Where Do You Score on Estate Planning Checklist? – Annapolis and Towson Estate Planning

Make sure that you review your estate plan at least once every few years to be certain that all the information is accurate and updated. It is even more necessary if you experienced a significant change, such as marriage, divorce, children, a move, or a new child or grandchild. If laws have changed, or if your wishes have changed and you need to make substantial changes to the documents, you should visit an experienced estate planning attorney.

Kiplinger’s recent article “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?” gives us a few things to keep in mind when updating your estate plan:

Moving to Another State. Note that if you have recently moved to a new state, the estate laws vary in different states. Therefore, it is wise to review your estate plan to make sure it complies with local laws and regulations.

Changes in Probate or Tax Laws. Review your estate plan with an experienced estate planning attorney to see if it has been impacted by changes to any state or federal laws.

Powers of Attorney. A power of attorney is a document in which you authorize an agent to act on your behalf to make business, personal, legal, or financial decisions, if you become incapacitated.  It must be accurate and up to date. You should also review and update your health care power of attorney. Make your wishes clear about do-not-resuscitate (DNR) provisions and tell your health care providers about your decisions. It is also important to affirm any clearly expressed wishes as to your end-of-life treatment options.

A Will. Review the details of your will, including your executor, the allocation of your estate and the potential estate tax burden. If you have minor children, you should also designate guardians for them.

Trusts. If you have a revocable living trust, look at the trustee and successor appointments. You should also check your estate and inheritance tax burden with an estate planning attorney. If you have an irrevocable trust, confirm that the trustee properly carries out the trustee duties like administration, management and annual tax returns.

Gifting Opportunities. The laws concerning gifts can change over time, so you should review any gifts and update them accordingly. You may also want to change specific gifts or recipients.

Regularly updating your estate plan can help you to avoid simple estate planning mistakes. You can also ensure that your estate plan is entirely up to date and in compliance with any state and federal laws.

Reference: Kiplinger (July 28, 2021) “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?”

 

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What are the Key Documents in Estate Planning? – Annapolis and Towson Estate Planning

A basic estate plan can be fairly straightforward to create with the help of an experienced estate planning attorney.

Here are the main items you need in an estate plan. However, ask your estate planning attorney about what else you may need in your specific circumstances.

Bankrate’s recent article entitled “Estate planning checklist: 3 key steps to making a successful plan” says there are three things you need in every good estate plan: Last Will and Testament, Power(s) of Attorney and an Advance Healthcare Directive – and each serves a different purpose. Let us look at these:

A Last Will and Testament. This is the cornerstone of your estate plan.  A Will instructs the way in which your assets should be distributed.

Everyone needs a Will, even if it is a very basic one. If you do nothing else in planning your estate, at least create a Will, so you do not die intestate and leave the decisions to the courts.

A Power of Attorney (POA). This document permits you to give a person the ability to take care of your affairs while you are still living. A financial POA can help, if you are incapacitated and unable to manage your finances or pay your bills. A medical POA can also help a loved one take care of healthcare decisions on your behalf.

With a financial POA, you can give as much or as little power over your financial affairs as you want. Note that when establishing this document, you should have a conversation with your POA Agent, so if called upon, he or she will have a good understanding of what they can and cannot do financially for you. A healthcare POA also allows a person to make healthcare decisions, if you are unable to do so.

An Advance Healthcare Directive. This document instructs medical staff how you want them to handle your health-related decisions, if you are unable to choose or communicate. It includes resuscitation, sustaining your quality of life, pain management and end-of-life care.

Reference: Bankrate (July 23, 2021) “Estate planning checklist: 3 key steps to making a successful plan”

 

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What are Biggest Mistakes in Estate Planning? – Annapolis and Towson Estate Planning

Bankrate’s recent article entitled “Estate planning checklist: 3 key steps to making a successful plan” talks about five things to watch out for with an estate plan. Therefore, as you are making your estate plan, carefully consider everything, and that means it may take some time to complete your plan.  Let us look at five things to watch out for in that process:

