Read more about the article Will In-Laws Inherit If I Don’t Have a Will? – Annapolis and Towson Estate Planning

Will In-Laws Inherit If I Don’t Have a Will? – Annapolis and Towson Estate Planning

State inheritance laws prioritize spouses, children and other blood relatives ahead of in-laws. However, how those individuals handle their share of an inherited estate can determine whether an in-law receives any assets.

Yahoo’s recent article, “Can I Leave Inheritance Money to In-Laws?” explains that state inheritance laws say who can be an estate heir. These individuals are typically directly related to the decedent by marriage, blood, or adoption. In order of priority, people who can inherit from someone under state law include spouses, children, siblings, parents, grandchildren, aunts and uncles and cousins.

However, an in-law may get some of an estate if they marry a direct heir.

You can leave assets to your in-laws if you want them to inherit from your estate. The easiest way to do this is to leave instructions in your will as to what assets they should inherit. You could also ask an experienced estate planning attorney about creating a trust to give assets to in-laws.

Some people may want to leave something to a son or daughter-in-law. However, others may seek to exclude them from inheriting altogether. To protect an inheritance from in-laws, you can create a trust that allows you to leave assets to family members. In addition, the trust can state that anyone not a blood relative can be excluded from receiving assets.

A prenuptial agreement for your child is another option. This might have terms that state how assets you pass on to your child should be handled during your lifetime and beyond. You could also raise the prospect of a postnuptial agreement after they’re married. The document would dictate what happens to their assets (and anything they’ve inherited from you) if they are divorced.

Every family situation is unique, and you might have questions about where in-laws fit into your estate plan. Ask an experienced estate planning attorney to discuss this with you.

Questions? Contact us to schedule a complimentary initial call with one of our experienced estate planning attorneys.

Reference: Yahoo (Jan. 8, 2023) “Can I Leave Inheritance Money to In-Laws?”

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Read more about the article What are the Consequences of Dying Without a Will? – Annapolis and Towson Estate Planning
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What are the Consequences of Dying Without a Will? – Annapolis and Towson Estate Planning

Someone who dies (the “decedent”) with a legal will is known to have a testate inheritance. As such, their assets are distributed according to their will. A person who dies without a legitimate will has an intestate estate. Their assets are distributed according to the laws of inheritance.

Yahoo’s recent article, “What Happens If I Die Without a Valid Will?” says that estate planning is a local area of the law, so specific rules governing estate planning vary greatly from state to state.

When you die, all of your property is called your estate. If you die with a valid and enforceable will, then your estate is distributed in the following way:

  1. First, all attorney’s fees related to managing your estate are set aside for payment;
  2. The person managing your estate (the executor) then pays any debts that you had with the assets in your estate;
  3. Finally, after paying off all debts, your estate is distributed according to the instructions in your will.

Liabilities don’t transfer through an estate, so while you can inherit someone’s property, you can’t inherit their debts. However, debts can affect an inheritance in several ways. The first case is when liabilities transfer with the property. Therefore, if the decedent owed unpaid property taxes or a mortgage on their house and then left you that property if you wanted the house, you’d also have to take responsibility for paying those debts. If you don’t, the executor will sell the house, settle the debts and transfer any remaining money to you.

Second, liabilities can reduce a potential inheritance. Here, if someone leaves you $100,000 in their will but also has $40,000 in unpaid debts, you’d only get $60,000 because that’s what would be left. If the debts exceed the estate’s value, the individual dies insolvent, and their heirs would get nothing.

Other than managing liabilities like debt and taxes, a person can use their will to distribute their assets in almost any way they want. It’s important to understand this because many think family members automatically have a right to inherit money or property. This isn’t so.

Contact us to schedule a complimentary initial call with one of our experienced estate planning attorneys.

Reference: Yahoo (Jan. 27, 2023) “What Happens If I Die Without a Valid Will?”

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Read more about the article What Is the Purpose of an Executor? – Annapolis and Towson Estate Planning

What Is the Purpose of an Executor? – Annapolis and Towson Estate Planning

It is flattering to be named the executor for a loved one. It demonstrates an extremely high level of trust and respect, as the person considers you capable enough to fulfill their wishes when they have passed. However, just because you have been named executor does not mean you are obliged to serve, says the recent article, “What are the responsibilities of an executor?” from Daily Local News.

