designations. Any asset with a beneficiary designation will pass directly to the beneficiary and is not subject to probate. However, you must designate a beneficiary for each account and keep them current. This is especially important if there has been a divorce and your prior spouse’s name appears as a beneficiary on any assets, such as life insurance policies or deeds.

Advance Healthcare Directive (AHCD)/Living Will. This document is used to specify what medical care you want if you are unable to convey your wishes yourself. AHCD documents typically include a living will and a medical power of attorney. These documents may relate to types of treatments, end-of-life care, artificial respiration etc.

Financial Power of Attorney. A POA allows you to appoint another person to manage funds and property on your behalf. If you need medical attention, the POA can authorize the use of assets to pay for expenses and provide for your family when you are unable to do so.

Insurance policies and financial information. All insurance policy documents, including life, health, auto, long term care and home insurance, should be kept in one location. You should also have a list of all financial accounts, including access information. You could keep this information in a notebook, or on an encrypted document on your personal computer.

Proof of Identity Documents. Discharge papers from the armed forces, Social Security card, Medicare card, birth, marriage, divorce certificates, prenuptial agreements and divorce settlements and passports should all be accessible to your trustee or executor.

Titles and Property Deeds. An inventory of titles and deeds should be done when any type of trust is created to ensure that the properties are correctly placed in the trust. Names on titles or deeds supersede your will. If your spouse is named as a joint owner on the house deed, they legally possess the property, regardless of what is in your will.

Digital assets. Most Americans under age 70 have an estimated 160 digital accounts. Consider using a password manager or secure digital vault to help you manage your login credentials. You’ll also want to name a digital executor in your will, so they can oversee or cancel digital accounts and distribute digital assets.

Funeral instructions. While documents about your funeral and any memorial services aren’t legally binding, it’s better to tell your family what you want to happen at your funeral. If you have purchased a burial plot and paid for your funeral, make sure the family members know where the documents are. Whatever your wishes, write them down and share them with family members.

Once you have your estate plan together, protect these documents by keeping them in a fire-and waterproof box in your home. Copies of the documents should be distributed to anyone who needs them. For example, a copy of your advance healthcare directive should be sent to your healthcare agent and your primary care doctor. Your executor should have a copy of your will. Review these documents every three to five years, or after any significant life events.

Contact us to review your estate plans with one of our experienced estate planning attorneys.

Reference: The Street (Jan. 31, 2023) “10 Essential Estate Planning Documents You Need”

 

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

Read more about the article Do You Need a Revocable or an Irrevocable Trust? Annapolis and Towson Estate Planning

Do You Need a Revocable or an Irrevocable Trust? Annapolis and Towson Estate Planning

It’s not always obvious which type of trust is the best for an individual, says a recent article titled “Which is Best for Me: A Revocable or Irrevocable Trust?” from Westchester & Fairfield County Business Journals.

In a revocable living trust (RLT), the creator of the trust, known as the “grantor,” benefits from the trust and can be the sole Trustee. While living, the grantor/trustee has full control of the real estate property, bank accounts or investments placed in the trust. The grantor can also amend, modify and revoke the trust.

The goal of a revocable trust is mainly to avoid probate at death. Probate is the process of admitting your last will and testament in the court in the county where you lived to have your last will deemed legally valid. This is also when the court appoints the executor named in your last will. The executor then has access to the estate’s assets to pay bills and distribute funds to beneficiaries as named in the last will.

Probate can take six months to several years to complete, depending upon the complexity of the estate and the jurisdiction. Once the estate is probated, your estate is part of the public record.

A revocable living trust and the transfer of assets into the trust can accomplish everything a last will can. However, distribution of assets at the time of death remains private and the court is not involved. Distribution of assets takes place according to the instructions in the trust.

By comparison, irrevocable trusts are not easily revoked or changed. Most irrevocable trusts are used as a planning tool to transfer assets for the benefit of another person without making an outright gift, or for purposes of Medicaid or estate tax planning. An Irrevocable Medicaid Asset Protection Trust is used to allow an individual to protect their life savings and home from the cost of long-term care, while allowing the trust’s creator to continue to live in their home and benefit from income generated by assets transferred into the irrevocable trust.

The grantor may not be a trustee of an irrevocable trust and the transfer of assets to a Medicaid Asset Protection trust starts a five-year penalty period for Nursing Home Medicaid and a two-and-a-half-year penalty period for Home Care Medicaid for applications filed after March 1, 2024. After the penalty (or “look back”) periods expire, the funds held by the trust are protected and are not considered countable assets for Medicaid.

