November 25, 2016February 27, 2023

What You Should Have in Your Estate Plan

There are a few things that every single estate plan needs to have regardless of the exact legal instruments that you end up using as your primary estate planning tools.

Estate plans can take a variety of shapes. Some estate plans are small and simple. Other estate plans are large and contain many complex legal instruments. However, there are a few things every single estate plan needs to have.

Recently, the Catholic Register discussed what is necessary for all Canadian estate plans in “The must-haves of estate planning.” In the U.S. most of the same things are also necessary. They include:

Someone needs to be appointed as the executor of your will. Even if the primary instrument to distribute your property is a trust, your plan should still include a pour-over will for which you need to appoint someone trustworthy as an executor.
Your estate plan needs to include some basic tax planning, especially if you live in a state that has an estate tax of its own. Both Maryland and the District of Columbia do, so you need some basic tax planning in both these states.
If you have any dependents, then your estate plan needs to provide for their care. While you have some flexibility in your estate, you cannot simply disinherit a spouse or a minor child. Maryland and the District of Columbia, like other states, allow disinherited spouses to claim an elective share of the estate, regardless of an intent to disinherit.
Your estate plan should also include powers of attorney so you can appoint someone to look after your interests if you become incapacitated.

If you have an experienced estate planning attorney create your estate plan, then it will contain all of these things and much more that will make your estate plan as effective as it can possibly be. Schedule a consultation with Profit Law Firm to get the peace of mind that comes with proper estate planning.

Reference: Catholic Register (Nov. 6, 2016) “The must-haves of estate planning.”

November 24, 2016July 13, 2023

Avoid Family Disputes in Your Estate Plan

One of the main estate planning goals of many people is to avoid having a family fight over their estates.

There are very few things that can be more destructive to a family than a fight over an estate. Once the fight begins it becomes nearly impossible to regain family harmony because of the deep and bitter emotions that battles over estates have. People who know this seek to create estate plans that make family fights less likely.

While it is not possible to avoid all fights, there are some steps that can help.

Recently, the Lodi News-Sentinel discussed some of those steps in “Avoid family fights over inheritance,” including:

Plan ahead of time. You should have an estate plan in place long b_81a106d2-a54e-11e6-933b-d37e6ac5f0fe.htmlefore you think you will need one. Sudden deaths happen and it could happen to you. If you have no estate plan, you practically invite your family to fight over your estate.
Consider irrevocable trusts. At some point your family might start thinking about what will happen to your estate after you pass away and they might start angling for position in the estate. If you have planned ahead and have an irrevocable trust, then you will not be as easily influenced to change plans to accommodate everyone.
Use a professional trustee. Instead of appointing a family member to be in charge of your trust after you pass away, use a professional who will remain independent and treat everyone in the family equally.
Hold a family meeting. Bring everyone together and let them know what your plans are and why you made them. Family members who are surprised by your estate plans after you pass away are more likely to argue.

Reference: Lodi News-Sentinel (Nov. 7, 2016) “Avoid family fights over inheritance.”

November 23, 2016August 27, 2023

A Bypass Trust Might Still Be Your Best Option

Relatively recent changes to federal estate tax law have made bypass trusts less popular than they used to be. However, they are still good in many circumstances.

It used to be a complicated process for a married couple to get the most out of the estate tax exemption. When one spouse passed away his or her estate tax exemption could be useless if all of the assets went to the other spouse directly. When the second spouse passed away all of the couple’s assets would be considered part of his or her estate and the individual estate tax exemption would be applied.

To get around this couples had to get a “bypass” trust of which there were many types. Essentially, the surviving spouse was bypassed in the estate plan.

The relatively new federal law of spousal “portability” changed this and made bypass trusts less necessary. Now, if the paperwork is properly filled out, a surviving spouse can elect to carry over the deceased spouse’s estate tax exemption and use it along with his or her own later.

This move essentially doubles the estate tax exemption.

However, there are some situations where a bypass trust is still a good idea as discussed by the Poughkeepsie Journal in “Bypass trust works better for many families.”

Many states have estate taxes of their own and they do not all allow spousal portability. For instance, Maryland has a state estate tax and the District of Columbia has a state estate tax. Thus, in Maryland and the District of Columbia a bypass trust is still necessary to take full advantage of estate tax exemptions. A bypass trust can also be used to protect against a surviving spouse getting remarried and having all of the couple’s property eventually ending up in the new spouse’s family. As a result, bypass trusts are a useful estate tool for blended families, learn more here. They can also be used as a great way to include other family members in the estate plan, especially grandchildren.

If all this sounds a bit confusing, do not worry. That is why there are estate planning attorneys and firms like us.

Tell the attorney what you want done with your possessions after you pass away and let the attorney worry about the best way to accomplish that while minimizing the estate tax burden on your estate.

Reference: Poughkeepsie Journal (Nov. 4, 2016) “Bypass trust works better for many families.”

November 22, 2016February 23, 2026

Do You Want a Will or a Trust?