  1. Plan your estate now. Of course, it is not just the old and infirm who need an estate plan. Everyone needs a last will so that their last wishes are respected, knowing that the unexpected can happen at any time.
  2. Say who will take care of your minor children. While last wills may typically focus on what happens to your financial assets, you will also want to specify what happens to any minor children on your passing, namely who takes care of them. If you have underage children, you must state who would be a guardian for that child and where that child will live. Without a last will, a judge will decide who will take care of your children. That could be a family member or a state-appointed guardian.
  3. 3. Ask executors if they are willing and able to take on the task. An executor carries out the instructions in your last will. This may be a complicated and time-consuming task. It involves distributing money in accordance with the stipulations of the document and ensuring that the estate is moved properly through the legal system. Make sure you designate an executor who is up to the task. That means you will need to speak with them and make certain that he or she is willing and able to act.
  4. Consider if you want to leave it all to your children. Many young families simply give all their assets to their children when they die. However, if the parents pass away when the children are young, and they do not establish a trust, they have access to all of the money when they reach the age of majority. This could be a great sum of money for a young adult to inherit with no rules on how to use it.
  5. Keep your estate plan up to date. You should review your estate plan regularly, at least every five years to be sure that everything is still how you intend it and that tax laws have not changed in the interim. Your plan could be vastly out of date, depending on changes since you first drafted it.

Estate planning can be a process where you demonstrate to your friends and family how much you care about them and how you have remembered them with certain assets or property.

It is a way to ensure that your loved ones do not have months of work trying to handle your estate.

Reference: Bankrate (July 23, 2021) “Estate planning checklist: 3 key steps to making a successful plan”

 

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What Should I Know about Cryptocurrency and Estate Planning? – Annapolis and Towson Estate Planning

Cryptocurrency is a digital currency that can be used to buy online goods and services, explains Forbes’ recent article entitled “Cryptocurrency And Estate Planning: What Digital Investors Should Know.” Part of cryptocurrency’s appeal is the technology that backs it. Blockchain is a decentralized system that records and manages transactions across many computers and is very secure.

As of June 24, the total value of all cryptocurrencies was $1.35 trillion, according to CoinMarketCap. There are many available cryptocurrencies. However, the most popular ones include Bitcoin, Ethereum, Binance Coin and Dogecoin. Many believe cryptocurrency will be a main currency in the future, and they are opting to buy it now. They also like the fact that central banks are not involved in the process, so they cannot interfere with its value.

In addition, NFTs or non-fungible tokens, are also gaining in popularity. Each token is one of a kind and they are also supported by blockchain technology. They can be anything digital, such as artwork or music files. NFTs are currently being used primarily as a way to buy and sell digital art. An artist could sell their original digital artwork to a buyer. The buyer is the owner of the exclusive original, but the artist might retain proprietary rights to feature the artwork or make copies of it. The popularity of NFTs is centered around the social value of fine art collecting in the digital space.

Here are three reasons to have an estate plan, if you buy bitcoin:

  1. No probate. Even if your loved ones knew you had cryptocurrency, and even if they knew where you stored your password, that would not be enough for them to get access to it. Without a proper estate plan, your digital assets may be put through a lengthy and expensive probate process.
  2. Blockchain technology. You must have a private key to access each of your assets. It is usually a long passcode. A comprehensive estate plan that includes this can help you have peace of mind knowing that your investments can be passed on to loved ones’ if anything were to happen to you unexpectedly.
  3. Again, central banks do not play any part in the process, and it is secure because its processing and recording are spread across many different computers. However, there is no governing body overseeing the affairs of cryptocurrency.

Reference: Forbes (July 21, 2021) “Cryptocurrency And Estate Planning: What Digital Investors Should Know”

 

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No Kids? What Happens to My Estate? – Annapolis and Towson Estate Planning

Just because you do not have children or heirs does not mean you should not write a will. If you decide to have children later on, a will can help protect their financial future. However, even if you die with no children, a will can help you ensure that your assets will go to the people, institutions, or organizations of your own choosing. As a result, estate planning is necessary for everyone.

Claremont Portside’s recent article entitled “What Happens to Your Estate If You Die With No Children” says that your estate will go to your spouse or common-law partner, unless stated otherwise in your will. If you do not have any children or a spouse or common-law partner, your estate will go to your living parents. Typically, your estate will be divided equally between them. If you do not have children, a spouse, or living parents, your estate will go to your siblings. If there are any deceased siblings, their share will go to their children.