Suppose you decide the responsibilities of being an executor are more than you’re willing or able to handle. In that case, you can renounce your position as executor, and a successor executor named in the will becomes the executor. If the person who named you executor did not name a successor, the court will select a person for the role.

If you have any doubts about this role, please tell the person who asks you to serve, so they can make other arrangements.

If you choose to serve, you’ll want to understand what the job entails. Each estate is unique, and its administration depends upon the assets owned by the deceased, what debts they had and their wishes for distribution.

Some duties are the same regardless of the complexity or simplicity of the estate. For example, the executor often makes arrangements with the funeral home and provides information for the death certificate. Once the death certificate is issued, the executor probates the will with the local court in the county where the decedent last lived. Most people retain an estate planning attorney to guide them through probate and estate administration.

Once the petition for probate has been filed and the court issues Letters Testamentary empowering you to serve as the executor, the administration begins. Some, but not all, of the tasks, include:

  • Gathering assets
  • Notifying beneficiaries named in the will
  • Obtaining an EIN federal tax number for the estate
  • Opening an estate checking account
  • Verifying and paying the debts of the decedent
  • Liquidating and transferring estate assets into the estate checking account
  • Filing a final personal income tax return
  • Providing an accounting to beneficiaries and distributing the estate in accordance with the decedent’s will
  • Filing an estate tax return.

The executor also handles other tasks, such as selling the contents of the person’s residence and home.

The executor is entitled to reasonable compensation for their services. The amount is treated as taxable income. Determining the fee depends on the value and complexity of the estate and the amount of time it took to settle the estate. Some family members waive a fee, while others feel their time deserves compensation.

An estate planning attorney can provide invaluable assistance and prevent expensive mistakes from occurring. If the estate involves businesses, complex ownership structures, trusts, or other sophisticated assets, it is worthwhile to have the help of an experienced professional.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Daily Local News (March 22, 2023) “What are an executor’s responsibilities?”

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Read more about the article Do I Need an Estate Planning Attorney? Annapolis and Towson Estate Planning

Do I Need an Estate Planning Attorney? Annapolis and Towson Estate Planning

Sound estate planning can help minimize taxes and expenses associated with transferring your assets and property after your death, says Urban Asia’s recent article entitled “Why Is It Important To Hire An Estate Planning Attorney.”

An experienced estate planning attorney can help you with your estate planning goals efficiently, avoiding legal processes that can be time-consuming and costly. Estate planning through an attorney can help you, and your loved ones avoid legal complications or unwanted delays.

What are the benefits of hiring an experienced estate planning attorney?

  • Legal expertise: They have specialized knowledge of the laws and regulations governing probate and estates. They can advise you on the best plan to suit the utilization of your assets and needs, and make sure that your estate planning complies with all applicable laws.
  • Tax implications: Estates can have tax implications. An experienced estate planning attorney can advise you on how to structure your estate plan to minimize taxes and maximize the benefits for your beneficiaries.
  • Customization: They can help customize your estate plan to suit your individual needs and goals.
  • Protection of beneficiaries: Estate planning attorneys can help protect your heirs’ interests by ensuring that your will and trust are administered correctly. They can help assure that all your assets are protected from creditors and other legal claims.
  • Charitable giving: An estate planning attorney can advise you on how to make philanthropic gifts, either during your lifetime or at death, through charitable trusts or other charitable giving vehicles.
  • Incapacity planning: They can help you plan for incapacity by creating a power of attorney or living will to let you specify how your assets and property should be managed, if you are unable to decide for yourself.

Finding the right attorney for estate planning can be a challenging task. Estate planning can be complex, and selecting an attorney with experience and expertise in this discipline is essential. Therefore, look for an attorney with plenty of experience in estate planning.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Urban Asia (Jan. 22, 2023) “Why Is It Important To Hire An Estate Planning Attorney”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What Recourse Is Available if Inheritance Is Stolen? Annapolis and Towson Estate Planning

State inheritance theft laws typically cover four distinct aspects, says Yahoo’s recent article entitled “Someone Stole My Inheritance. What Are My Options?”

