Basics Of Estate Planning In Maryland

The state of Maryland does little to prepare people for the legal implications of probate, which leaves many people and their families dealing with financial hardships on top of the emotional loss they are already burdened with. This article contains fundamental knowledge about the process of preparing for death: estate planning, including.

• What happens when you pass away without proper estate planning in place in Maryland?
• What basic estate planning documents does everyone need in Maryland?
• How often should you review your Maryland estate plan?

How Much Estate Planning Do I Need In Maryland?

As with any preparations, some are better than none, but there is often more you can do to prepare your assets, property, family, and legal situation for your death. This process, called estate planning, can consist of as little as writing and notarizing a will but can be considerably more elaborate depending on your situation, needs, and objectives.

Much of this planning revolves around the process of probate, which is the court procedure required to take assets and property held in the name of a deceased person so that they can be given to living beneficiaries.

What Happens If Someone Dies Without Any Estate Planning In Place?

If you die without even a will in place, which happens tragically far more often than it should, your property passes on to predetermined beneficiaries by intestate succession. This is a generic or default way for wealth to be passed down that is codified in state laws.

While every state’s intestate succession laws are a little bit different, the process is generally the same. During an intestate succession in Maryland probate, the state will decide where your money and property goes. They pick which of your relatives get your assets based on pre-established and inflexible rules, and often it is not at all the way you would have wanted it distributed.

What Happens If You Die With A Will But No Additional Estate Planning?

Having a will, on the other hand, gives you control over who among your beneficiaries receives which assets. Unfortunately, that is all it does. If you have just a will but no trust, your estate will still have to go through the probate process. Only this time, the will tells the court what your wishes are, instead of everything being decided by the state.

However, while the court will try to make it happen, it can take months or even years to accomplish it, with additional costs associated with going through probate accumulating and undermining your legacy.

On the other hand, if you have a trust and all of your assets are owned by that trust (such as with a revocable living trust), then nothing has to go through probate. This is because, in the eyes of the law, these assets belong to the trust and are not held in your name. Since the trust is still legally active, no probate is required.

Instead, the trustee you have designated to take care of the trust, which could be a child, trusted friend, or attorney, can immediately distribute those assets exactly in the manner you set out. Which can be extremely straightforward, or creatively detailed depending on your wishes.

This means that your assets and property will be passed on without the cost, in terms of time, expense, fees, or publicity, which come with the involvement of the court. This is especially important for real estate property, as many intangible assets like 401-ks or life insurance policies can be handled by designating beneficiaries.

However, just because trusts are the most powerful, versatile, and effective estate planning tool, it does not mean they are the only one you need…

Daniel Razvi is a versatile Maryland attorney focused on providing tax and risk-optimized estate planning services. Attorney Razvi brings considerable experience and a unique perspective to the field of estate planning thanks to his comprehensive approach, which includes retirement planning, estate planning, and tax optimization.

For comprehensive and strategic insights into the field of Maryland Estate planning, connect with lawyer Daniel Razvi and his law firm, Higher Ground Legal.

Call Now (301) 396-7576

Basic Maryland Estate Planning Documents

Given its importance in avoiding intestate succession, everyone should make sure they have a will in their name at the very least. However, there are other estate planning documents that you should strongly consider setting up, just in case.

What Is A Power Of Attorney?

Power of attorney gives somebody that you trust the ability to take care of your financial affairs, pay your bills, or buy and sell things in your name. This is especially important if you become incapacitated, but it can be helpful for a whole host of situations and reasons.

What Is An Advanced Medical Directive?

While power of attorney lets someone make financial decisions in your stead, your advanced medical directive gives similar power to someone to handle your medical decisions. Through it, you empower them to tell the doctors what you wish to happen, including on difficult topics like pulling the plug or resuscitation.

What Is A Revocable Living Trust?

If you own property, then you will generally need a revocable living trust to hold your property and any other assets you wish. These trusts are flexible while you are alive, allowing you to add or withdraw items or change the rules, but become fixed and final when you die. This ensures that, if everything is done correctly with the help of an experienced attorney, your estate will not have to go through probate.

Are There Any Other Estate Planning Documents Or Tools I Need Before I Die?

We have covered all the basic estate planning documents everyone needs, but that doesn’t mean they will cover every situation. There are plenty of unique situations you can find yourself in that require estate planning solutions adapted specifically to those conditions.

For example, if someone who might inherit from you has special needs, you might need a special needs trust or provision to protect them from losing their government benefits when they inherit.

Alternatively, if you have been blessed with considerable wealth, there are certain tax minimization trusts like an IDGT or Intentionally Defective Grantor Trust you may wish to put in place. Those are more advanced, however, and most families in Maryland will not need one.

On the other hand, most families in Maryland will need to review their estate plans regularly to make sure they still align with their wishes.

When Should I Review And Update My Estate Planning Documents?

Estate planning is an ongoing process, while you can set it up ahead of time, it does not automatically adapt itself to everything life can throw your way before you go.

If there are any major changes in your life, you really should at least review, (and likely update), your estate plan. For example, you should do so:

• If you buy or sell property, that’s one time to look.
• If you have changed your mind about your beneficiaries.
• If you have another child.
• If you want to exclude someone who was previously included, such as an ex-spouse or former friend.
• If you lose a spouse to death or divorce.
• And more…

When Is The Best Time To Start Estate Planning?

It is never too early to start estate planning – but it can be too late. If you are not in a sufficiently clear mental state to understand what you are signing and to make your wishes known, your decisions will not be respected.

Given how suddenly illness can creep up on us, or how quickly an accident can whisk us away, you should get your estate planning done before anything happens. The last thing you want is someone claiming that you were not in your right mind when you created your documents and throwing your family into conflict. Thus, the best time to reach out to an attorney and start your estate planning is always right now.

Who Needs Estate Planning The Most In Maryland?

You could live a very long time… or tomorrow could be your last day. As a result, you always want to make sure your estate is planned for. That is especially important if you own property to keep it out of probate. However, there’s another category of folks for whom estate planning should be a top priority, whether or not you own property.

If you have young children, especially children who are under 18, you definitely need trust. Children are not allowed to own property, and cannot really own significant amounts of money, or other such wealth in their name. Such assets must always be held under an adult’s name.

For example, let us say you are a young working adult with a good job and a $2 million dollar life insurance policy to cover your family’s needs should you pass. If you have a trust, that life insurance policy will pass to it, and through the trustee you chose, and the conditions you picked out, that money will be managed for your children and passed on to them when they are old enough.

If you do not have a trust, then the life insurance company cannot pay it out to your children. They will pay it to the probate court instead, and that court will determine who can access the money, and when your children will receive it, with additional fees for whomever they designate to do so.

How Should I Get Started Planning My Estate In Maryland?

If all this seems like a lot, it is because it is. Planning your estate is not the task of a single afternoon, especially if you are trying to handle things on your own.

The best way to start planning your estate, however, will always be by talking to an experienced estate planning attorney, preferably one with experience dealing not just with estate plans but also tax law and retirement planning. That way, your estate plan will have you covered, not just in the inevitable event of your death but in all other cases as well. For more information on The Basics Of Estate Planning In Maryland, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (301) 396-7576 today.