Salines-Mondello Law Firm, PC

Key Issues to Tackle in Estate Planning

Avoiding disputes is a key to successful estate planning.

Estate planning can often sound confusing but there are four things that are often important to understand in order to give your family peace of mind, according to NewsGram in “4 Things You Must Know About Estate Planning.”

Estate planning focuses on planning for how an individual’s assets will be preserved, managed and distributed after their death. It also addresses how the person’s financial life, including their property, is to be managed, in the event they become incapacitated because of an accident or an illness.

The core of estate planning while you are living is to protect your assets, protect your estate from having to pay unnecessary taxes and protects you and your wishes, if you are incapacitated or pass away. Here are four key things everyone should keep in mind while preparing their estate plan.

Age should not be a factor. Anyone who is of legal age and owns anything has an estate. An estate refers to anything of value that you own. It does not mean a $10 million mansion. A home, a car, bank accounts, retirement accounts and personal possessions make up an estate, regardless of their size or value. Once you have assets, you need an estate plan. We don’t know when we are going to die, but we can be sure that if you have no estate plan, the state will determine who receives your assets. You may want to make those decisions for yourself. That’s what an estate plan does.

You need an estate planning attorney. Estate planning crosses into several different legal practice areas. Asset management, tax planning, real estate, guardianship and other areas need to be addressed by a legal professional who understands how these elements all work together. An estate planning attorney has a professional responsibility to help you document your wishes for incapacity and death.

However, they do more than that. The estate planning attorney will help you fine-tune your wishes, gain clarity on what you want to happen during life and death, and translate that into the legal language.

Planning helps avoid or minimize probate. Depending on where you live, probate can be a simple process or one that takes a long time. The estate planning attorney will help you plan to pass your assets to your spouse or the next generation to avoid going through the court process known as probate. This is a process of authenticating your will, verifying that the assets in the will are correctly named, paying off any outstanding tax balances and approving the distribution of the assets.

An estate plan works to minimize family squabbles. Disagreements over estates, including personal possessions as well as money, routinely tears families apart. You don’t have to be wealthy or even a celebrity to have a family that is fractured over a misunderstanding or someone feeling like they were not treated fairly. This is another area where an experienced estate planning attorney can help bring you through the process of distributing assets.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and can help avoid acrimony.

Reference: NewsGram (June 5, 2019) “4 Things You Must Know About Estate Planning.”

Tax Planning Is Only a Part of Estate Planning

The tax codes change, and the estate plans need a fresh look.

The new tax laws have not made estate planning simpler. They have created a situation where it would be wise to take a fresh look at estate, retirement and disability planning, because those plans work together in one package, according to the Daily Times in “Planning Ahead: Estate planning is not just tax planning.”

Wills have often been drafted for people in upper tax brackets concerning assets and what belongings should be passed to children and grandchildren. However, because federal estate exemptions are now very different, the question arises on whether the estate plan achieve the goals desired?

Here are some of the questions to ask:

• What do I own?
• Can I maximize what I own?
• Where will my assets go upon my death?
• Who will care for minor children or disabled relatives, if I die?
• What will happen if I become disabled?
• Will I have enough to pay for my children’s education, my retirement, or for even my potential disability or that of my spouse?

Estate planning goes beyond drafting a simple will, or even a complex trust. Wills and trusts are personal documents. Sometimes people decide that other things are more important than taxes. That’s why a simple online form does not answer all the questions when creating a will.

An unmarried couple may decide there are more tax benefits to being married, if a state has an inheritance tax that is higher for people who are not related. 

It makes the most sense to name a young person as a beneficiary of an IRA, so the asset can grow (“stretch”) over the years. However, you may have someone else in mind for the IRA.

Decision making in estate planning is not something that happens instantly, and it does change over time. That is why it is important to review an estate plan every few years. 

The critical thing is to have an estate plan in place. You can adjust it as time goes by, but without one your family faces many added difficulties and costs.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.

Reference: Daily Times (April 9, 2019) “Planning Ahead: Estate planning is not just tax planning”

Naming Heir to Estate? Consider a Backup

You may not like considering a back up to your plans for your estate, but it is a good idea.

When you name an heir to your estate, you are most likely not thinking of outliving them.  However, it might be a good idea to have a backup plan because no one knows what the future will bring, according to the Carroll County Times in “Legal Matters: If predeceased by an heir in a valid will, what happens with that inheritance?”

It is a good idea to review your will with your estate planning attorney to see if your will has already made a provision for this event. Your will should be reviewed from time to time anyway, especially when there has been a major tax law change. If there is nothing in your will currently addressing this situation, you can change the will to what you would want to happen.

If you don’t make this change and a child predeceases you, the laws of your state will govern what happens.

In Maryland, the law of the Estates and Trusts Code says that your child’s estate will still receive the share you had designed in your will, regardless of whether they died before you. Therefore, whoever is an heir to your child’s estate, will receive what your deceased child was awarded in your will.

The law also states that the legatee—your deceased child—must be identified in the will to receive whatever share of your estate you directed. If you don’t want to leave a portion of your estate to the heirs of your deceased son or daughter, you must specify exactly how you want your estate to be divided, if one of your children should die before you do.

Is it worth getting into these specifics? Yes. For one example, if you’ve had a bitter feud with a son-in-law for decades and you don’t want to leave him anything, then you’ll want to make sure to specify that in your will.

Each state has its own laws governing what occurs when an heir predeceases the parent. For example, in the past in Maryland, a legatee’s right to receive a share of the estate did not enjoy any protection, if he died before the author of the will. If the will did not contain specific directions on how that share should be distributed if the legatee died before the author of the will, the share simply remained in the estate, and the legatee’s heirs did not receive any assets.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.

Reference: Carroll County Times (Dec. 21, 2018) “Legal Matters: If predeceased by an heir in a valid will, what happens with that inheritance?”