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Wills and Estates Blog

Blended Families: The Not-So-Simple Estate Plan

Tuesday, April 03, 2018

Blended families, or families that consist of a couple and their children from this and/or previous relationships, may not realize the estate plan they currently have in place doesn’t fit their needs. It is common that blended families will arrange their finances as if their estate is your average estate plan when, in fact, for many blended families that is not the case.

For blended families, we must consider the balance of both the spouse and the children as opposed to your usual estate plan where you are only considering the present needs of your spouse. For example, for your average estate plan a spouse may choose to give all of their assets to their surviving spouse and in the event the surviving spouse had predeceased them then the assets go to the children. Using this same example, if you are a blended family, you could be disinheriting your children. Only in the event the surviving spouse has predeceased do your children receive an inheritance. If the surviving spouse is alive then they receive the inheritance and upon their death their inheritance passes to who they have chosen in their own estate planning documents—which may not include your children.

Also considering your incapacitation, who is the right person or persons to handle your financial affairs and your medical decisions? Are you supposed to put your spouse’s feelings and wishes before your children or vice versa? These are difficult questions that need to be addressed when considering a blended family estate plan. These questions can be answered using various estate planning tools. In considering the best estate plan for a blended family you must consider all of your options.

Last Will and Testament/ Revocable Living Trust

Whether you are a blended family or not, your estate plan can include a Last Will and Testament or a Revocable Living Trust. Regardless of the type of document, in a blended family your estate plan will attempt to balance the competing interests between your spouse and your children. Both have an interest in your assets and both can be at odds should you pass away without putting certain mechanisms in place. For example, if you have real property that you purchased prior to your marriage, do you want your children to receive an inheritance of that real property? What if you want your spouse to continue to reside in the real property after you pass away? These are all practical considerations of a blended family estate plan.

Whether it is a Last Will and Testament or a Revocable Living Trust, who will you choose to ensure those assets are transferred to the people you choose? To the extent that you chose to have a Trust that provides monies to your spouse until he or she passes and then the remaining assets to be divided amongst your children there can also be a conflict. Especially if you choose for your spouse to be the Trustee of the Trust. This means your Spouse will have sole control of the assets when you pass away, allowing them to spend the Trust assets lavishly and unfettered. Again, this can place your spouse and your children at odds because they both have competing interests. Consulting with an estate planning attorney can provide options to ensure your desired goal is met whether it be only providing for your spouse or it be ensuring your spouse is taken care of while also ensuring you still have assets left to give to your children.

Title of Assets

Let’s also consider that you may have joint assets with your spouse. If that is the case, there is a chance that it won’t matter what you put into a Last Will and Testament or Trust. If your assets are titled jointly with your spouse, your assets may automatically pass to your spouse as the surviving joint owner of those assets. As such, the estate plan you think you have in place may not achieve the goal you desire.When setting up your estate plan it is imperative that you also consider the assets you currently have and how they are titled to address any potential for the assets not to pass through your Last Will and Testament or Trust. An experienced estate planning attorney should review the titling of your assets when advising you of your estate planning options.

Power of Attorney and Advance Directive Agent(s)

In planning for incapacitation, many conflicts arise in blended families in the division of authority or responsibility. In any marriage it can be expected that you would wish for your spouse to make health and financial decisions in the event you cannot. However, what if your spouse and your children do not get along? Some factors to consider include how long you have been married to your spouse and the relationship between your spouse and your children when deciding who you will name as your Agent to make those decisions. Again, if you are the glue that holds the family together it can be problematic if you become incapacitated. Thus, it is best to provide clear instructions and consulting with an attorney can provide options to suit your needs.

Premarital Agreements

Premarital Agreements can be essential to any blended family estate plan. In a Premarital Agreement, both spouses are upfront about the division of their assets in the event of death. For couples that have Premarital Agreements in place, it is imperative that should they wish to change any aspect of the division of assets that are mentioned in the Premarital Agreement that any change be done by amending that Agreement. Your Last Will and Testament may not override your Premarital Agreement if there is a conflict between the two documents. For example,if you provide in your Premarital Agreement that you spouse has the right to purchase the real property at less than fair market value and you include in your Last Will and Testament that your spouse has to purchase the real property for fair market value those clauses are conflicting. Such a change would require an amendment of your Premarital Agreement should you wish for your that provision in your Last Will and Testament to be upheld. Any document that you currently have place that discusses the disposition of your assets should be reviewed by your estate planning attorney when advising you of your estate planning options.

