As we enter the new year, one resolution that you should consider putting on your list is to have your estate plan in place.
Estate planning is the process of managing your assets to ensure that they fall in the right hands if you are no longer capable of making your own decisions or in the event of your death. Even if you are not elderly or physically ill, there are many benefits to nailing down your estate plan sooner than later.
First, it is best to finalize an estate plan while you are competent.
You do not know what difficulties life will throw your way, which could impede your ability to make an estate plan. If you pass away without an estate plan in place, Maryland has a set of default rules that will determine who will inherit from your estate. These rules are found in the Maryland Intestacy Statutes. If you do not execute a valid Will, you will have no say over where your assets go. Suppose you are married with children and die intestate. In that case, a large percentage of your estate will be distributed to your children instead of your surviving spouse. If you have minor children, the Court will decide who will serve as their guardians. Further, you will forgo any estate tax planning; the Maryland Intestacy Statutes permit your estate to be taxed to the fullest extent allowed by law. Finally, you will have no ability to leave assets in trust for your spouse, children, or any other family members that you intend to support.
Second, it is best to know your priorities for your estate plan.
Do you anticipate your estate triggering federal and state estate taxes? Do you anticipate your children or family members challenging the validity of your estate plan? Do you expect creditors or a former spouse to file a claim against your estate? Do you have a child with special needs whom you want to continue to qualify for Medicaid or other public benefit programs? Do you have a charity in mind to whom you’d like to give your assets? These questions are best to answer early on, when you can answer them, instead of when you are on your death bed.
Third, you should know exactly what property you own, how it is titled, and how you can get it in the right hands after your death.
Contrary to popular belief, a validly executed Will can only distribute property titled in your name. A Will does not have the power to distribute jointly owned assets, such as joint bank accounts or jointly owned real estate. A Will also cannot distribute assets that are subject to contractual relationships. These include life insurance, payable on death accounts, IRAs, 401(k), and other retirement accounts. These assets pass according to a Beneficiary Designation Form and not according to a Will. In addition, assets titled by a revocable living trust pass independently of a valid Will.
Finally, it is better to have “tough” conversations now than later.
Any estate plan can be contested through probate, which can be a long and expensive litigation process regardless of how ironclad your estate plan is. To minimize the potential for surprise, and therefore for probate, one simple thing you can do is to be intentional about talking to your family members about whom to leave your assets. Having those conversations now can save you much heartache down the road.
Regardless of your age or health, I encourage you to make your estate planning one of your resolutions for 2022. The estate planning process can be challenging to navigate, especially since we do not know what the future holds. If you have questions or need legal guidance on an estate planning matter, please don’t hesitate to contact me at 301-563-6685 to schedule a free consultation.
About Andalman & Flynn, P.C.: Founded in 1998 in downtown Silver Spring, Maryland, Andalman & Flynn has forged a distinguished reputation for legal excellence. The firm represents individuals seeking disability benefits throughout the country and practices family law throughout Maryland and the District of Columbia. The firm focuses on cases that impact the rights of everyone, and are there for clients when responsive legal help is most critical. The firm has provided legal analysis on national and local television and radio, and their attorneys often testify before legislative bodies and are routinely invited to contribute to prominent legal publications. For more information about Andalman & Flynn, please visit the website at andalmanflynn.com or call 301.563.6685