The four are:

  • Who committed the inheritance theft,
  • When the theft happened,
  • What was taken, and
  • How the theft happened.

As far as the “how” goes, note that inheritance theft can take many different forms. One of the most common examples involves elder financial abuse where someone takes advantage of an elderly person’s weakened physical or mental state to steal from them.

If you think someone’s stolen your inheritance, it’s important to review inheritance theft laws in your state. Again, each state has different guidelines regarding:

  • What constitutes inheritance theft,
  • Who has the standing to bring a civil claim or file a criminal complaint concerning a stolen inheritance,
  • The legal grounds for successfully pursuing an inheritance theft claim, and
  • Penalties and remedies for inheritance theft.

Speaking with an experienced estate planning attorney can help you see if you have standing and grounds to file a claim for inheritance theft. Your attorney may advise you to take certain steps to develop a case, including:

  • Taking an inventory of the estate’s assets,
  • Reviewing estate documents, such as wills or trusts, to look for any potential signs of fraud or forgery, and
  • Verifying the validity of will or trust documents.

With a larger estate, you may need to hire a forensic accountant. They specialize in examining financial documents, which may be helpful if you’re struggling to create a paper trail to support a claim of inheritance theft.

Inheritance theft laws can help to protect your rights to an estate if you think your inheritance was stolen. You can also take actions to preserve your own estate for your heirs by drafting a valid will, creating a trust and choosing trustworthy individuals to act as your executor, trustee and power of attorney.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo (Jan. 18, 2023) “Someone Stole My Inheritance. What Are My Options?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What Is Probate Court? Annapolis and Towson Estate Planning

Probate court is a part of the court system that oversees the execution of wills, as well as the handling of estates, conservatorships and guardianships. This court also is responsible for the commitment of a person with psychiatric disabilities to institutions designed to help them.

Investopedia’s recent article entitled “What Is Probate Court?” also explains that the probate court makes sure all debts owed are paid and that assets are distributed properly. The court oversees and usually must approve the actions of the executor appointed to handle these matters. If a will is contested, the probate court is responsible for ruling on the authenticity of the document and the cognitive stability of the person who signed it. If no will exist, the court also decides who receives the decedent’s assets, based on the laws of the state.

Each state has rules for probate and probate courts. Some states use the term “surrogate’s court”, “orphan’s court”, or “chancery court.”

Probate is usually required for property titled only in the name of the person who passes away. For example, this might include a family home that was owned jointly by a married couple after the surviving spouse dies. However, there are assets that don’t require probate.

Here are some of the assets that don’t need to be probated:

  • IRA or 401(k) retirement accounts with designated beneficiaries
  • Life insurance policies with designated beneficiaries
  • Pension plan distributions
  • Living trust assets
  • Payable-on-death (POD) bank account funds
  • Transfer-on-death (TOD) assets
  • Wages, salary, or commissions owed to the deceased (up to allowable limit)
  • Vehicles intended for immediate family (under state law); and
  • Household goods and other items intended for immediate family (under state law).

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Investopedia (Sep. 21, 2022) “What Is Probate Court?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What are the Big Emotional Issues in Estate Planning? Annapolis and Towson Estate Planning

The largest-ever generational wealth transfer is here: more than $68 trillion is flowing from baby boomers to their adult children.

MarketWatch’s recent article entitled “When it comes to estate planning ‘you have to get to the core emotional issues’” says financial advisers and estate planning attorneys have helped their aging clients shift from wealth accumulation to wealth preservation. The next challenge is legacy planning—and that creates a number of issues.

A significant component of legacy planning is trying to get different generations of a family to accept the patriarch and matriarch’s wishes. If the millennials—the adult kids—can accept their parents’ inheritance plan, there’s less chance for disputes when the money is transferred.

Calm, cool rationality is severely lacking when some families address issues tied to cross-generational wealth. Things can get heated.

Retirees will often ask their financial adviser or estate planning attorney to serve as a buffer to deal with the younger generations. As the children ask for information about their parents’ assets, this professional becomes the point person.

