Downs Law Firm, P.C.
Truly, nearly every legal question depends on a host of facts and circumstances that make it impossible to guarantee a particular outcome … except in the case of my favorite question: ‘Do I need a will?’
Fortunately, Perry’s foresight to do proper estate planning, meant that the tragedy was not made worse for his family.
Complaints about stolen homes have shot up from 44 in 2013 to 136 in 2018, according to the city Department of Records. The department is making changes to its security system in the aftermath of the Inquirer stories, but it declined to detail the upgrades, fearing it would tip off scammers.
Your work isn’t done just because you have a will. There are many myths floating around about wills, trusts and estate planning. Those myths can easily confuse people who haven’t taken the time to bust them, before getting on to the real work … taking care of the family, according to the Cleveland Jewish News in “Estate planning myths common, but debunkable.” One common myth is that a trust is completely creditor protected. While there are some trusts that achieve this goal, there are many that don’t. It is easier to provide that to your beneficiaries that to yourself. Another myth is that once an estate plan is completed, there’s no need to revisit or make changes. We look at the planning you put in place as essentially an ongoing rough draft. Perhaps the biggest myth around estate plans is that they are only needed by wealthy people. Actually, everyone needs a will. A property power of attorney can save your loved ones thousands of dollars and massive aggravation. People chat with their friends and neighbors and pick up snippets of information, which is usually incorrect. As with any kind of story, once a piece of information has moved through a few different people, it becomes confusing, even if it started out accurate. The value of such “Street lawyers” is usually what you pay for it. Unless it comes from an estate planning attorney, don’t get any legal advice at a neighborhood or family gathering. The results can be disastrous. If you think having a trust alone is enough to prevent your heirs from having to pay any taxes, your kids will be in for a big and expensive mistake. If you don’t set up guardianship for your minor children, then the court will appoint a guardian. It’s entirely possible that it may be a person you would never have wanted to raise your children. If a separate financial trustee is not named, there won’t be any checks and balances on how the money left for your children is spent. If you don’t have an estate plan in place, and especially if your family includes minor children, make an appointment to speak with an estate planning attorney who can advise you on an estate plan that fits your unique circumstances. Reference: Cleveland Jewish News (Sep. 20, 2018) “Estate planning myths common, but debunkable”
The government will be more than happy to distribute your assets. Years ago a friend of mine told me of his final moments with his father. He was in the hospital signing documents with the lawyer and his father. Dad was on his death bed, dying several hours later. The family business went to him, as he had worked in the business for over two decades. It was what he was promised all along but did not make the final time with his Dad as he would have wanted. If that hadn’t happened, state law would have controlled, leaving promises unkept. Dying intestate will result in your state of residence deciding where your assets will go. However, it doesn’t have to be like that, because creating an estate plan will leave the decision in your hands, according to KREM.com in “Head off a small-business skirmish: Draw up your will or estate plan today.” Here’s a tale from another law office that makes it all very clear. A business owner died unexpectedly. He had never completed his divorce from his first wife after 20 years. He had been in a relationship with another woman for 10 years and they had two children together. Since he never divorced his wife, she inherited his business. No one likes to consider that they will die, or in this case, that it is really time to deal with their marital status. He probably thought he had plenty of time to plan. However, the result was not pretty. Here’s how you can avoid your own unintended consequence: Preplan. A business owner needs to do a complete estate plan, so your property, family and business will be protected, if you should become incapacitated or die. You’ll need the following: Disability insurance. This is a relatively affordable product that replaces up to 60% of your income, if injury or illness prevents you from working. Life insurance. Consider the cost of providing food, shelter, education and care for your family. How would that be replaced, if you died tomorrow? Another thing life insurance can do is keep a business alive after the owner dies. Proceeds can be earmarked in your estate plan to be used to meet business costs and spare your loved ones from selling the business for a low amount, because they need to raise funds fast. Create a succession plan. How will your business go forward without you? Have your documents prepared. Hire an estate planning attorney who can protect your business and your family. Here’s what you’ll need: A will and/or a trust. You need a will, especially if you have small children. This is because you’ll want to name guardians for them. A will does go through probate. However, this is only true if your assets are not placed in trusts. Your estate planning attorney will create a plan that fits your needs. Health care directives. This gives a family member or friend the ability to make health care decisions, if you are unable.