An irrevocable trust can also be used to transfer assets for the benefit of a loved one, friend, child, or grandchild. Assets are not controlled by the beneficiaries but can be used by the trustee for the beneficiary’s health, education, maintenance and support.

Trusts are used to reduce the size of the taxable estate, to plan for the well-being of loved ones, and to protect the individual and couple if long-term care is needed. Speak with an estate planning attorney about which trust is best for your unique situation.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Westchester & Fairfield County Business Journals (Jan. 26, 2023) “Which is Best for Me: A Revocable or Irrevocable Trust?”

 

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

Read more about the article You Need a Completed and Properly Prepared Will – Annapolis and Towson Estate Planning

You Need a Completed and Properly Prepared Will – Annapolis and Towson Estate Planning

The first two essential estate planning documents are the durable power of attorney for legal and financial matters, followed by a healthcare power of attorney. Next is the last will and testament.  However, unlike the first two, the last will is not used until after death, explains the recent article titled “Completing a will ensures wishes are clear to all” from The News-Enterprise.

A last will tells the court what you want to happen to your property and who you want to be in charge of distributing your property and settling your estate after you die. Don’t confuse your last will with a “living will,” a healthcare document used to convey your wishes for end-of-life decision making.

Jointly owned property or payable-on-death property with beneficiary designations generally pass to co-owners or beneficiaries outside of the last will. However, any property owned solely by the decedent with no beneficiary listed on the account must go through court in a probate proceeding.

The court then validates the last will and determines the rightful owner(s) of property after any bills and expenses are paid. Wishes stated in the last will guide the court in making its determination. A last will contains a lot of legal language which can become confusing. However, an estate planning attorney can explain it all.

There are three key roles in a last will: the testator, executor and beneficiary.

The testator is the person signing the last will. The executor is the person (or persons) the testator appoints to be responsible for opening and administering the probate case after death. Beneficiaries are the people who receive something from the estate.

Assets are distributed in several different ways. The testator may have made specific bequests in the last will to leave property or money to a person or a charity. The rest of the estate, called the residuary estate, is distributed among beneficiaries, divided either by fractional shares or percentages. The residuary estate may be left outright or in a testamentary trust. An outright distribution is given directly to a beneficiary, whereas a testamentary trust is held on behalf of the beneficiary and distributed over time.

Beneficiaries can become confusing. Primary beneficiaries—the individuals the testator wanted to receive part of the estate—are the first line of distribution. If the primary beneficiary is unable or unwilling to receive their inheritance, a contingent beneficiary is usually listed in the last will.

The contingent beneficiary is often listed as “per stirpes” or “pro rata” to other individuals. Per stirpes means the children of the deceased beneficiary receive that person’s share. A pro rata distribution means the deceased beneficiary’s share is divided between other beneficiaries in the last will.

Lastly, the “remote contingent” beneficiary receives the inheritance only if all of the primary and contingent beneficiaries have died. They can be extended family members, close friends, or charities.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: The News-Enterprise (Jan. 27, 2023) “Completing a will ensures wishes are clear to all”

 

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

Read more about the article Why It’s Important to Update Your Estate Plan – Annapolis and Towson Estate Planning

Why It’s Important to Update Your Estate Plan – Annapolis and Towson Estate Planning

When someone dies without having updated their estate plan for many years, the executors often face a difficult task of administering a disorganized and incomplete estate. At best, the executor needs additional time and resources to organize the estate. At worst, says a recent article titled “Estate plans require maintenance” from The Record-Courier, the decedent’s wishes and desired distributions are not followed.

Among several reasons for updating an estate plan are major life events, known as “trigger” events. These include marriage, birth, death, divorce or changed financial circumstances.

The same is true for the death of a beneficiary or changed personal relationships.

If the grantor becomes incapacitated, changes in the estate plan may become necessary if the person needs long-term care or will be receiving any kind of means-tested government benefits.

A revision of the estate plan is warranted if there is a change in one’s assets, from purchasing a new home or business, selling real property or the modification of a business venture. A growing estate may require a revised plan focused on minimizing estate tax liabilities. On the other hand, if the size of the estate has decreased significantly, an estate plan focused on tax planning may need to be revised or simplified.

Most businesses require a succession plan and the designation of a person to take control of the business upon the death of the grantor.

Finally, as assets within the estate change, the property list, often referred to as the “schedule,” should be updated. All newly acquired assets need to be titled properly, especially if the plan is for them to be owned by a trust.