People usually act on emotional reasons, not intellectual reasons. Therefore, you have to get to the core emotional issues, not just give logical arguments when facilitating wealth transfer within families, experts say.

If the family has major dysfunction, bringing in another professional, like a therapist, is usually a good first step to get everybody to the point they can have a polite conversation.

In most cases, however, it’s not that serious. Advisers confront petty squabbles and field calls from family members with clashing interests. Meetings can be concluded by asking permission to share what they’ve said with other family members. That allows gatherings of the entire family can be more productive.

Advisers typically set ground rules when helping families work through intergenerational strife. For example, they might ask everyone to listen for understanding, rather than agreement. That means paraphrasing or asking clarifying questions to confirm they understood what they heard before they rush to make their point. It’s good to caution family members to temper their expectations. If someone is absolutely determined to get their way at all costs, it’s a red flag.

Financial advisers and estate planning attorneys will also ask questions to uncover people’s motivations.

Contact us to review your estate plans with one of our experienced estate planning attorneys.

Reference: MarketWatch (Dec. 24, 2022) “When it comes to estate planning ‘you have to get to the core emotional issues’”

 

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Read more about the article You Need a Completed and Properly Prepared Will – Annapolis and Towson Estate Planning

You Need a Completed and Properly Prepared Will – Annapolis and Towson Estate Planning

The first two essential estate planning documents are the durable power of attorney for legal and financial matters, followed by a healthcare power of attorney. Next is the last will and testament.  However, unlike the first two, the last will is not used until after death, explains the recent article titled “Completing a will ensures wishes are clear to all” from The News-Enterprise.

A last will tells the court what you want to happen to your property and who you want to be in charge of distributing your property and settling your estate after you die. Don’t confuse your last will with a “living will,” a healthcare document used to convey your wishes for end-of-life decision making.

Jointly owned property or payable-on-death property with beneficiary designations generally pass to co-owners or beneficiaries outside of the last will. However, any property owned solely by the decedent with no beneficiary listed on the account must go through court in a probate proceeding.

The court then validates the last will and determines the rightful owner(s) of property after any bills and expenses are paid. Wishes stated in the last will guide the court in making its determination. A last will contains a lot of legal language which can become confusing. However, an estate planning attorney can explain it all.

There are three key roles in a last will: the testator, executor and beneficiary.

The testator is the person signing the last will. The executor is the person (or persons) the testator appoints to be responsible for opening and administering the probate case after death. Beneficiaries are the people who receive something from the estate.

Assets are distributed in several different ways. The testator may have made specific bequests in the last will to leave property or money to a person or a charity. The rest of the estate, called the residuary estate, is distributed among beneficiaries, divided either by fractional shares or percentages. The residuary estate may be left outright or in a testamentary trust. An outright distribution is given directly to a beneficiary, whereas a testamentary trust is held on behalf of the beneficiary and distributed over time.

Beneficiaries can become confusing. Primary beneficiaries—the individuals the testator wanted to receive part of the estate—are the first line of distribution. If the primary beneficiary is unable or unwilling to receive their inheritance, a contingent beneficiary is usually listed in the last will.

The contingent beneficiary is often listed as “per stirpes” or “pro rata” to other individuals. Per stirpes means the children of the deceased beneficiary receive that person’s share. A pro rata distribution means the deceased beneficiary’s share is divided between other beneficiaries in the last will.

Lastly, the “remote contingent” beneficiary receives the inheritance only if all of the primary and contingent beneficiaries have died. They can be extended family members, close friends, or charities.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: The News-Enterprise (Jan. 27, 2023) “Completing a will ensures wishes are clear to all”

 

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Read more about the article Why It’s Important to Update Your Estate Plan – Annapolis and Towson Estate Planning

Why It’s Important to Update Your Estate Plan – Annapolis and Towson Estate Planning

When someone dies without having updated their estate plan for many years, the executors often face a difficult task of administering a disorganized and incomplete estate. At best, the executor needs additional time and resources to organize the estate. At worst, says a recent article titled “Estate plans require maintenance” from The Record-Courier, the decedent’s wishes and desired distributions are not followed.