The best way to make certain your estate goes to the right people, and that your loved ones can divide your assets as easily as possible, is to write a will. Ask an experienced estate planning attorney to help you. As part of this process, you must name an executor. This is a person you appoint who will have the responsibility of administering your estate after you die.

It is not uncommon for people to appoint one of their children as the executor of their will. But if you do not have children, you can appoint another family member or a friend. Select someone who is trustworthy, responsible, impartial and has the mental and emotional resources to take on this responsibility while mourning your death.

You should also be sure to update your will after every major event in your life, like a marriage, the death of one of your intended beneficiaries and divorce. In addition, specifically designating beneficiaries and indicating what they will receive from your estate will help prevent any disputes or contests after your death. If you have no children, you might leave a part (or your entire) estate to friends, and you can also name charities and other organizations as beneficiaries.

It is important to name who should receive items of sentimental value, such as family heirlooms, and it is a good idea to discuss this with your loved ones, in case there are any disputes in the future.

Even without children, estate planning can be complicated, so plan your estate well in advance. That way, when something happens to you, your assets will pass to the right people and your last wishes will be carried out. Ask an experienced estate planning attorney for assistance in creating a comprehensive estate plan.

Reference: Claremont Portside “What Happens to Your Estate If You Die with No Children”

 

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What Exactly Is a Trust? – Annapolis and Towson Estate Planning

MSN Money’s recent article entitled “What is a trust?” explains that many people create trusts to minimize issues and costs for their families or to create a legacy of charitable giving. Trusts can be used in conjunction with a last will to instruct where your assets should go after you die. However, trusts offer several great estate planning benefits that you do not get in a last will, like letting your heirs to see a relatively speedy conclusion to settling your estate.

Working with an experienced estate planning attorney, you can create a trust to minimize taxes, protect assets and spare your family from going through the lengthy probate process to divide up your assets after you pass away. A trust can also let you control to whom your assets will be disbursed, as well as how the money will be paid out. That is a major point if the beneficiary is a child or a family member who does not have the ability to handle money wisely. You can name a trustee to execute your wishes stated in the trust document. When you draft a trust, you can:

  • Say where your assets go and when your beneficiaries have access to them
  • Save your beneficiaries from paying estate taxes and court fees
  • Shield your assets from your beneficiaries’ creditors or from loss through divorce settlements
  • Instruct where your remaining assets should go if a beneficiary dies, which can be helpful in a family that includes second marriages and stepchildren; and
  • Avoid a long probate court process.

One of the most common trusts is called a living or revocable trust, which lets you put assets in a trust while you are alive. The control of the trust is transferred after you die to beneficiaries that you named. You might want to ask an experienced estate planning attorney about creating a living trust for several reasons, such as:

  • If you would like someone else to take on the management responsibilities for some or all of your property
  • If you have a business and want to be certain that it operates smoothly with no interruption of income flow, if you die or become disabled
  • If you want to shield assets from the incompetency or incapacity of yourself or your beneficiaries; or
  • If you want to decrease the chances that your will may be contested.

A living trust can be a smart move for those with even relatively modest estates. The downside is that while a revocable trust will usually keep your assets out of probate if you were to die, there still will be estate taxes if you hit the threshold.

By contrast, an irrevocable trust cannot be changed once it has been created. You also relinquish control of the assets you put into the trust. However, an irrevocable trust has a key advantage in that it can protect beneficiaries from probate and estate taxes.

In addition, there are many types of specialty trusts you can create. Each is structured to accomplish different goals. Ask an experienced estate planning attorney about these.

Reference: MSN Money (July 9, 2021) “What is a trust?

 

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Why Is Estate Planning So Important? – Annapolis and Towson Estate Planning Attorneys

Big Easy Magazine’s recent article “Estate Planning Is Essential and Here’s Why” says that writing a Last Will and Testament is not limited to what happens to your house, car, company, or other assets after you die. It also states who will take care of your minor children, if they are orphaned.

Your instructions for burial and other smaller things can be included.

If you fail to provide specific instructions, the state intestacy laws will apply upon your death. Here is a glimpse of the consequences of not writing your last will:

  • Your burial preferences may not be honored.
  • Your properties may be managed by an individual you do not necessarily trust. Without a named executor to your Will, some other family member may be asked to file taxes, make transfers and manage your estate.
  • Family members may not get an inheritance. Under intestacy laws, same-sex relationships and common-law marriages may not be recognized. So, your partner may not get a portion of your estate.
  • Your favorite charity may be left out. If you are committed to leaving a legacy, your charity, religious organization, or other organization of choice should be mentioned in the Will.
  • The government will name the guardians for your minor children.

With a Will, you can designate a guardian for your children and avoid additional taxes. Ask an experienced estate planning attorney about developing a comprehensive estate plan.

Aside from this, estate planning can also save your loved ones considerable angst and money.

A detailed Will with your instructions will avoid complications and provide comfort, while your loved ones recover emotionally from their loss.

Reference: Big Easy Magazine (May 17, 2021) “Estate Planning Is Essential and Here’s Why”

 

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How Can I Be a Super Executor? – Annapolis and Towson Estate Planning

Executors are frequently relatives or friends designated in a Last Will and Testament as the final administrator of a deceased person’s estate. If you agreed to serve as an executor, you likely are aware of some of the tasks you will face, closing accounts, inventorying assets and distributing bequests. Even when it is a relatively simple situation — one spouse dies and leaves everything to the other — there can be a lot of paperwork involved. It certainly can get more complicated when a widow dies, and there are several children and numerous assets.

AARP’s recent article entitled “How to Be a Good Executor of a Will or Estate” says being an executor is a tough job. So, heed these steps to make certain that when the time comes for you to serve, you honor the decedent, serve his or her heirs and do your job as efficiently as possible.

Communicate. Be sure that you understand the Will writer’s wishes. You can request that he or she be specific about what he or she truly wants to happen with the estate after his or her death. The Will writer can give an explanation in a last letter of instruction. It is an informal document to be read after he dies that explains his or her decisions.

Do the paperwork. When the person passes away, you must find the Will (the original, not a copy). The Will and the death certificate must be filed with the probate court to get letters testamentary. This authorizes the executor to take any actions required to administer the estate. Get at least a dozen extra certified copies of the death certificate because you will need these to cancel credit cards, sell a home, transfer title to a car and turn off the utilities.

Safeguard property. A vacant house may attract thieves who scan the obituaries, as well as relatives and neighbors who think they are entitled to help themselves. After the death, lock up and secure the property. Move jewelry and other valuables to a safe place. Also, take pictures of the home’s interior to document its contents.

Get organized. The executor must maintain and sell an unoccupied house, stop Social Security payments, pay debts, close financial accounts and file taxes. Start a detailed to-do list, keep good records and create a list of assets and liabilities.

Get a thick skin. Closing out an estate entails managing the emotions of heirs. They also may be your siblings who are resentful of the authority you have been given. If so, give them regular updates to smooth bad feelings that may arise. Total transparency is best.

Distribute personal items. This can be a difficult process, so put a system in place to fairly divide the possessions. Even the most ordinary item may have deep sentimental value to an heir and could cause stress for the executor without your guidance.

Educate the heirs. Heirs and beneficiaries cannot be paid, until all taxes and debts of the estate are settled. Let them know that it may take many months before they will receive payment.

Final steps. Lastly, the executor must pay any debts and taxes owed by the estate, distribute the estate property and give an accounting for the estate to the beneficiaries.

If you have questions, ask an experienced estate planning attorney.

Reference: AARP (May 7, 2021) “How to Be a Good Executor of a Will or Estate”

 

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The Difference between Power of Attorney and Guardianship for Elderly Parents – Annapolis and Towson Estate Planning

The primary difference between guardianship and power of attorney is in the level of decision-making power, although there are many intricacies specific to each appointment, explains Presswire’s recent article entitled “Power of Attorney and Guardianship of an Elderly Parent.”

The interactions with adult protective services, the probate court, elder law attorneys and healthcare providers can create a huge task for an agent under a power of attorney or court-appointed guardian. Children acting as agents or guardians are surprised about the degree of interference by family members who disagree with decisions.

Doctors and healthcare providers do not always recognize the decision-making power of an agent or guardian. Guardians or agents may find themselves fighting the healthcare system because of the difference between legal capacity and medical or clinical capacity.