Each state has different estate laws, so a move to a different state definitely requires an estate plan to be revised, as some elements of the estate plan may become invalid. For example, in some states two witnesses are required to execute a last will, while in others one witness is sufficient. If you move from a one-witness state to a two-witness state, the possibility exists for your last will to be deemed invalid.

Any changes to the estate plan desired by the grantors, such as changed distribution of assets on death or a wish to name a different person to inherit, requires a revision.

Changes in the law, especially those regarding estate taxes, also make it necessary to update an estate plan. The general recommendation is to review the estate plan every three to five years, regardless of whether any trigger events have occurred.

Establishing a comprehensive estate plan, which includes a last will, health and financial powers of attorney and any necessary trusts, and maintaining it is the best way to ensure your wishes will be carried out in case of incapacity and death.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: The Record-Courier (Jan. 28, 2023) “Estate plans require maintenance”

 

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

Read more about the article Does Estate Plan Need a Trust? Annapolis and Towson Estate Planning

Does Estate Plan Need a Trust? Annapolis and Towson Estate Planning

Many people dismiss trusts as only needed by wealthy people. However, they actually can be used to solve many different issues. A recent article from The Mercury titled “Planning Ahead: How do you know when you need a trust?” examines the different reasons for using trusts.

Family Members with Special Needs. If your family includes a family member with special needs, you’ll want to use a Special Needs or Third-Party Supplemental Needs Trust to protect the individual’s eligibility to receive government benefits. Most benefits are means-tested, so a disabled person is not permitted to have more than a minimal level of assets. A well-intentioned family member may feel they are doing a good thing by bequeathing assets to an individual with special needs. However, they would instead be putting the person’s benefits at risk.

Special Needs planning is complex, since it usually involves several different benefit programs as well as services. An estate planning elder law attorney is often involved in helping families navigate benefits and planning for the future, when parents are deceased.

When money management is needed. The average person isn’t accustomed to managing million-dollar portfolios. Therefore, when a large inheritance is in the future, a trust with an experienced financial manager as a trustee can be a better alternative. This is good ‘future-proofing.’ For an example, a woman with a large estate dies unexpectedly, leaving adult children with an equally unexpected large inheritance. The children are suddenly tasked with managing complex investment vehicles and tax liabilities. Had the estate been in a trust with a skilled money manager, their interests would have been better protected.

Real estate in multiple states. Real estate in more than one state gets complicated for estate management. It might be easier to place all of the assets in one trust to make management easier.  If the goal is to keep the property in the family, like a vacation home, a trust is an easier way to own the property and define the rights and responsibilities of the beneficiaries.

Do you need tax protection? Placing assets in trusts can remove them from the taxable estate. Tax planning is a common reason to use trusts, and many different types of trust are available for this purpose.

Do you want a trust to manage funds during your life and after you’ve passed? A revocable living trust can be used to hold your assets during life and postmortem. A revocable trust does not remove assets from the taxable estate but are used for other purposes. This type of trust is usually used in conjunction with a “pour-over will,” where assets held in your name at the time of death are “poured over” into a living trust.

Your estate planning attorney will be able to determine which of the many different types of trusts will be right for you and your family’s unique circumstances.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: The Mercury (Nov. 23, 2022) “Planning Ahead: How do you know when you need a trust?”

 

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

Read more about the article Do I Need a Last Will and Testament? Annapolis and Towson Estate Planning

Do I Need a Last Will and Testament? Annapolis and Towson Estate Planning

Estate planning encompasses everything from planning for property distribution at death to preparing for incapacity, tax planning and guardian planning for minor children. An experienced estate planning attorney is involved with far more than a last will and testament. However, this is what most people think of when they sit down for their first meeting.

A recent article titled “Last Will and Testament” from mondaq examines what the last will and testament does and how it differs from trusts. These two are only part of a comprehensive estate plan.

A will is only effective upon death.  Its directions are not followed while living or if a person becomes incapacitated. A will does not avoid probate, rather it ensures assets go to the people as directed by the person making the will. Without a will, assets are distributed according to the laws of the state, usually determined by kinship. A certain percentage will go to a spouse and another percentage will go to biological children. Unmarried partners and stepchildren have no legal right of inheritance.