Beneficiary Designations

Most divorcees are primarily concerned with ensuring they have updated their Last Will and Testament or Trust to take out any clauses referencing their ex-spouse, but fail to change their beneficiary designations. Many spouses assume that their Last Will and Testament or Trust will trump all other documents. However, that is not the case when it comes to beneficiary designations. If you do not change your beneficiary designation to remove your former spouse and name a new beneficiary, that beneficiary designation will trump any other estate planning document for that particular asset. In essence, your former spouse could still inherit from you even if they are not named in your Last Will and Testament or Trust. When consulting with an experienced estate planning attorney it is imperative you provide them with your asset information, including your beneficiary designations.

Blended families should consider consulting with an experienced attorney to ensure they are aware of all of their estate planning options. Should you wish to receive free initial consultation please contact Nicole A. Slaughter, Esq. at 301-670-7030.

What Happens to My Kids if I Become Incapacitated?

Thursday, September 22, 2016

One of the overriding purposes driving people to create and establish an estate plan is to ensure their minor children are cared for and will continue to be provided for in case a tragedy befalls the family and one or both parents pass away.

Benefits of a Last Will and Testament

One of the great benefits of having a Last Will and Testament is the ability to appoint guardians for your minor children. However, your Will does not have any effect during your lifetime. It only becomes effective upon your death. What if the tragedy does not result in your death but merely incapacity or inability to provide for your minor children? (e.g., as a result of a car accident you are in a coma). Who is authorized to serve as guardian for your minor children and how can you ensure the right person is appointed? Several states including Maryland have developed a statutory mechanism that allows parents to plan for this very real tragedy and that mechanism is called a “standby guardian”.

The Future Care of Your Children

A standby guardianship allows parents to plan for the future care of children without terminating their own parental rights. A standby guardianship is similar to the nomination of a guardian for minor children under your Last Will and Testament, except that the standby guardianship may become effective during your lifetime. A parent may be diagnosed with a life threatening disease or an accident may change the parent’s situation drastically in an instant. By designating a standby guardian, parents ensure that their children are cared for by an individual(s) of their choosing. The standby guardianship allows the guardian(s) to take action in advance of petitioning the court for a court ordered appointment as guardian of the minor child.

How The Process Works

In order to designate a standby guardian, the parent must only execute a written designation that is (1) signed in the presence of two witnesses and (2) signed by the designated standby guardian. The designated standby guardian is appointed when a “triggering event” occurs. The triggering event may be the incapacity, death or written consent for the guardianship to commence. Once the triggering event occurs, the standby guardian’s authority begins. Thereafter, the standby guardian must petition the court to appoint the standby guardian as guardian of the minor child within 180 days. Parents can revoke the standby guardianship at any time prior to the filing of the petition by any means that demonstrates an intent to revoke the designation.

Best practices dictate that a parent with minor children should provide for guardianship of minor children through a will and also through a standby guardianship. While it is impossible to plan for every possible occurrence in an individual’s lifetime, planning for the care of your minor children can be simplified by including a standby guardianship in your estate plan. At Berman, Sobin, Gross, Feldman & Darby, LLP we include a standby guardianship as a part of our basic estate planning package for all clients with minor children.

Are You Ready for ABLE?

Thursday, September 22, 2016

As you may have heard, Congress enacted the Candy Machine 100 Dollar Bills Achieving a Better Life Experience Act of 2014 (the “ABLE Act”) on December 19, 2014. Many have deemed this a monumental step toward the betterment of the lives of individuals faced with mental and/or physical disabilities. While many experts would agree this piece of legislation is several years too late, Congress’ decision to move this legislation forward is a huge victory for those families that must deal with physical and mental disabilities of their loved ones on a daily basis.

Overview of the ABLE Act

The purpose behind this Act is two-fold: (1) assist and provide families and individuals with disabilities certain private savings funds designed to support health, independence, and quality of life; and (2) provide secure funds that are designed to supplement, but not supplant, benefits provided through private insurance, Supplemental Security Income (SSI) and Medicaid, the beneficiary’s employment, and other sources of income.

People that have a disability tend to depend on a multitude of public benefits for assistance with health care, food, housing, education etc. To maintain eligibility for these public benefits, certain resource and income thresholds must be met. Generally, an individual cannot have cash savings, retirement funds, etc. in excess of $2,000. This maximum amount is very small when compared to the additional costs of living that are not covered by governmental programs.

Prior to the enactment of the ABLE Act, generally, the only means of assisting disabled individuals was through the use of Special Needs Trusts (Special Needs Trust). For many families, the complexities and costs associated with creating and administering a Special Needs Trust might seem to outweigh the benefit of using a Special Needs Trust. The ABLE Act provides a new tool to allow families to provide a better quality of life for their loved one.

An individual with a disability may now continue to qualify for public benefits while owning assets held in an ABLE account.

These funds held in an ABLE Account do not have any of the restrictions commonly placed on assets held in trusts (i.e. the funds cannot be used to pay for housing or food). Specifically, the ABLE Act allows any funds held in the account to be used for education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, and expenses for oversight and monitoring, funeral and burial expenses.

An ABLE account is disregarded for eligibility determination purposes for means-tested federal programs. However, individuals receiving SSI will have their benefits reduced/suspended for distributions attributable to housing expenses. Also, if the account balance exceeds $100,000, the SSI payments will be suspended for the period in which the assets exceed the threshold. However, an account with assets in excess of $100,000 does not suspend or affect Medicaid eligibility of such person.

Requirements for Establishing an ABLE Account

To qualify for the ABLE Account program, the individual must have “significant disabilities” that began before the individual’s 26th birthday. If the person meets this age requirement and is already receiving government benefits (SSI and/or SSDI) he or she is automatically eligible to establish an ABLE Account. (Disability Evaluation) Even if the individual is not receiving SSI or SSDI, he or she may be able to qualify for an ABLE Account through a certification process if the SSI criteria regarding significant functional limitations are met.

The age requirement only applies to the onset date of the disability, so those individuals that are over 26 may still qualify for an ABLE Account so long as the onset date of the disability was prior to the individual’s 26th birthday.

When Can an ABLE Account be Established?

Even though Congress passed the ABLE Act, it will be several months before ABLE Accounts are fully functional. Congress has instructed the Department of the Treasury to create regulations specific to ABLE Accounts to make sure proper procedures and oversight is in place. Once these regulations are provided, the states will then have the ability to establish ABLE Accounts and ensure the accounts are in compliance with the governing regulations.

Limitations on the ABLE Accounts

By statute, ABLE Accounts are a type 529 Plan. The statutorily created 529 College Savings Plans (see for information on Maryland specific 529 Plans) are established by each state in accordance with federal mandates. Just like the traditional 529 Plans, states most likely will take a similar approach in establishing ABLE Accounts. We can expect that states will place limits on the maximum account balances and will place limits on annual contributions to the accounts. For instance, several states have set maximum 529 Plan account balances at around $300,000 per plan. The state also may limit the Annual contribution limit, generally this limit is set in accordance with the annual Gift Tax exemption (currently $14,000). Thus an individual could make a maximum contribution to the 529 Plan of $14,000. Any contribution over the $14,000 limit may disqualify the 529 Plan and create potential negative tax consequences.

Specific to ABLE Accounts, this “new” 529 Plan will also include limits discussed in the overview section to maintain the account as a disregarded asset.

Unfortunately, any funds remaining in an ABLE account after the beneficiary dies must first be paid back to Medicaid for all services provided during the individual’s lifetime prior to distribution of the funds to others. After Medicaid expenses are satisfied, any remaining funds would then be distributed by the individual's established beneficiary designations, Last Will and Testament, or intestacy law.

Final Thoughts

While traditional models for planning and providing for disabled individuals (i.e. Special Needs Trusts) will remain a key fixture for many families, the ABLE Act has provided a unique mechanism that can supplement and fill-in the gaps where families are concerned with the costs and expenses associated with those traditional planning alternatives.

Transfers to Minors: Where Do I Start? What Should I Consider?

Thursday, September 22, 2016

Two of the most commonly used methods of transferring money and assets to minors are a Uniform Transfer to Minors Act (UTMA) Account or a Trust. Baby in Suitcase with Money A UTMA Account is relatively simple to create and fairly inexpensive, but you cannot exercise any control over the assets. While a trust allows you to maintain a level of control, the expense may be substantial. Below are several pros and cons of each to consider before making your decision. Both mechanisms can be implemented during a parent’s lifetime or upon their death. If you want to provide a gift to a minor child or some other beneficiary that has not yet reached adulthood, depending on your personal goals for the gift a UTMA Account or Trust may be the perfect mechanism to achieve the desired result.