One of the first things that people have to decide when they start thinking about estate plans is whether they want to use a will or a trust. Both have their advantages.

If you start asking your friends and family or look on the Internet for estate planning advice, then you are likely to receive a lot of conflicting advice. Should you get a will or a trust? Nearly everyone seems to have an opinion one way or another. You can find out more about the basics of estate planning on our website.

Normally, the opinion of non-attorneys is rooted in which of the two options was best for the person giving the advice. It may or may not be the best advice for you.

To help decide the better option to use as the primary legal instrument in your estate plan it is helpful to know the basic differences between the two.

This was the subject of a Motley Fool article titled “Will vs. Trust: What’s the Difference?”

A will determines who gets your possessions after you pass away. It has no legal effect until then. It is a roadmap for what you want to happen later. The rules for wills vary from state to state, but they need to go through probate court and the details are made public. For people with small estates they can be cost-effective.

Trusts, on the other hand, have legal effect as soon as they are executed. Property is placed in the trust while you are still alive. While trusts can be more costly to obtain and maintain, they do not ordinarily have to go through probate after you pass away and the details are not made available to the public. Trusts are normally preferred to wills for larger estates.

If you are uncertain whether a will or trust is a better option for you, that is okay. You probably should not decide between the two before talking to an estate planning attorney who can help you make the decision. Schedule a consultation if you would like to learn more.

Reference: Motley Fool (Jan., 2026) “Will vs. Trust: What’s the Difference?”

November 14, 2016July 3, 2023

Using a Pour Over Will to Fund a Trust

When you get a living trust from an estate planning attorney you will likely also get a pour over will that is designed to bequeath any assets you have when you pass away into your trust. It is important not to rely on that will as the sole means of funding your trust.

Getting a trust to avoid having your estate go through probate is only effective if you fund the trust. That means your assets need to be transferred into the trust. Any assets held in the trust when you pass away will then be used and distributed according to the terms of the trust instead of having to go through probate.

At the same time, you will also likely get a pour over will.

These are simple wills that dictate that any assets you had at the time of death that are not in the trust should be placed into it via probate.

Do not let that fool you into thinking you do not need to transfer assets to the trust now and just rely on your will as the Green Bay Press-Gazette points out in “Estate Planner: Importance of funding your trust.”

While the exact rules vary from state to state, it does not take a lot of assets to require an estate to go through probate.

If all of your assets remain outside of your trust, then your executor has to probate your pour over will. By relying on the will you would have essentially defeated the purpose of getting the living trust in the first place.

If you do not know how to transfer assets into your trust or need assistance doing so, then talk to your estate planning attorney to get more information about what you need to do. We help clients, who want Maryland living trust fund at Profit Law Firm.

Reference: Green Bay Press Gazette (Oct. 31, 2016) “Estate Planner: Importance of funding your trust.”

October 18, 2016

Life Insurance Trusts

Life insurance is a great way to provide your family with liquid assets after you pass away, but if the policy benefits would put your estate over the estate tax exemption, then you might consider a trust.

When planning the estate of a family's primary breadwinner one of the biggest concerns is providing the necessary cash assets for the rest of the family to live on while everything else gets settled. This is especially the case if the estate is expected to go through probate or if most of the estate assets are difficult to sell quickly.

One of the best ways around this problem is through the use of life insurance. The policies pay out in cash almost immediately. However, as Forbes points out in "3 Considerations for an Irrevocable Life Insurance Trust" the solution is not always perfect.

One of the problems with life insurance policies is that the benefits can be counted for estate tax purposes. This is especially problematic if the benefits would put your estate over the exemption limit when it would not be otherwise.

One way to get the advantages of life insurance while avoiding the estate tax problem is to create an irrevocable life insurance trust. The trust becomes the owner and the beneficiary of the life insurance policy and keeps the benefits out of the estate tax calculations. However, if you transfer ownership of an existing life insurance policy, then you must live for three years to avoid having the IRS include the death benefit value in your estate anyway.

If you have questions about irrevocable life insurance trusts or other ways to provide liquid assets to your family after you pass away, then speak with an estate planning attorney about the options.

Reference: Forbes (Sept. 19, 2016) in "3 Considerations for an Irrevocable Life Insurance Trust."

October 6, 2016

What Is Your Estate Planning Attorney Talking About?

Estate Planning Attorneys talk about a lot of different legal documents. You need to know what those documents are.

When you visit with an estate planning attorney, the attorney is likely to mention the names of several different legal documents. If you want to understand what the attorney is talking about, then you will need to know what those documents are.

Most attorneys would be happy for you to ask if you do not know. Answering questions is what the attorney is there for. However, if you are not comfortable asking basic questions, then you should learn some basics beforehand.