The talk may be difficult but may turn out to be necessary. When someone dies or becomes disabled, the people who support and love that person are often in the position of walking into the middle of a movie and trying to figure out “What is going on?” As we age, sharing information ahead of time can be a big help. It might not be the easiest conversation you have ever had. However, it is a good idea to have a talk with your loved ones about what steps to take as you go through the aging process, according to The Des Moines Register in “In 2019, resolve to have a difficult conversation.” The person who is contemplating needing help, may want to start the conversation but the person who may be called on to help may find it too difficult to consider. Who wants to think about their parents getting frail and needing help going to the bathroom? No one. The person who is starting to feel the impact of aging may already be aware of some limitations. However, talking with their children or potential caregivers may change the conversation from “someday” to “soon.” The loss of independence is one of the big milestones, just as gaining independence is a milestone earlier in life. That’s a hard thing to accept for both sides. Those who have lived through this process of needing to become caregivers say that it would have been easier if they would have known what their loved ones wanted. So, would have been knowing what kind of help their loved ones could afford. It’s better to have time to research available resources in advance, rather than operating in crisis mode. This is what your conversations need to address: Medications, physical health, emotional well-being and health care providers Their wishes, if their health declines slowly or rapidly. Do they want to stay at home? Who would they want to help with daily care? Finances: Can they afford to pay for care at home? Has any Medicaid planning been done? What government programs are they eligible for? Do they have a CPA or financial advisor? Estate plan: Where is their Last Will and Testament? Is there a Power of Attorney, Living Will or Medical Directive in place? Who is their estate planning attorney? Documents, including birth certificates, Social Security, insurance cards, safe deposit box keys, computer passwords, etc. Seven out of 10 people over age 65 will need help from others at some point. Most will need it for at least three years, so it might be wise to have the conversation before a difficult situation arises.Reference: The Des Moines Register (Dec. 19, 2018) “In 2019, resolve to have a difficult conversation”
Put away the estate plan when it is completed. However, take a good look at it frequently. There are many reasons why an estate plan needs changing, because your life changes as do your goals, according to the Times Herald-Record in “5 steps to securing your elder estate plan.” What might be some of those changes? It could include your divorce, your marriage or even the marriage or divorce of your children. It can also be that your financial situation has changed, and you need to make changes. A ten-minute review at the beginning of a New Year will be an annual reminder, and can verify that you are still on the right course. The process of review may seem challenging but here are some steps to consider: Step One: gather up all your documents, which may take some time. This includes your will, powers of attorney, health care proxies, living wills, any trusts and any other documents. For clarity, here are some definitions. A will is the document that states where you want your assets to go when you die. It is reviewed by the court in a proceeding called probate, but only after your death. Assets in a living trust (or other types of trusts, depending on your situation) do not go through this process. Creating a trust results in a legal entity that owns the assets it contains. The trust assets go to beneficiaries upon death, as directed by you to the trustee. In many instances, trusts save time, money and avoid litigation over inheritances. Powers of attorney name the person you appoint to make any legal, business or financial decisions for you, should you become incapacitated. A health-care proxy names the person to make your medical decisions, if you are unable to do so. Living wills are used to express your wishes for end-of-life care. Step Two: review your documents. Make sure that everything is signed. You would be surprised how many important documents aren’t signed. Read the documents to see who was named as the executor of your will and who is the trustee of your trusts. Are those people still able to undertake these responsibilities? Do you still want them making decisions for you? Step Three: make a list of all of your assets. Note how they are titled—what names are on the accounts—and what are the values of each. Include retirement accounts like IRAs, 401(k)s, insurance policies and annuities and check to see if you named a beneficiary. Do you still want that person to be the recipient of the asset? Make sure that you have also named a contingent beneficiary. Step Four: what information would your loved ones need should you become unable to communicate? They’ll need information about your medications, the name and contact information for your primary care physician, your estate planning attorney, your CPA and your financial advisor. You may want to arrange for a “family meeting” with your healthcare team and your legal and financial team (two separate
Snowbirds Checklist Heading is a good idea but consider legal issues before leaving. If you are a retiree who heads south after the holidays, it might be wise to create a checklist of at least four personal legal business items, according to LimaOhio.com in “Extra checklist before heading south for the winter.” Not that January and February aren’t delightful here in the Baltimore-Washington area… First, make sure that your living will and healthcare power of attorney documents have been updated. Does your family have copies of these documents? Or do you emailed copies to them ? If you have these documents with us, we now scan them and forward a copy to you to send on to your decision makers. If they save that email, they will also have our contact information to access your Property Power of Attorney if needed. Second, discuss the location of your estate planning portfolio with them, and how to contact your estate planning attorney. Update them if changes need to be made and get copies to your children and/or friends. Third, make sure that your last will and testament is updated. Have you had any big changes in your life since the last time it was reviewed? Marriages, deaths, divorces, births, and adoptions are the typical “trigger” events that signal a need for review. Being out of town for an extended time is a good