During the pandemic, most of us have given thought to our mortality and to how best protect our spouses and families. At Bromberg Rosenthal LLC, we have the personnel and experience to assist you in all aspects of planning related to your estate. Our goal is to help you carry out your wishes for asset preservation while providing for your spouse, your children and your extended family. We will meet with you and learn about your concerns and desires and help you craft the necessary documents to achieve your goals. Whether you want a so-called “simple will,” a more complex one with trust agreements for your children, or even more complex instruments including such planning mechanisms as “credit shelter trusts” or “revocable trusts,” we will meet your needs and requirements at reasonable cost.
While untimely death is a great concern, you are more likely to become incapacitated or generally unable to either handle financial affairs or make your wishes known regarding the extent of the medical intervention you wish to have when you are chronically ill. The time period of mental and/or physical disability may be short or may be permanent. In any case it is important to have in place the necessary documents that will give your loved ones the ability to handle your financial affairs and help make your health care decisions if you are unable to do so for yourself. The proper documentation will insure that your wishes are met without the need to get the courts involved.
We assist our clients in drafting powers of attorney for medical decision making; for handling financial affairs; and for selling real estate. We can assist you in all aspects related to the efficient management and transfer of your property with the goal of meeting your plan of distribution while minimizing the tax consequences. A brief primer on wills appears below:
(Or, Where There’s a Will, There’s A Way – Your Way!)
A Will is a written legal document, which sets forth what is to happened after a person’s death to his or her property and who is to be named as guardian to care for any minor children. The person writing the will is known at the “Testator.” The Will appoints a person called the “Personal Representative,” or “Executor”, who carries out the instructions in the will. A person receiving a gift from the estate is called the “Beneficiary.” If a Will sets up a trust for the benefit of someone, a person will be appointed to manage the funds in the trust who is known as the “Trustee.”
A will becomes effective only when it is signed and witnessed with certain formalities. It will control the disposition of your estate unless it is revoked. Since the property you own will change over time, or the persons you named as Personal Representative, Trustee or beneficiaries may die, or you may simply change your mind about how you want your affairs handled after your death, an annual review of your Will is a good idea.
Your estate consists of all money and property you own in your own name at the time of your death. Thus, for example, if you own your home with your spouse as “tenants by the entirety” or with any person as a “joint tenant” with rights of survivorship, your home will not pass under the terms of your will. It will automatically go to the surviving joint tenant or tenants even if your will is emphatic that you do not want that to happen. The same result applies to bank accounts that are owned jointly with someone else or which have been set up as so-called “POD” (Payable on Death) accounts.
Some people erroneously think they have put in place a sensible distribution of their estate in their will only to be thwarted in their intentions because they failed to properly correct the ownership records and title documents to their bank accounts and other property.
If you die without a valid Will, money and other property you own at death will be divided and distributed according to “intestate succession” laws of your state. These laws divide all property between a few close relatives according to a set formula, and completely exclude, more distant relatives, friends and charities.
In Maryland, for example, there are specific rules as to how your estate will be distributed if you leave a surviving spouse and/or surviving children without writing a will. If you leave a spouse and a surviving minor child or children, your spouse gets one-half of the estate and your children get the other half. If your children are adults, your surviving spouse gets the first $40,000 plus one-half of the rest (known as the “residue” or the “remainder”) and your children (or grandchildren or other “lineal heirs” known as your “issue”) get the balance. If you have no surviving “issue” but one or more of your parents is still living, then your spouse gets the first $40,000 plus one half of the remainder and your parents get the balance. Only if you leave no surviving issue and your parents are both deceased does your surviving spouse get the whole estate.
In the absence of surviving issue, the law gets very specific and convoluted if you do not have a will. For example, § 3-104(c) of the Estates and Trusts Article of the Maryland Code provides as follows:
(c) If there is no surviving parent or issue of a parent, it shall be distributed one half to the surviving paternal grandparents equally, or if only one paternal grandparent survives, to the survivor, or if neither paternal grandparent survives, to the issue of the paternal grandparents, by representation, and one half to the surviving maternal grandparents equally, or if only one maternal grandparent survives, to the survivor, or if neither maternal grandparent survives, to the issue of the maternal grandparents, by representation. In the event that neither of one pair of grandparents and none of the issue of either of that pair survives, the one half share applicable shall be distributed to the other pair of grandparents, the survivor of them or the issue of either of them, in the same manner as prescribed for their half share..
Clearly, these laws may not reflect your wishes. There is even less protection for unmarried couples. No state’s intestate succession law gives an unmarried partner any property.
In addition, the laws of intestacy do not deal with the question of who will take care of minor children if both parents die or if the surviving parent is unavailable, leaving it up to the courts and social service agencies to appoint a guardian. Even though the court has the ultimate authority to appoint a guardian, a Will is the only way to let the court know who you want to raise and educate your children.
Every adult should have an up-to-date Will. If you are married you and your spouse will each need a will. It is not necessary to be a citizen of the United States to prepare a Will. Preferably, you should make the Will in Maryland if you reside in Maryland, although Wills made elsewhere are also valid here. You must of legal age, namely, at least 18. In addition, you must be of “sound mind.” Being of “sound mind” means that you understand what a will is; what it accomplishes and that you are making your will. You must also understand the relationship between yourself and your family members and others whom you would normally include in a will. Finally, you must understand what property you own.
There are various factors that can trigger the need to modify or redo your will. Some examples are:
A minor child must have an adult guardian unless a court has declared he or she is legally “emancipated.” Maryland declares that anyone under the age of 18 is a minor. Normally the surviving spouse becomes the personal guardian of your minor child. Parents should agree on who they want appointed as personal guardian of their children, in case both parents die simultaneously or near in time to one another. The issue is always a very personal one that requires careful thought and consultation between parents.
In the case of divorced or separated parents, the surviving parent will generally have the best claim to be the guardian of their child, although anyone may challenge a person’s petition to be guardian of a child. If the surviving parent is unavailable, the courts will normally give great weight to the preference contained in the deceased parent’s Will.
Minor children cannot legally own property. This means that there must be an adult legally responsible for supervising and administering property owned by a child. Thus, you need to name a property guardian for your minor children. Frequently, this is the same person who has been named as the personal guardian of the children. If you have substantial assets and you want this property to be managed for your child beyond the age of majority (i.e., age 18 or 21) you need to leave your property in trust. If you decide to establish a trust for your minor children you must choose a trustee and determine the age at which the property in the trust will be released to the beneficiary. You should also name a successor trustee, in case your first choice is unable to serve. You also have the option of naming tow or more people to act as co-trustees.
A Will does not dispose of property which would pass to another by contract or by operation of law. As discussed above, jointly held property goes directly to the surviving “joint tenant.” Proceeds of life insurance policies are also not controlled by your will. The insurance company must pay the funds over to the person you named as beneficiary on the policy even if your will says something to the contrary. As a result, you should regularly review the beneficiary designations on your life insurance policies. The same analysis applies to pension plan assets where you have named beneficiaries other than your estate.
Choosing the right personal representative (“PR”), is a very important decision you make when you make a Will. The PR is responsible for taking your Will through probate. The PR pays your bills and taxes and distributes your property according to your instructions. You should name a person you trust who will see that your estate is settled quickly and efficiently. Your PR does not have to be an attorney or an accountant. Usually, you will appoint your spouse, an adult child, or close relative as your PR.
Frequently, your PR will hire an attorney or an accountant if they need help to settle the estate. You should also name at least one alternate PR in your Will. Then, if your first choice cannot serve, your next choice can be appointed. If you do not name an alternate PR and the person you named cannot serve, the court will appoint someone else to serve.
Feel free to call us at 301-251-6200 for a no charge initial telephone conversation to discuss any of these issues and to learn about our services.