Among several reasons for updating an estate plan are major life events, known as “trigger” events. These include marriage, birth, death, divorce or changed financial circumstances.

The same is true for the death of a beneficiary or changed personal relationships.

If the grantor becomes incapacitated, changes in the estate plan may become necessary if the person needs long-term care or will be receiving any kind of means-tested government benefits.

A revision of the estate plan is warranted if there is a change in one’s assets, from purchasing a new home or business, selling real property or the modification of a business venture. A growing estate may require a revised plan focused on minimizing estate tax liabilities. On the other hand, if the size of the estate has decreased significantly, an estate plan focused on tax planning may need to be revised or simplified.

Most businesses require a succession plan and the designation of a person to take control of the business upon the death of the grantor.

Finally, as assets within the estate change, the property list, often referred to as the “schedule,” should be updated. All newly acquired assets need to be titled properly, especially if the plan is for them to be owned by a trust.

Each state has different estate laws, so a move to a different state definitely requires an estate plan to be revised, as some elements of the estate plan may become invalid. For example, in some states two witnesses are required to execute a last will, while in others one witness is sufficient. If you move from a one-witness state to a two-witness state, the possibility exists for your last will to be deemed invalid.

Any changes to the estate plan desired by the grantors, such as changed distribution of assets on death or a wish to name a different person to inherit, requires a revision.

Changes in the law, especially those regarding estate taxes, also make it necessary to update an estate plan. The general recommendation is to review the estate plan every three to five years, regardless of whether any trigger events have occurred.

Establishing a comprehensive estate plan, which includes a last will, health and financial powers of attorney and any necessary trusts, and maintaining it is the best way to ensure your wishes will be carried out in case of incapacity and death.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: The Record-Courier (Jan. 28, 2023) “Estate plans require maintenance”

 

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Read more about the article When Is Life Insurance Taxable to Beneficiaries? Annapolis and Towson Estate Planning

When Is Life Insurance Taxable to Beneficiaries? Annapolis and Towson Estate Planning

When people purchase life insurance policies, they designate a beneficiary who will benefit from the policy’s proceeds. When the life insurance policyholder dies, the policy’s beneficiary then receives a payout known as the death benefit.

Yahoo Finance’s recent article entitled “Will My Beneficiaries Pay Taxes on Life Insurance?” says the big advantage of buying a life insurance policy is that, upon death, your beneficiaries can get a substantial lump sum payment without taxation, unless the amount of the life insurance pushes your estate above the applicable federal estate tax exemption. In that case, your estate will need to pay the tax.

While death benefits are usually tax-free, there are a few situations where the beneficiary of a life insurance policy may have to pay taxes on the lump sum payout. When you earn income from interest, it’s typically taxable. Therefore, if the beneficiary decides to delay the payout instead of receiving it right away, the death benefit may continue to accumulate interest. The death benefit won’t be taxed. However, the beneficiary will typically pay taxes on the additional interest.

If a life insurance policyholder decides to name their estate as the death benefit beneficiary, the estate could be subject to taxation. When you don’t designate a person as your beneficiary, the proceeds from the life insurance policy are subject to Section 2024 of the IRS code. That says if the gross estate incorporates proceeds of a life insurance policy, the value of a life insurance policy must be payable to the estate directly or indirectly or to named beneficiaries (if you had any “incidents of ownership” throughout the policy term).

The proceeds of a life insurance policy may also pass to the estate if the beneficiary dies, and there are no contingent beneficiaries. If you have a will in place, the proceeds will be paid out according to the terms of the will. If there’s no will in place, the probate court decides the way in which to distribute your assets.

The individual insured on a life insurance policy and the policyholder are usually the same person. The policyholder then names a beneficiary. However, a gift tax may apply if the insured, the policyholder and the beneficiary are three different parties. Because the IRS assumes the death benefit was a gift from the policyholder to the beneficiary, you might have to pay gift taxes on the death benefit.

Beneficiaries usually won’t have to pay taxes on life insurance proceeds. However, some situations can result in a taxable event. Be sure that your beneficiary designations are clearly outlined in the policy to avoid taxation.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo Finance (Jan. 17, 2023) “Will My Beneficiaries Pay Taxes on Life Insurance?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys