Read more about the article What Documents are in an Estate Plan? Annapolis and Towson Estate Planning

What Documents are in an Estate Plan? Annapolis and Towson Estate Planning

Understanding how estate planning documents work is central to creating an estate plan for each individual’s unique situation. An estate planning attorney needs to know the details of your life, not because they’re nosy. It is because this is how they can create a plan tailored to protect you during your lifetime, plan for long-term care and distribute assets upon your death. A recent article, “Understanding estate planning documents” from Lake Country Record-Bee, explains in broad strokes what each estate plan needs to include.

The will nominates an executor to administer the decedent’s estate, including the distribution of specific gifts and other assets. Depending on your state of residence, the will must be witnessed by one or two people who have no interest in the outcome of your will. At death, the distribution of assets only applies to those in the estate and not to those who receive property transferred under a trust, through a designation of death beneficiary form or a joint tenancy title.

A trust controls and manages assets placed in the trust during life and after death. Assets held in a living trust are used to avoid conservatorships, should become incapacitated during life. Assets in trusts do not go through probate.

Assets transferred into a living trust must belong to the person to establishes the trust, known as the settlor. A married couple may establish a joint trust to receive community property, if they live in a community property state. Each spouse may choose to transfer his or her own separate property assets into a joint trust or keep their separate property assets in separate trusts.

Trust assets are titled for ownership and control to the trustee. The trustee is a fiduciary, meaning they are the legal representative of the trust and administer the provisions of the trust as directed in the trust documents.

You should always have a successor trustee for a trust, who takes office when the last initial trustee resigns, becomes incapacitated, or dies. How and when the transfer to the successor trustee takes place is included in the trust documents. Some trusts include a specific method to fill a trustee vacancy, if no nominated successor trustee accepts the role.

Living trusts can be changed by the settlor. The incapacity or death of the settler makes a living trust an irrevocable trust. A joint trust, however, sometimes allows either settlor acting alone to amend the living trust. Your estate planning attorney will help you determine whether a joint trust makes sense for your family.

Powers of attorney (POA) allows a person (the principal) to authorize another person (the agent) to act as a representative over some or all of the principal’s own legal and financial affairs. The POA does not have any power over a trust; the trustee is in charge of the trust. A POA can be effective on signing or effective upon incapacity of the principal. POA forms do not always reflect specific individual wishes, so it’s best to have one created by an estate planning attorney.

The Advance Health Care Directive (AHCD) delegates authority to an agent to make decisions and act on the principal’s needs in health care. The AHCD must be created and be in place before incapacity occurs. An incapacitated person cannot sign legal documents.

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

Reference: Lake County Record-Bee (Feb. 18, 2023) “Understanding estate planning documents”

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

Can a Power of Attorney Withdraw Money from Bank Account? Annapolis and Towson Estate Planning

A power of attorney, or POA, is a legal document giving another person the legal authority to make financial and legal decisions on your behalf. Known as an agent or attorney-in-fact, you should only name someone to be your POA, if you trust them implicitly and believe they will always manage your affairs with your best interest in mind, according to the recent article titled “Can A Power Of Attorney Transfer Money To Themselves?” from Washington Independent.

There are different types of power of attorney and ethical and legal considerations surrounding the transfer of money. The two main types of POA are general POA and durable POA. A general POA gives the agent broad authority to handle financial and other matters on your behalf, and the power ends if you become incapacitated. A durable POA remains in effect, if you become incapacitated and continues until your death or until it is revoked.

The powers given to an agent vary widely depending on the state laws governing the document, and also vary depending on the specific document. In general, an agent can use the POA to handle a wide range of financial matters, including paying bills, managing investments, buying and selling real property and signing legal documents.

Using non-state specific blank forms downloaded from the web leads almost always leads to complicated (read: costly and time-consuming) problems for an agent. The specific powers granted to the agent need to be spelled out in the document. For example, you may wish for your POA to manage paying household bills, but not to sell the house.

There are also ethical considerations. While the POA gives the agent the authority to transfer money on your behalf, they are fiduciaries and are held to a higher standard of ethics. They must act in your best interest at all times.

Transferring money from your account to the agent’s account for their benefit would be a clear violation and could result in legal consequences, including criminal charges. The transfer could be challenged in court and the agent could be held accountable for any damages.

If you are concerned about a person abusing this role, there are steps to take to minimize the risk.

  • Chose a trustworthy and reliable person to serve as your agent.
  • Limit the powers granted by having a customized Power of Attorney drafted by an experienced estate planning attorney. The document could specify that the agent is not permitted to transfer money to themselves or use your funds for their personal benefit.
  • Monitoring the action of the agent. If you are incapacitated, name a person to monitor the agent and provide them with contact information for your estate planning attorney if there are any questions.

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

Reference: Washington Independent (Feb. 7, 2023) “Can A Power Of Attorney Transfer Money To Themselves?”

 

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

Read more about the article What Is an Estate Planning Checkup? Annapolis and Towson Estate Planning

What Is an Estate Planning Checkup? Annapolis and Towson Estate Planning

The start of the year is the time to review and revisit your estate plan. Just like going to the doctor and dentist for regular exams, it’s basic self-care. A recent article from Kiplinger, “Need an Estate Planning Checkup? Now is the Perfect Time,” advises having an annual checkup with your estate planning attorney before anything goes wrong.

Estate planning is about people. It ensures that loved ones will be protected when we are no longer here. It names someone we trust to administer our estate and follow our wishes. It also ensures that no one is left out or no one is wrongfully included.

After the holiday season of family gatherings is a good time to review the family situation. Children have grown into adulthood. Perhaps they’ve married and had children. What we planned to leave for them as minors may be different now. If your family suffered a loss last year, it may be time to reallocate funds or change beneficiaries.

This is the time to evaluate who you have named as an executor or entrusted with powers of attorney. They may have had their own health issues, suffered memory loss, or undergone their own life changes. These should also be reviewed when creating a new will or trust.

Property values have probably changed over the years. Real estate acquired decades ago may have appreciated far more than anticipated. If the intent is to leave equal shares of assets to beneficiaries, the new value of the property needs to be considered.

Depending on your assets, you may need to engage an expert to provide current valuations for real property, artwork and any other high-value assets. If you expect to see significant changes in the coming year, from selling property or making other adjustments, don’t wait until next year to order a new valuation. The more current your numbers, the better your estate plan.

Tax laws have changed a great deal in recent years. An experienced estate planning attorney will allow you to maximize the estate that you leave. Estate tax and gift taxes have been adjusted for inflation, so you may be able to leave larger gifts to children and grandchildren.

Your estate plan checkup should include a review of recent tax law changes, and a look at the legal environment for the coming year. Discuss how aggressive you want to be with your estate planning. The same goes for life changes which may have legal consequences. All of this needs to be discussed in a candid manner with your estate planning attorney.

You may leave your meeting with a to-do list, or you may find your estate plan still works. Either way, you’ll feel better after your estate plan checkup.

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

Reference: Kiplinger (Jan. 30, 2023) “Need an Estate Planning Checkup? Now is the Perfect Time”

 

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

Read more about the article What are the Components of an Estate Plan? Annapolis and Towson Estate Planning

What are the Components of an Estate Plan? Annapolis and Towson Estate Planning

Estate planning doesn’t have to be challenging. It’s also one of the most thoughtful steps you can take for the people you care about. Estate planning is the process of who will handle your estate and receive possessions after your death, according to a recent article titled “10 Essential Estate Planning Documents You Need” from The Street.

There are important legal documents making up your estate plan, each with different options.

Last will and testament. The will designates who receives specific assets and property after you die.  However, it is only such assets or property subject to probate. This includes tangible assets, like your home and personal belongings, as well as intangible assets, like bank and investment accounts and digital assets. Beneficiaries are those who will receive assets. They may be family members, close friends, or charitable organizations. Your will is also used to specify guardians for your children and choose an executor, the person you trust to carry out the wishes expressed in your will.

Revocable living trust. This is a legal entity created to distribute possessions after you pass away. However, it is different than a will. A revocable living trust is a legal entity that owns the assets placed in the trust, while permitting you, the grantor, to have access to them while living. The revocable living trust spares heirs from having to wait until probate is completed to receive inheritances. The living trust allows for rapid and private transfer of assets after death.

Beneficiary designations. Any asset with a beneficiary designation will pass directly to the beneficiary and is not subject to probate. However, you must designate a beneficiary for each account and keep them current. This is especially important if there has been a divorce and your prior spouse’s name appears as a beneficiary on any assets, such as life insurance policies or deeds.

Advance Healthcare Directive (AHCD)/Living Will. This document is used to specify what medical care you want if you are unable to convey your wishes yourself. AHCD documents typically include a living will and a medical power of attorney. These documents may relate to types of treatments, end-of-life care, artificial respiration etc.

Financial Power of Attorney. A POA allows you to appoint another person to manage funds and property on your behalf. If you need medical attention, the POA can authorize the use of assets to pay for expenses and provide for your family when you are unable to do so.

Insurance policies and financial information. All insurance policy documents, including life, health, auto, long term care and home insurance, should be kept in one location. You should also have a list of all financial accounts, including access information. You could keep this information in a notebook, or on an encrypted document on your personal computer.

Proof of Identity Documents. Discharge papers from the armed forces, Social Security card, Medicare card, birth, marriage, divorce certificates, prenuptial agreements and divorce settlements and passports should all be accessible to your trustee or executor.

Titles and Property Deeds. An inventory of titles and deeds should be done when any type of trust is created to ensure that the properties are correctly placed in the trust. Names on titles or deeds supersede your will. If your spouse is named as a joint owner on the house deed, they legally possess the property, regardless of what is in your will.

Digital assets. Most Americans under age 70 have an estimated 160 digital accounts. Consider using a password manager or secure digital vault to help you manage your login credentials. You’ll also want to name a digital executor in your will, so they can oversee or cancel digital accounts and distribute digital assets.

Funeral instructions. While documents about your funeral and any memorial services aren’t legally binding, it’s better to tell your family what you want to happen at your funeral. If you have purchased a burial plot and paid for your funeral, make sure the family members know where the documents are. Whatever your wishes, write them down and share them with family members.

Once you have your estate plan together, protect these documents by keeping them in a fire-and waterproof box in your home. Copies of the documents should be distributed to anyone who needs them. For example, a copy of your advance healthcare directive should be sent to your healthcare agent and your primary care doctor. Your executor should have a copy of your will. Review these documents every three to five years, or after any significant life events.

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

Reference: The Street (Jan. 31, 2023) “10 Essential Estate Planning Documents You Need”

 

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

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”

 

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

Read more about the article Top Benefits of Estate Planning – Annapolis and Towson Estate Planning

Top Benefits of Estate Planning – Annapolis and Towson Estate Planning

Despite the hard lessons learned during the COVID pandemic, surveys repeatedly show most Americans still don’t have an estate plan in place. According to the article “Five benefits of estate planning” from The Aspen Times, a comprehensive estate plan ensures your assets are distributed according to your wishes when you die, minimizes taxes on your estate and protects your loved ones, especially those who depend on you financially. In addition, estate planning protects you while you are living and ensures that your wishes are followed, if you become incapacitated.

Protect Yourself and Your Assets During Your Lifetime. No one likes to consider themselves at risk of incapacity. However, this happens. If you become mentally or physically incapacitated during your lifetime, you might not be able to earn income, or make decisions for yourself. Part of an estate plan includes documents to address these risks to protect yourself, your family and your assets.

Designating a health care proxy and a power of attorney gives people you choose the ability to make decisions on your behalf. Otherwise, the responsibility for your medical, legal and financial decisions may go to someone you don’t even know.

Asset Distribution. Without a last will, your home state’s laws govern the distribution of your assets. Your intentions to care for certain individuals won’t be relevant, as the law itself decides who gets what. A last will is used to state exactly how you want assets to be distributed. Your last will should be updated as your financial situation and/or family dynamics change. You should also review designated beneficiaries on investment accounts and insurance policies regularly and especially after any major life changes.

Minimize Transfer Taxes. While there’s no way to predict what taxes will take effect in the future, it’s safe to assume there will be taxes on your estate. If you hope to leave wealth of any size to your family, proper estate planning is crucial. There are many different strategies to minimize taxes on inherited wealth, including life insurance, Roth IRA conversions, lifetime giving and trusts. Your estate planning attorney will be able to create a plan suited for your unique situation.

Protect Family Wealth. As people accumulate wealth, they often become the targets of frivolous lawsuits. For this reason, placing assets in certain types of trusts can ensure efficient wealth transfer, as well as protecting assets from predators and creditors.

Create and Continue a Legacy. Legacy planning is part of the estate planning process. Many people donate money or assets on their death to causes they supported during their lifetime. These goals can be achieved by contributing to a donor advised fund, creating a family foundation or setting up a philanthropic trust.

Creating an estate plan is also a useful tool for having candid discussions with the family about the future, avoiding future conflicts and making your estate administration easier for loved ones.

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

Reference: The Aspen Times (Jan. 24, 2023) “Five benefits of estate planning”

 

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

Read more about the article Estate Planning Mistakes to Avoid – Annapolis and Towson Estate Planning

Estate Planning Mistakes to Avoid – Annapolis and Towson Estate Planning

One reason to review your estate plan is to make sure people you’ve assigned roles to, like executor or guardian, are still living and willing to perform these tasks, according to the article “Five common estate planning mistakes to avoid” from the Idaho Press. Another is to be sure your estate plan is not missing out on any advantages created by new tax laws.

Biggest estate planning mistake: not having an estate plan. Each state has its own laws for distributing property when a person dies without an estate plan. These generally involve leaving a percentage of the decedent’s assets to family members, based on kinship. If the decedent and their partner are unmarried, no matter how long they have been together, the partner receives nothing. Spouses and biological children typically receive a share. This may leave the surviving spouse without enough money to live on. If the children are minors, the court will control their inheritance and when they reach the age of majority, the children receive the entire inheritance.

Second worst mistake: failing to name a guardian and giving no guidance for how you would like minor children to be raised. A guardian must be named in a will, or the court will name a guardian. Wise parents also create a letter to the guardian outlining their values, how they would like their children raised and whatever personal information a guardian should know about their children’s personalities, preferences and interests. This is a kindness to the children and the guardian.

Third is relying on joint ownership to avoid probate. This doesn’t work as well as you might think. Many people add an adult child to the title of assets like their home, and it creates more problems than it solves. Jointly owned assets are vulnerable to the co-owner’s creditors, divorce proceedings and even misuse of the assets. The co-owners must agree to all actions concerning the property, so if the parent wants to sell the house and the co-owning offspring does not, the parent may not be able to sell their own home. To make things more problematic, if there’s more than one child and only one is named co-owner, there is no legal requirement for the co-owner to share with their siblings. If the value of an asset fluctuates and the intent was to give all children equal shares, this can be undone as well.

Fourth is failing to plan for incapacity. People think of estate planning as planning for death but planning for incapacity is an equally important part of estate planning. If a person is too sick or injured to manage their personal business, only a court appointee can act on their behalf, unless a Power of Attorney exists. The POA is used to appoint a person to act as your agent when you cannot do so. Don’t rely on standardized forms: a POA can be assigned powers to act on everything from investments to bill paying to selling a home, or it can be limited to specific tasks. Your estate planning attorney can create a POA to reflect your needs.

You’ll also want a Power of Attorney for Health Care, sometimes called a Medical Power of Attorney. This allows your health care agent to speak with your doctors and be actively engaged in your medical care. Your estate planning attorney will prepare a Living Will, used to document your wishes for end-of-life care. You should also have a HIPAA form prepared, so your agent can access your medical records.

The fifth mistake is not keeping an estate plan up to date. Tax laws aren’t the only things to change and impact your estate plan. A friend from two decades ago may not want to serve as your executor or may have died or moved to another country. Your children may have had children of their own or divorced their spouses. Life changes and your estate plan needs to reflect these changes.

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

Reference: Idaho Press (Nov. 26, 2022) “Five common estate planning mistakes to avoid”

 

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

Read more about the article Why Everyone Needs an Estate Plan – Annapolis and Towson Estate Planning

Why Everyone Needs an Estate Plan – Annapolis and Towson Estate Planning

 Estate planning means making plans to manage and distribute assets and caring for loved ones in the event of a person’s death or incapacity.  It also involves the creation of legally binding documents to outline a person’s wishes for health care and financial matters. Estate planning ensures your wishes are carried out and is also used as a means to minimizes taxes, as explained in the article “Why Estate Planning Is Important Even If You Don’t Have Assets” from The LA Progressive. 

Even if you don’t have significant assets, you still need to make decisions about your health care, which is done as part of an estate plan. Here are the fundamentals to get you started.

Will. This is a legal document with specific instructions regarding how your assets are to be distributed after death and who should be named as a guardian to care for minor children. The will is also used to name a person to serve as executor of your estate to carry out your wishes and manage distribution of assets.

Trust. A trust is a legal entity holding property or other assets on behalf of another person, known as the beneficiary. There are many different types of trusts, including revocable, irrevocable and charitable trusts.

The revocable trust allows you to maintain control over assets in the trust during your lifetime. After death, the assets in the trust are distributed according to the terms in the trust. An irrevocable trust can’t be changed or amended once it’s established. Charitable trusts are used to provide for a nonprofit organization.

Trusts are used to manage and distribute assets during a person’s lifetime and after their death. They are also used to remove assets from the taxable estate and can also be used to manage expenses associated with the distribution of one’s estate.

Healthcare Power of Attorney. This document allows you to name someone to make medical decisions on your behalf if you are incapacitated and can’t make decisions for yourself. These should be created with your personal situation in mind; a standard form may not permit the nuances you want to convey to another person. With a customized healthcare POA, you can specify the type of decisions your healthcare agent may make and describe any limitations you want over their authority.

Financial Power of Attorney. The financial POA allows you to name a person, called your “agent” or “attorney in fact,” to manage finances if you are too sick or injured to do so. This should also be a customized document, as you may want to limit your agent’s authority to pay bills or allow them to do everything from paying bills to managing investment accounts. The POA expires upon your death and the agent can’t perform any tasks once you have passed away.

Without an estate plan, the care of minor children and distribution of assets takes place according to state laws, which isn’t how most people want their decisions made. The solution is actually quite easy: talk with a local estate planning attorney and get started on creating your estate plan.

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

Reference: LA Progressive (Jan. 11, 2023) “Why Estate Planning Is Important Even If You Don’t Have Assets”

 

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

Read more about the article What Happens When There Is No Will? Annapolis and Towson Estate Planning

What Happens When There Is No Will? Annapolis and Towson Estate Planning

A will ensures that your personal and financial assets are given to the people and organizations you want. It also allows you to choose the person you want to settle your affairs, known as your executor. The time to have a will prepared is typically the same time people have a power of attorney and healthcare proxy forms prepared, according to the article “What Happens if You Die Without a Will?” from The Street.

Your estate plan is the term used to describe having all of these and other tools prepared to work together. It has nothing to do with the size of your estate, which could be modest or major. Regardless of the financial size or complexity of your life, you need a will.

What happens without a will?

A married person with children who dies without a will does the family a great disservice. All property, including real estate, investments and accounts that are jointly owned with the spouse go to the co-owner without needing to go through probate. However, separately owned property and accounts are distributed by the state in the absence of a will. Depending on the state, one-third may be awarded to the surviving spouse, and the remainder may be divided among the children. If the children are minors, the funds will be held in an account only accessible with court approval. The family may find itself without sufficient funds to maintain its lifestyle.

A person who is married but has no children or grandchildren and dies without a will may have their entire estate given to the surviving spouse. However, some states have a cap of $100,000. Other states give a third of to one-half of assets to the surviving spouse and the rest to the deceased’s parents, if they are living, or to the siblings. Jointly owned property, accounts and community property go to the surviving spouse.

What about a single person with children? With no will, the state law gives the decedent’s assets to surviving children in equal shares. If an adult child is deceased, their share is split among their own children (the decedent’s grandchildren). However, if the children are minors, the money is subject to court control and supervision.

If someone who is single and has no children dies, the state usually gives their assets to surviving parents. If the parents are not living, the assets will be distributed to the decedent’s siblings, or nephews and nieces, if the siblings have also passed. The state will reference a consanguinity chart—a chart used to help identify relationships of people showing degrees of family relationships by blood or marriage. Assets may pass to distant cousins who have never met or even known of the existence of the decedent.

If there are no living family members, the estate typically goes to the state itself.

When a member of an unmarried couple dies without a will, the surviving partner has no legal rights at all. Only spouses and relatives are recognized by state law. The partner will not inherit anything; assets will pass as if the person was single.

Domestic partners are treated differently in different states. In some states, they have inheritance rights, but this is state-dependent.

An experienced estate planning attorney can create a will and related documents to ensure your wishes are carried out upon your death. Otherwise, your estate will be distributed according to the laws of your state. You can protect yourself and your loved ones with a will.

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

Reference: The Street (Jan. 2, 2023) “What Happens if You Die Without a Will?”

 

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

Read more about the article What Should Not Be Kept in a Safe Deposit Box? Annapolis and Towson Estate Planning

What Should Not Be Kept in a Safe Deposit Box? Annapolis and Towson Estate Planning

In today’s digital world, almost everything of importance is stored virtually, in the cloud. A physical safe deposit box might seem like a throwback, but still has some good uses, says a recent article from Kiplinger, “Things You’ll Regret Keeping in a Safe Deposit Box.”

Some things belonging in a safe deposit box include prized possessions, like a valued baseball card collection or jewelry inherited from a loved one. Some important documents—but not all—should be kept in a safe deposit box.

There are many items you may regret putting in a safe deposit box, particularly if you need to access them in an emergency, when the bank isn’t open. The bank may also not be open during emergencies, including natural disasters. The COVID lockdown reduced many bank branch hours, or banks required appointments to access safe deposit boxes.

Here are some things that don’t belong in your safe deposit box:

Cash. If you need cash in an emergency and the bank is closed, you’ll have to wait. Idle money also loses buying power over time when inflation is high. A better place for the money if you don’t need it: an interest-bearing account or a certificate of deposit. Many banks also forbid storing cash in a safe deposit box. The cash has no protection from the Federal Deposit Insurance Corporation (FDIC), which insures up to $250,000 per deposit per bank. However, it is only if your money is in a checking account, savings account, or certificate of deposit.

Passport. Unless you travel internationally frequently, you probably don’t use your passport often. However, what if you score a great deal on a trip with a Monday departure—and the bank is closed until Monday morning? Or a college student on a semester abroad has an emergency and you need to jump on a plane? It’s best to have a passport at home in a secure, waterproof and fireproof safe.

Your will and other estate planning documents. Keeping copies of your will, your spouse’s will and any will in which you’re named the executor in a safe deposit box makes good sense. However, your original will does not belong there, especially if you are the sole owner of the safe deposit box. After your death, the bank will seal the safe deposit box until the executor can prove they have the legal right to access it. Settling your estate will be delayed until this is resolved.

Keep the original copy of your will either with your estate planning attorney, if they provide the service, or keep it where your executor or spouse can easily access it. Copies are fine in the safe deposit box. However, originals need to be accessible.

Final letters of instruction. Writing a letter of instruction to go along with your estate plan is smart. The letter can convey your wishes for medical care, if want to be buried or cremated and what kind of memorial service you want. However, if the letter is sealed up in a safe deposit box, your wishes will never be granted. Keep a letter of instruction with your original will and consider sending dated copies of the letter to anyone who you want to take action on your behalf or who is designed to receive a specific bequest.

Powers of Attorney. A POA gives authority to a third party to act on your behalf should you become incapacitated. If it’s locked in a safe deposit box and only you have access to the box, the person you want to protect you when you are incapacitated will not be able to help. Keep the original POA with the original copy of your will. Copies are fine for anyone who will need them. However, the original stays with your will.

Advance Directives. Much like the POA, your advance directives—living will and health care proxy—will be needed if you become seriously ill or injured or incapacitated. Without quick access to these advance directives, no one will know your wishes. Make sure that medical providers and family members have copies on hand.

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

Reference: Kiplinger (Jan. 4, 2023) “Things You’ll Regret Keeping in a Safe Deposit Box”

 

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