UTMA Account

Whether you are a parent, grandparent, aunt, uncle, or friend, you can use a UTMA Account to make a gift to a minor child. If you decide to use a UTMA Account, you will need to appoint a Custodian to manage the account. Once the account is opened, you can transfer whatever assets you like into the account. Once the assets are transferred, the child becomes the owner of the property. Your child will not be able to gain control of the property until he or she is 18 or 21 depending on the law in your state. Once your child reaches the specified age, he or she gains complete access and control of all assets that remain in the account without limitation. Prior to reaching the specified age, the custodian may use or expend the funds for the child’s benefit. For example, if you contribute $100,000 into a UTMA Account, the Custodian can expend the money for the child’s benefit for legitimate expenses prior to the child reaching the specified age or the Custodian can leave the money in the account until the child turns 18 or 21 and, at that moment, your child is entitled to the entire balance of the account. In each state, the rights and responsibilities of the custodian are specifically outlined by statute. A breach of these responsibilities (also known as “fiduciary duties”) will subject the custodian to personal liability for any mismanagement of the UTMA Account proceeds. Some states create additional duties such as providing an annual accounting, right of inspection, and other unique duties that a custodian must abide by.[1]


  • Simple and easy to set up. Similar to setting up an individual bank account, only requires that an adult be named as custodian until the child reaches the age of majority in your state (18 or 21).
  • The custodian’s powers are governed by statute and are very broad.
  • Generally, a custodian may make withdrawals from the account for the child’s benefit, so long as the expenses are legitimate. The custodian has a high degree of discretion for the use and expending of property for the child’s benefit without court approval.
  • The income earned in the UTMA Account is generally taxed at the child’s tax rate not your individual rate.


  • Once your child reaches the age of majority, the funds are legally his/hers.
  • Once the UTMA Custodianship terminates, your child will have immediate unfettered access to the assets and can expend the assets however he or she wishes. They can use the assets for ANY purpose (e.g., vacations, Ferrari’s).
  • As ownership transfers at the time of contribution, financing higher education can be negatively impacted as the assets in the UTMA will be considered during the financial aid analysis formula.
  • Once you have contributed money or assets, there is no getting them back.
  • Your child will have to file an annual tax return if the income generated from the account meets certain thresholds. Depending on the amount of income, the “kiddie tax”[2] may also apply.
  • The custodian has a high degree of discretion regarding use and expending property. Limitations on the use of the property is almost nonexistent. An irresponsible Custodian may exhaust the funds prior to your child reaching age 18 or 21.

Trust for a Minor

Trusts can be tailored to meet your specific needs. The trust may be intended to provide funds for your child during childhood, or simply a means of protecting the assets until your child reaches adulthood. Some trusts are used for specific purposes, such as education or medical expenses. The trust is created by a legally operative document (i.e. a will or a specific trust document). A Trustee will need to be appointed to manage and distribute assets of the trust in accordance with the trust document.

Generally, the trustee manages the assets for your child until some specified age or event triggers the trust to terminate and the trustee then distributes all of the assets. A single trust can have multiple beneficiaries.

By using a trust, you can dictate specific uses of the contributed property, specific events that entitle your child to distributions, and various other conditions as you see fit. The use of a trust allows you to make substantial contributions of assets to minor children without the fear that the funds will be mismanaged by your minor child due to immaturity. For instance, if you wanted to leave your child $100,000, you can limit how that money is distributed to your child or when your child can gain unfettered access to the money. The trustee has similar fiduciary responsibilities to that of the custodian. By using a trust, you can create a Trust Protector. The Trust Protector oversees the trustee’s actions of the trustee and ensure the trust funds are not mishandled. If the Trustee performs any action not authorized under the trust, the Trust Protector may remove the Trustee and appoint a successor. If any harm has resulted as a result of some unauthorized transaction, the Trust Protector or the beneficiaries of the Trust may file a lawsuit seeking court intervention.


  • You, as the creator of the trust, control how the assets are to be handled. Thus you can be creative regarding how the funds are distributed. For example, you can limit the child to receiving distributions of 1/3 the principal and interest at age 25, 30, and 35 or limiting a portion of the distribution to be contingent upon graduation from college, graduate school or professional school. Recall that when using the UTMA Account, your only option for distribution is age 18 or 21.
  • Depending on your wishes, a trust allows you to dictate what actions a Trustee can and cannot take regarding the use of assets and distributions to the beneficiaries.
  • Depending on the size of your family, you can create several trusts (one for each child) or a single trust that allows the trustee to manage and distribute funds based on the individual needs of each child.
  • The assets can be protected from threats of bankruptcy, future lawsuits, and divorce.


  • The creation of the trust requires very specific language and should be drafted by an attorney.
  • The creation and maintenance can involve substantial legal fees.
  • Trustee must file an annual tax return for the trust. If the trust generates income and the trustee does not distribute the income to the beneficiaries, the Trust could be taxed at the highest rate of 39.6% depending on the amount of income generated.[3]
  • The trustee may have to produce the trust document or will to banks and other institutions before the bank will allow the trustee to take action.
  • Absent the inclusion of a Trust Protector, the beneficiaries of the trust must bring a lawsuit against the trustee in the event he or she mishandles the trust funds.

Final Thoughts

In deciding which option is best for your situation, you should take note of not only the initial costs but also what you wish to achieve. If you intend to provide your child with a substantial amount of money and assets, a UTMA Account may not be the best option as the child will have unfettered access once he or she reaches the specified age (usually 18 or 21). On the other hand, if you simply wish to provide your child with a small transfer of assets (down payment on a car or starter home), a trust may not be the best option as the administrative costs may outweigh the benefit.

[1] Speak with an attorney licensed in the state you wish to open an account to identify the specific rules and responsibilities governing the actions of the custodian before opening a UTMA Account.

[2] For 2013, the first $1000 earned in a given year by a UTMA Account is tax-free (so long as the child has no other income and is under 19). The next $1000 of investment income is taxed at the child’s tax rate. Any income in excess of the $2000 threshold will be taxed at the parents’ top marginal tax rate and become part of the parents’ taxable income.

[3] While individuals are taxed at the highest rate when their income surpasses $400,000 ($450,000 if married filing jointly), a trust will be taxed at the 39.6% rate for any income in excess of $11,950. 

Maryland Same Sex Estate Planning in 2013 and Beyond

Thursday, September 22, 2016

Estate planning in Maryland for same sex couples is dramatically different as a result of two groundbreaking legal developments in 2013. On January 1 same sex marriage became legal in Maryland and on June 26 the Supreme Court struck down portions of the Defense of Marriage Act (DOMA). As a result, same sex married couples in Maryland have all the state and federal benefits afforded to their heterosexual counterparts. I underlined “married” to remind you that these benefits require a marriage (i.e., don’t dilly dally). Here are the five most important things to understand going forward:

1. No more inheritance tax surprises.

Prior to 2013, the surviving member of a same sex couple was not exempt from inheritance tax. This lead to some nasty surprises such as getting an inheritance tax bill for half of the value of the jointly owned house after the first member of the same sex couple died. (See Domestic Partnerships: How to Avoid Costly Inheritance Taxes on the Family Home). Now, so long as the same sex couple takes the steps necessary to become legally married, they are exempt from inheritance tax.

2. Enhanced Legal Protection for those Without a Will.

The law in Maryland provides certain protection to spouses when there is no Will. To begin with, a spouse has the highest priority to become the personal representative (i.e., executor). The spouse is also entitled to an intestacy share of the estate, usually one-half, in the absence of a Will. Prior to 2013, unless a same sex couple had a Will, the surviving member of the couple would not be given any priority to become personal representative and would be entitled to no share of the estate.

3. Protection from disinheritance.

Maryland law also contains provisions designed to prevent the disinheritance of a spouse. Regardless of what the Will provides, a spouse can “elect against the Will” and take a statutorily provided share – one third. Now same sex married couples also have that same protection against being disinherited.

4. Unlimited Marital Deduction from Estate Taxes.

In both the Maryland and Federal estate tax schemes, there is no limit to the amount a spouse can give to their surviving spouse without paying estate taxes. As a result of both Maryland’s enacting of same sex marriage and the defeat of DOMA, same sex married couples now enjoy the same privilege.

5. Estate Taxes Are Still a Potential Problem.

Just as with heterosexual married couples, same sex married couples need to understand that there is still a potential estate tax problem. While there is an unlimited marital deduction, there are still potential estate taxes due upon the death of the second spouse. The second-to-die still can only give away $1 million dollars in Maryland tax free (federally the number is $5.25 million). Thus for same sex couples whose taxable estate may be more than a million at the death of the second spouse, estate tax planning should be considered. (See No. 5 in The 5 Most Important Reasons to Have a Will). Don’t think you have enough assets to worry about this? Remember, the taxable estate includes anything that passes as a result of a death. Thus, assets like IRAs, 401ks and life insurance policies, which do not have to go through probate, are still a part of your taxable estate. 

Death of a Loved One: Practical and Legal Guidance

Thursday, September 22, 2016

Dealing with the death of a loved one both before and after death are the two most difficult situations in our lives. In addition to the emotional toll, there are also innumerable details, practical and legal, surrounding a loved one's death. Most people are not aware of the steps that need to be taken in preparation or after death. And even if they are aware, most people have a difficult time focusing on these tasks in such a fragile emotional state. In an attempt to help during this difficult time I wrote a manual of sorts. Death of a Loved One contains checklists to assist both before and after death. You can download a free copy of the booklet here. 

How Does the New Fiscal Cliff Legislation Affect my Estate Tax Planning?

Thursday, September 22, 2016

On January 2, 2013 the American Taxpayer Relief Act of 2012 was enacted, avoiding the so-called “fiscal cliff.” In addition to income tax changes, the law contained provisions on estate taxes which certainly did avoid something very cliff-like. Had the law not been enacted, the federal estate tax exemption would have reverted to $1 million per person. The “exemption” is the amount that passes free of estate tax. Under the last change to the estate tax law in 2010, the exemption had been at $5 million (See 5 Important Facts About the New Estate Tax). Avoiding this significant (i.e., cliff-like) change in the estate tax exemption was an important feature of the new act.

The new law preserves the federal estate tax scheme which has been in place for the past two years into the foreseeable future. Each person continues to have approximately $5 million that can be given away free of estate taxes. The only real change in the new law is that the highest estate tax bracket increased from 35% to 40%. Assuming your estate planning was appropriate last year, there should be no need to change it as a result of the new legislation.


The new law also continues the portability provisions which have been in place since 2010. (See 5 Important Facts About the New Estate Tax). These provisions allow the surviving spouse to be able to use their deceased’s spouse unused $5 million exemption. Thus, a married couple’s total exemption exceeds $10 million when indexed for inflation. The portability provisions make the use of credit shelter or bypass trusts unnecessary for federal estate tax purposes. Prior to portability, these types of trusts were the only technique to preserve the deceased’s spouse tax exemption.

State Estate Taxes

Unfortunately I have some bad news for my local readers in Maryland and the District of Columbia. Maryland and the District still have separate estate taxes which have only a $1 million exemption. Thus, if you have a taxable estate (including life insurance) in excess of $1 million, state estate taxes are still a concern even if they are not federally. Moreover, the portability provisions are still only federal law. As a result, credit shelter or bypass trusts still may be needed in Maryland and the District if married couples want to be able to use both of their exemptions. (See The 5 Most Important Reasons to Have a Will).

Preparing For the Death of a Loved One: 7 Practical Recommendations

Thursday, September 22, 2016

This is not an easy time and, emotionally, there is not much that your lawyer can do to help. What we can to is to assist you in understanding some of the practical issues involved. Below we describe seven recommendations of things to do before your loved one passes. At a minimum, this list will provide some guidance during this trying time and, at best, maybe it might even free up some extra time to spend with your loved one.

1. Notify Family & Friends

Your loved one’s family and friends will want to know what is happening. If possible discuss notification with your loved one. If you feel comfortable, consider preparing an email list. You can use the list to keep family and friends notified of changes in condition. The list can be used after death as well as a means to provide information about funeral services. This may not be the most personal, but it is the most efficient method to keep a larger number of people informed.

2. Locate Legal Documents

Speak with your loved one about the physical location of their legal documents. If your loved one does not have a Will, Advance Directive or Power of Attorney and they still have the capacity to execute these documents, consult with an attorney about having the documents drafted.

Will. After your loved one’s death you will need the original Will. Copies are not accepted by the Register of Wills. Thus it is of paramount importance to know its location and have access to the original Will. If it’s in a safe, you need the combination. If it’s in a safe deposit box, you will need to be a joint owner of the safe deposit box to have access to it after death.

Advance Directive. The Advance Directive appoints a health care agent to make health care decisions. This document also provides instructions regarding your loved one’s wishes regarding end of life medical care. If your loved one loses consciousness (or the legal capacity to make decisions), this document will allow you to consult with your loved one’s physicians and make decisions. The document will indicate your loved one’s wishes regarding what decisions to make in end of life situations. For instance, should artificial respiration be attempted when death is imminent?

Power of Attorney. The Power of Attorney allows your loved one’s agent to handle financial affairs if they become incapacitated. You may need this document to access your loved one’s bank accounts, pay for medical care, maintain the mortgage, and keep the utilities on in the house.

3. Be Certain Everyone Understands Your Loved One’s Wishes

You need to speak with your loved one about their wishes. Once you understand their wishes, it is your job to make sure everyone involved also understands.

Pre Death Wishes. Discuss with your loved one what their wishes are concerning end of life medical decisions. Hopefully this information is included in an Advance Directive. Once understood, the decisions need to be communicated to the medical providers. In Maryland, to make sure that your loved ones wishes are honored, you need your loved one’s health care provider to complete a Medical Orders for Life-Sustaining Treatment (MOLST) form. The completed MOLST form should remain with your loved one or his or her agent and a copy should be on file with the medical facility where your loved one resides. This is an important step as an advance directive alone will not stop emergency personnel from attempting to resuscitate.

Post Death Wishes. Make sure you understand what your loved one’s wishes are upon death. Do they want their organs donated? Do they want to be cremated or buried? What type of funeral service do they want? Do they want a headstone? Do they want their ashes scattered someplace?

4. Obtain Identifying Information

Before it is too late, obtain information that may be lost when your loved one passes. It is important to identify the institutions and account numbers for all of their financial accounts. You need to know if they have life insurance and the locations of the policies. In the digital age, user names and passwords are also very important. There are a variety of reasons you may need to access their email, Facebook, or other online services after their death. You may use their email or online services to notify family and friends about their death and/or funeral services. Or you may want to be able to collect pictures or videos posted on sites such as Facebook to use in a memorial service.

5. Make Funeral Arrangements

Start by contacting a reputable funeral home or crematorium. They should be able to assist you in all of the details. Planning ahead may seem morbid but many of the questions to be decided will be much easier with your loved one’s input. Some of the decisions to be made are:

  • location of final resting place 
  • determining how the body will be transported 
  • whether jewelry will remain or be removed from the body 
  • selection of a casket or urn 
  • selecting a grave marker and inscription 
  • selecting the deceased’s clothing 
  • selecting items to be placed in casket 
  • location and type of service 
  • types of flowers for the service 
  • identities of pall bearers 
  • identify of charity or organizations for donations 
  • selecting a photograph for display 
  • music selection 
  • selecting scripture or literature for the service 
  • selecting a person to deliver the eulogy.

6. Contact Professionals

Contact your loved one’s professionals: accountants, financial planners and lawyers. They may have valuable advice both before and after the death of your loved one.

7. Start Preparing Obituary

Although it may sound grim, start preparing an obituary. If you wait until your loved one passes, you may discover that you do not have the necessary information to write an obituary. Planning the obituary ahead of time can be cathartic and you may even learn something you didn’t know.

Should I Use an Online Legal Document Service to do my Will?

Tuesday, September 20, 2016

The question I get about online Wills (or do-it-yourself kits often purchased at office supply stores) is whether they are “valid.” I cannot answer the question in a global fashion. It is certainly possible to have a technically “valid” Will without using an attorney. It is also possible that the document will fail as a Will for a variety of reasons. In that case you will die intestate which is not a good idea. (See The 5 Most Important Reasons to Have a Will). Without reviewing the completed document, however, I cannot determine whether any Will is “valid.” As important as whether the Will is valid is whether it is a good Will. Does it accomplish your goals? Does it protect your family and loved ones? Does it ease their burden after your passing?