The will is also the legal document used to name an executor, the person responsible for carrying out the directions in the will and managing the estate. The executor has a long list of duties, from making sure the will is validated by the court during probate to applying for an estate tax identification number with the IRS, opening an estate bank account, notifying Social Security of the decedent’s passing, paying debts, paying taxes for the individual and for the estate and distributing property,

The will is used to name a guardian for minor children. When planning has been done correctly, the guardian is provided with information about the children’s lives and financial planning has been done for the children’s support and for their education. A trust is usually used to hold assets for the benefit of the children, with a trustee named to manage funds.

Wills go through probate, which varies by state. Once the will is filed in court, it becomes a public document. Heirs must be notified, even those not included in the will. An alternative is creating and placing assets in a trust to protect privacy and manage and distribute property.

Trusts are not just for wealthy people. They are used to maintain privacy, as the assets in the trust do not pass through probate. The trustee is in charge of the trust and making distributions to beneficiaries. There are many different types of trusts; an experienced estate planning attorney will be able to recommend the optimal one for each client based on their situation.

The trust is effective upon its creation and is a separate legal entity and is also used to protect assets from creditors. Trusts are more complicated than traditional bank accounts. However, their ability to protect assets and maintain privacy make them a valuable part of any estate plan.

If a person becomes incapacitated, the trust remains in effect. If the trust is a revocable trust, meaning the grantor is able to change its terms as long as they are living and the grantor becomes incapacitated, a successor trustee can step in and manage the trust without court intervention.

Trusts do require diligence to create. Trust must be funded, meaning assets need to be retitled so they are owned by the trust. New accounts may need to be open, if retitling is not possible. Beneficiaries need to be established and terms need to be set. The trust can be created to fund a college education or for general use. However, terms need to be established.

A comprehensive estate plan protects the individual while they are living and protects the family after they have passed. It is a gift to those you love.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: mondaq (Nov. 16, 2022) “Last Will and Testament”

 

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

Read more about the article Why You Need a Secondary Beneficiary – Annapolis and Towson Estate Planning

Why You Need a Secondary Beneficiary – Annapolis and Towson Estate Planning

A secondary beneficiary, sometimes called a contingent beneficiary, is a person or entity entitled to receive assets from an estate or trust after the estate owner’s death, if the primary beneficiary is unable or unwilling to accept the assets. Secondary beneficiaries can be relatives or other people, but they can also be trusts, charities or other organizations, as explained in the recent article titled “What You Need to Know About Secondary or Contingent Beneficiaries” from Yahoo life.

An estate planning lawyer can help you decide whether you need a secondary beneficiary for your estate plan or for any trusts you create. Chances are, you do.

Beneficiaries are commonly named in wills and trust documents. They are also used in life insurance policies and in retirement accounts. After the account owner dies, the assets are distributed to beneficiaries as described in the legal documents.

The primary beneficiary is a person or entity with the first claim to assets. However, there are times when the primary beneficiary does not accept the assets, can’t be located, or has predeceased the estate owner.

A secondary beneficiary will receive the assets in this situation. They are also referred to as the “remainderman.”

In many cases, more than one contingent beneficiary is named. Multiple secondary beneficiaries might be entitled to receive a certain percentage of the value of the entire estate. More than one secondary beneficiary may also be directed to receive a portion of an individual asset, such as a family home.

Estate planning attorneys may even name an additional set of beneficiaries, usually referred to as tertiary beneficiaries. They receive assets if the secondary beneficiaries are not available or unwilling to accept the assets. In some cases, estate planning attorneys name a remote contingent beneficiary who will only become involved if all of the primary, secondary and other beneficiaries can’t or won’t accept assets.

For example, a person may specify their spouse as the primary beneficiary and children as secondary beneficiaries. A more remote relative, like a cousin, might be named as a tertiary beneficiary, while a charity could be named as a remote contingent beneficiary.

Almost any asset can be bequeathed by naming beneficiaries. This includes assets like real estate (in some states), IRAs and other retirement accounts, life insurance proceeds, annuities, securities, cash and other assets. Secondary and other types of beneficiaries can also be designated to receive personal property including vehicles, jewelry and family heirlooms.

Naming a secondary beneficiary ensures that your wishes as expressed in your will are going to be carried out even if the primary beneficiary cannot or does not wish to accept the inheritance. Lacking a secondary beneficiary, the estate assets will have to go through the probate process. Depending on the state’s laws, having a secondary beneficiary avoids having the estate distribution governed by intestate succession. Assets could go to someone who you don’t want to inherit them!

Talk with your estate planning attorney about naming secondary, tertiary and remote beneficiaries.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo life (Jan. 4, 2023) “What You Need to Know About Secondary or Contingent Beneficiaries”

 

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