prompt to review how current your documents are, and how they address your concerns. Who will have that document? If your estate planning attorney maintains original copies for clients, then make sure to have another original on your person or safely secured with a loved one. Lastly, and this takes a little time but is well worth doing, create a list of all your assets. Make sure they are properly titled for your situation. Should you have all your bank accounts become Payable on Death to your spouse? When was the last time you checked your beneficiary designations? Chances are good there are beneficiary designations on your bank, investment, and retirement accounts and on your life insurance policies. Wherever you have a beneficiary designation, you should also have a contingent beneficiary. An estate planning attorney can advise you snowbirds on creating an estate plan that fits your unique circumstances and may include a trip in a southerly direction. Reference: LimaOhio.com (Oct. 13, 2018) “Extra checklist before heading south for the winter”
An estate planning attorney in your new state of residence should go over your estate plan. We have noticed a distinct trend: Many people are choosing to leave Maryland and to relocate for retirement and often relocate to a warm, sunny state. The weather an retirement friendly tax environments make this easy to understand. If you decide to relocate, it would be a good idea to have an estate planning attorney review your estate plan, according to TC Palm in “Should new Florida residents update their out-of-state estate planning documents?” An example of why it’s a good idea to have an estate plan review is that in the State of Florida, as long as your will from another state is valid under that state’s law, it will be honored in Florida. That is generally true. However, there may be laws in Florida that could cause some problems with the out-of-state will. That applies to other states as well. Here’s a good example. Let’s say you now own a home–known in Florida as a “homestead”—and your out-of-state will transfers your residence at the time of your death to a trust for the benefit of your spouse and your children. The only person who can receive a homestead in Florida is the spouse. If your will from out-of-state was used, the house would result in a life estate going to the spouse with a vested remainder to your children. This doesn’t achieve the result you wanted: to have the property controlled by a trustee and not your spouse and children. If this was a second marriage, the potential could be a family blow up, even litigation. Even in a first marriage, if the children and their mother differ on what should happen to the family homestead, there would be trouble ahead. Taking that example further: What if your out-of-state will directs the sale of your home in Florida and the distribution of proceeds in equal shares to your children? If you die with creditor claims, you lose the homestead exemption for creditor protection purposes. Your children’s inheritances could then be at risk. More food for thought: if your out-of-state will appoints a non-relative who is a resident of the state where your will was originally executed to serve as your personal representative, they won’t be able to do much in Florida. That’s because they are not eligible to serve as a personal representative under Florida law, which only allows a nonrelative to serve, if they are a Florida resident. Maryland has its own unique rules, including a 10% inheritance tax for assets left to people who do not qualify as close relatives, such as nephews and nieces. Every state has its own laws, and while some issues are fairly consistent from state-to-state, that is not always the case. To take advantage of the laws in your new home state, an plan review should be done. If you decide to relocate it would be a good idea to meet with an estate planning attorney, in
We all procrastinate about something. The time may never seem right to deal with your inevitable death. Aretha Franklin. the “Queen of Soul” has passed away, leaving an $80 million estate and no estate plan, according to Investment News in “Aretha Franklin estate echoes planning problems of Prince.” Franklin was not married so the estate will pass to her four children. It’s similar to the situation that occurred when Prince died unmarried and without a will in 2016. Had she been married her estate could have passed tax-free to a spouse and there would have been planning opportunities available at that time. Franklin’s four kids will now receive equal shares of her estate. However, they will have to pay a considerable amount in taxes. She was a resident of Michigan, which does not have an estate tax, so there won’t be a state estate tax. However, the federal government takes 40% of portions of the estate valued over $11.18 million. In other words, a $27.5 million tax bill. Without the benefit of a trust being established by a will, those assets will be taxed again by the federal government at the time that the four heirs pass, when the money moves to her grandchildren. Celebrity estates, like that of Franklin, must undergo a complex valuation process to correctly assign an approximate future value of income. Like Prince, there are image rights and music royalties, and the buzz surrounding her death is likely to inflate its value and the tax that will be levied. While Michigan does not have an estate tax, the state does have a “postmortem right of publicity,” meaning that her heirs have the right to legally protect her image for commercial use. Her postmortem rights of publicity are expected to be extremely high, because of her iconic stature as a musician, songwriter and cultural touchstone. Estates of celebrities and creative artists are required to be valued and the appraisal must be reconciled with a parallel appraisal conducted by the IRS. Remember Michael Jackson’s situation? The estate initially valued his name and image at $2,015, while the IRS valued it at more than $434 million. One of Franklin’s children reportedly has special needs. This could put him in a precarious position. If he inherits a large sum of money, he will no longer be eligible for any government programs. Given the size of his inheritance that will not be a problem. For those with less wealth, however, that is why estate planners encourage the use of special needs trusts. This not only protects the child’s eligibility but protects them from misusing the money or being scammed by unscrupulous individuals. Even if you are not an entertainer with assets that total in the millions, an estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference: Investment News (Aug. 22, 2018) “Aretha Franklin estate echoes planning problems of Prince”
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