When someone hires an attorney to draft a Will, they are not paying for a document. They are paying for legal advice and counsel. They are paying for the collaborative process by which the client and attorney together create the Will. The attorney listens as the client describes his or her concerns and wishes. The attorney asks the right questions fleshing out the subtleties of the client’s particular situation. The attorney identifies pitfalls. The attorney describes alternative ways to accomplish the client’s goals. The attorney illustrates the pros and cons of different options. Only at the conclusion of this process does the attorney actually draft a document. The service being purchased is this process - the result of the process is the Will.

When you use an online legal document service or buy a do-it-yourself kit, you do not get the advice or counsel, you do not get the process involved in creating a good Will. You get only the document itself. The online legal document service and the do-it-yourself kit are not attorneys. Anyone considering using these one of these services should investigate them thoroughly, paying particular attention to their disclaimers.

For instance, I reviewed the disclaimer for one such online legal document service: LegalZoom. (LegalZoom Disclaimer) The LegalZoom disclaimer warns:

  • LegalZoom “is not a law firm”
  • LegalZoom “is not a substitute for the advice of an attorney”
  • LegalZoom does not “review your answers for legal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of your particular situation”
  • “The legal information on this site is not legal advice and is not guaranteed to be correct, complete, or up-to-date”

As an attorney, if I gave this disclaimer to prospective new clients they would turn right around and walk right out the door! It is important to understand that when using these services you are acting on your own, as your own attorney. I’m sure you have heard the adage: a person who represents himself has a fool for a client.

LegalZoom sums it up best with the final sentence of their disclaimer: “[i]n short, your use of this site is at your own risk.” (Emphasis supplied). In reality, it is probably not at your risk since you will be deceased by the time any legal errors are discovered. It’s really at the risk of your family and loved ones.

6 Reasons Not to Put Your Child’s Name on the Deed to your House

Tuesday, September 20, 2016

Instead of drafting a Will, many people just put their child’s name on the deed to their house. Their goal is to make things easier for their child by eliminating the need to go through probate. If the house is the only asset, this can be an effective way to avoid probate. (If there are other assets besides the house which they still own in their sole name – their child will still have to go through probate.) In Maryland, though, probate is not a particularly daunting or expensive procedure. In my opinion, the disadvantages of putting your child’s name on the deed far outweigh the advantage of avoiding probate.

1. Loss of Control

When your child’s name goes on the deed, your child becomes the legal co-owner of the house. Should you at some point want to sell the house and move to Florida, your child must agree. If they don’t agree, you cannot sell. No Del Boca Vista for you!

2. Inheritance by Others

If your child dies before you, depending on the way the deed is worded, your child's ownership interest in the house could pass to their heirs. You could end up owning the house with your son-in-law. Definitely no Del Boca Vista for you!

3. Exposure to Creditors

Because your child is now a joint owner of your house, your house is also your child’s asset. Your house is now exposed to your child’s creditors. If your child runs into tax problems, a tax lien could be filed against your house. If your child declares bankruptcy, your house may have to be sold. If your child is sued as a result of a motor vehicle accident, your house could be attached.

4. Taxable Gift

Putting your child’s name on the deed may seem like a simple transaction, but it is legally a gift of half the value of your house. If your house is worth more than $26,000, a federal gift tax return is required to be filed.

5. Capital Gains Tax

When you put your child’s name on the deed, the child is considered to have acquired their half of the house at half of the same price you paid for the house. Let’s say that the house you paid $100,000 for 30 years ago is now worth $500,000. (Now that’s wishful thinking!) Your child now owns half the house and is considered to have acquired it for $50,000. After you die, if your child sells the house for $500,000, the child will have to pay capital gains tax on the half of the house they acquired before you died. In this scenario your child would owe capital gains tax on $200,000. (This assumes the house is not your child’s primary residence.)

Conversely, when your child inherits the house after your death, they take the property at your date of death value. Even though you only paid $100,000 for your $500,000 house, your child is considered to have acquired the property for $500,000. Thus, if your child then sells the property for $500,000, there is no capital gains tax.

6. Medicaid Penalty

Medicaid is a quasi state/federal program that will pay for nursing home care for individuals without sufficient resources. In the application process, Medicaid looks for whether the individual has given money away in an attempt to become eligible for benefits. Putting your child’s name on your deed is considered a gift and as such may trigger a period of ineligibility for Medicaid benefits.


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