A family caregiver accepts a legal appointment to provide or oversee care. An agent under power of attorney is not appointed to do what he or she wishes. The agent must fulfill the wishes of the principal. In addition, court-appointed guardians are required to deliver regular reports to the court detailing the activities they have completed for elderly parents. Both roles must work in the best interest of the parent.

Some popular misperceptions about power of attorney and guardianship of a parent include:

  • An agent under power of attorney can make decisions that go against the wishes of the principal
  • An agent cannot be removed or fired by the principal for abuse
  • Adult protective services assumes control of family matters and gives power to the government; and
  • Guardians have a responsibility to save money for care, so family members can receive an inheritance.

Those who have a financial interest in inheritance can be upset when an agent under a power of attorney or a court-appointed guardian is appointed. Agents and guardians must make sure of the proper care for an elderly parent. A potential inheritance may be totally spent over time on care.

In truth, the objective is not to conserve money for family inheritances, if saving money means that a parent’s care will be in jeopardy.

Adult protective services workers will also look into cases to make certain that vulnerable elderly persons are protected—including being protected from irresponsible family members. In addition, a family member serving as an agent or family court-appointed guardian can be removed, if actions are harmful.

Agents under a medical power of attorney and court-appointed guardians have a duty to go beyond normal efforts in caring for an elderly parent or adult. They must understand the aspects of the health conditions and daily needs of the parent, as well as learning advocacy and other skills to ensure that the care provided is appropriate.

Ask an experienced elder law attorney about your family’s situation and your need for power of attorney documents with a provision for guardianship.

Reference: Presswire (Jan. 14, 2021) “Power of Attorney and Guardianship of an Elderly Parent”

 

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What to Do after a Family Member Dies – Annapolis and Towson Estate Planning

Consumer Reports’ article, titled “What to Do When a Loved One Dies,” outlines some good advice to keep a loved one’s death from becoming even more painful.

Immediately

Here is what you and your family should do right away:

  1. Obtain a legal pronouncement of death. If a doctor is not present, and the individual dies at home under hospice care, call the hospice nurse. He or she can declare the death and help facilitate the transport of the body. If the person dies at home unexpectedly without hospice care, call 911. If the person has a DNR or do-not-resuscitate document, show it to the first responders.
  2. Make the arrangements for transportation of the body. If no autopsy is required, the body can be released to a mortuary or crematorium.
  3. Notify the person’s physician or the county coroner.
  4. Notify family and friends.
  5. Make arrangements for the care of dependents and pets.
  6. Contact the person’s employer (if applicable). Ask for information concerning benefits and any pay due, as well as if there was a life-insurance policy through the company.

Within a Few Days After Death

After some of the dust has settled, and you are able to think clearly and make some bigger decisions, address the following:

  1. Arrange for funeral and burial or cremation. See if the individual had a prepaid burial plan. Take a friend or family member with you to the mortuary. You should also prepare an obituary.
  2. Determine if there are burial benefits. If the person was in the military or was a member of a fraternal or religious group, contact that organization because it may have burial benefits or conduct funeral services. A local VFW or American Legion may provide an honor guard, if requested.
  3. Secure the home. Make sure there is security or someone to keep an eye on the individual’s home. Have the phone forwarded, collect mail, throw food out, water plants and keep minimal heat on to keep pipes from freezing in a colder climate’s winter months.

Up to 10 Days After Death

Here is the next set of items to do in the 10 days after a loved one passes:

  1. Get copies of the death certificate. These are usually obtained from the funeral home. Get multiple copies because you will need them for banks, government agencies and insurance companies.
  2. Present the will to the appropriate government office for probate.
  3. Contact the following:
  • An experienced estate planning attorney;
  • Banks;
  • The life insurance company;
  • The Social Security Administration;
  • Agency providing pension services, to stop monthly checks and get claim forms;
  • Utility companies, to change or stop service;
  • The U.S. Postal Service;
  • The IRS, credit-reporting agencies and the DMV to prevent identity theft; and
  • Social media companies to memorialize or remove an account.

Reference: Consumer Reports (Jan. 5, 2021) “What to Do When a Loved One Dies”

 

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