Recently, the Ventura County Star published a list of basic estate planning documents and what they do in "Get to know estate planning documents." The list includes:

Advance Directive – Tells doctors and other health care professionals what procedures not to perform if you are terminally ill and have no chance of recovery.
Asset Inventory – A list of all of your assets to let your estate executor know what you have after you pass away.
Beneficiary designations – Life insurance, retirement accounts, and other financial accounts you designate to go to a specific person after you pass away.
Power of Attorney – Allows for someone else to handle your finances if you are incapacitated.
Power of Attorney for health care – Allows for someone else to make medical decisions for you if you are incapacitated.
Record of Locations – A list of where your heirs can find all the important financial and legal documents after you pass away.
Trust agreement – A method of passing assets to others while having those assets maintained by a third person.
Will – The most common estate planning document that says how assets should be distributed after you pass away via probate.

A qualified estate planning attorney can help you decide the best legal documents to use for your unique circumstances.

Reference: Ventura County Star (Sept. 17, 2016) "Get to know estate planning documents."

September 29, 2016October 25, 2023

Not the Best Advice

Sometimes people who have good intentions can give bad advice. An illustration of this comes from a recent Dear Abby column that advised a woman to tell her mother to set up a trust.

The columnist known as Dear Abby has been giving advice for decades to newspaper readers who write in with problems. To her loyal readers she is seen as a wise woman who can always be counted on to assess a situation, cut to the chase and dispense good advice.

However, a recent column in which she advises a woman to tell her mother to get a trust illustrates why some types of advice are better left to lawyers.

The column was published in the Chicago Sun Times as “Dear Abby: He wants a night when wife dresses sexy.”

A woman wrote in to say that her mother has given her older brother an allowance for many years. The brother lives in another country because he is a fugitive from the law with outstanding warrants. The mother fears that without the money the brother will become homeless and not be able to support himself. Because of this the mother expects the daughter to continue giving money to her brother after the mother passes away.

Abby suggests that the woman tell her mother to set up a trust for the brother so that he will be taken care of and it will not be the letter writer’s problem.

At first glance, that advice might seem reasonable. A trust would be a great way for a mother to provide for a son who needs money but is not able to take care of himself.

Under ordinary circumstances a trust lawyer would be happy to set up this type of trust. However, this is not an ordinary circumstance. Since the brother is a fugitive, anyone who knowingly helps him could face legal consequences. The better advice may have been to consult an attorney.

Reference: Chicago Sun Times (Sept. 12, 2016) “Dear Abby: He wants a night when wife dresses sexy.”

September 26, 2016February 15, 2024

Basic Estate Planning Mistakes to Avoid

If you would like to make sure that your estate goes to the people you want it to go to, then it is important to avoid making some basic estate planning mistakes.

It is impossible to avoid making mistakes in every aspect of your life. No one can always be perfect at everything. Estate planning is no different.

CNBC recently wrote about some of the common estate planning mistakes we can avoid in “Don’t drop the ball when planning your estate.”

They include:

Many people do not make a will. Without a will, then you cannot decide who gets your property. Every estate plan should have a will of some sort.
After making a will some people never update it. This is a mistake as a will should be changed whenever there is a significant change in circumstances to make sure the will reflects the new circumstances.
It is a mistake to not consider how your heirs will handle their inheritances and whether they are capable of being responsible with anything you leave them.
It is a mistake to not consider getting a trust, especially if your heirs have the potential to be irresponsible. A trustee can oversee the inheritance and make sure it is used appropriately.
Finally, it is a mistake to not think carefully about who to appoint as an executor of a will or as a trustee.

If you realize that you need a will or trust, call Profit Law Firm for a consultation.

Reference: CNBC (Sept. 13, 2016) “Don’t drop the ball when planning your estate.”

September 15, 2016

A Trust Is Worth It

Setting up a trust can be time-consuming and there is no doubt that even the simplest trust takes some work to create. However, taking the time and making the effort is worth it.

A common question people have when they start to think about estate planning is whether it is worth the effort to create a trust. Just drafting a will is a lot simpler in most cases for the person doing the plan. Creating the trust requires funding the trust, which means that you have to transfer your assets into the trust.

If you just get a will, then you do not have to bother with any of that. However, if you are going to go to the effort of getting an estate plan, then you might as well make the effort of getting the best estate plan you can.

Taking the time to create a trust is almost always worth it as the Green Bay Press-Gazette explains in “Setting up a trust is worth the work.”

The two biggest advantages to a trust are that the trust makes it easier for you to control how your assets are used and distributed after you pass away. Moreover, a trust is much easier for your heirs to deal with after you pass away versus going through probate to sort out a will.

There are other advantages as well, such as keeping the details of your estate unavailable to the general public.

Even though a trust does take more effort to create than a will, the truth is that most of that effort can and should be done by an estate planning attorney. The attorney can make sure everything is set up properly and can normally assist in transferring assets into the trust. If you want to see how a trust might benefit you and your heirs contact Profit Law Firm.

In the end, getting a trust does not have to be that much more work for you.

Reference: Green Bay Press-Gazette (Aug. 29, 2016) “Setting up a trust is worth the work”

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Category: Trusts