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Estate Trust & Adminstration

When you die, some type of legal procedure is needed to transfer title and ownership of your financial assets to others. The law provides for several ways of doing this, but estate laws differ a little from state to state. All jurisdictions recognize wills as a means of transferring property, but not all states honor transfer-on-death methods of changing title or ownership. It's always a good idea to speak with an attorney to make sure the method you want to use is available in your state.

Probate Transfers Title
Probate is the legal process that changes ownership of financial assets from a person who has died to other individuals. Probate assets are those that don't automatically transfer on your death by some other means. They include assets in your will plus any non-transferred assets.

Trusts Can Avoid Probate
Financial assets that you place in a living trust do not require probate for transfer. When you place these assets in a trust, you re-title them in the trust's name. The trust technically owns them. When you die, the trust can transfer ownership of your assets from itself to the beneficiaries you've named in your trust documents. If you neglect to re-title some of your financial assets into the name of your trust, a will can direct that these assets should move to your trust when you die. The assets left out of your trust would still require probate to re-title ownership into the name of the trust so your trust can ultimately transfer them to your beneficiaries.

Beneficiary Designations Avoid Probate
Some assets don't require probate because they name their own beneficiaries. These include retirement plans and life insurance death benefits. Probate isn't necessary because the policy or plan already addresses transfer under your state's contract laws. Ownership of these assets moves directly to your beneficiaries.

Some Assets Transfer on Death
Some states give you the right to name someone on a financial account or deed to inherit automatically without the need for probate. These assets include things like bank accounts and real estate. In some jurisdictions, you can designate bank accounts as "transfer on death" or "payable on death" accounts to go to an individual named by you when you die. Co-owned real estate can transfer the same way if the deed includes a survivorship clause. Without this language, the property must usually pass through probate to transfer full ownership to your co-owner.

The word "probate" often carries a bad connotation, frequently because its meaning is misunderstood. Probate is simply the process of legally recognizing your will as the controlling authority in distributing your assets at death. Probate generally takes from six months to a year to complete. This is the "period of administration." It involves inventorying your assets, paying any bills, collecting any receipts, paying any tax and distributing your estate. And it is important to recognize what is "probate property" - that which is controlled by the terms of your will - and "non-probate property," which is not impacted by your will at all. Your will has no effect on the passage of assets, such as jointly owned property or insurance proceeds. They go automatically to the joint owner or to the beneficiary you have designated. Many people do not make this distinction. When I point this out, the reaction is often one of shock and relief at being able to cure the problem before it is too late.

Resolve Contentious Estates Without Costly Court Battles
While I do not often handle courtroom litigation, I have much experience with contentious estates and estate related litigation, and have used that experience to help people avoid potentially nasty situations. In matters concerning life, death and money, longstanding family differences can come to a boil. Family members who have managed to keep animosity in check during their parents' lifetimes frequently find it difficult to do so when they are gone and the 'who-gets-what' decisions are to be made.
In these situations, my goal as your lawyer is to get people talking and to help them understand the inevitable financial and emotional costs of fighting with each other. In most cases, I can help them successfully overcome their differences and get on with their lives. Probate offers these and additional benefits:

  • Court oversight of the estate activities
  • Comprehensive accounting of estate assets and property
  • The advantage of having someone - the Personal Representative - in place and able to make legally binding decisions

Attorneys' fees and commissions do not take a huge portion of the estate. In fact, they are controlled by statute; and the ultimate amounts are determined by the Orphans' Court, the probate court in Maryland. The maximum commissions allowed by law in Maryland are determined by reference to the size of the probate estate. The schedule is: nine percent on the first $20,000 of the estate and 3.6 percent on the remainder. Total compensation - commissions and attorneys' fees - is, in the absence of unusual circumstances, limited to that maximum commission cap.

I tell all of my clients that death taxes are the one type of tax that they, personally, will never have to pay. They will be gone when the tax is due. And some of my clients have taken the position that, "I'll be gone, so what do I care about death taxes?" That, however, is the minority view. Most people want their hard-earned assets to pass to the next generation as intact as possible, minimizing the government's share. If that is your view, you need to be familiar with federal and state death taxes.

Keeping Death Taxes to a Minimum
I have been familiar with federal and state death taxes for the better part of my 35-plus years in practice, and cannot tell you how many times the first words out of a client's mouth are: "I don't want the government to get my money." And sometimes the response is, "You can't avoid it." But many times the situation is in between, meaning that federal and state taxes are lurking out there, but solid planning can minimize or eliminate them. Death tax planning most frequently involves the use of trusts and/or annual gifts to family members, and/or the use of life insurance and/or charitable giving. The goal is to choose the right option, which is the one that fits your comfort level. There is a lot to know about death taxes, but I will be happy to take the time to explain them and their impact on your estate. After all these years in practice, I think I can convey the basics without much difficulty. The subject can be complex and obtuse at times; but you do not need to be an expert in tax law. It is only necessary that you understand the consequences of the various options available to you in addressing the subject.

Death Of A Loved One
When a loved one passes away, contact our office to schedule an initial estate meeting so we can review the steps involved in settling an estate, as well as what your responsibilities are as trustee and/or personal representative. During this meeting we will provide you with more detailed information about how we can assist you.

You will probably have many questions. Please write them down and bring them with you.

It would be helpful if you could bring your original estate planning documents. Other helpful documents to bring to the meeting, if you have the time to find them, include:

  • Paid funeral bill
  • Death Certificate, if issued already
  • Originals or copies of real estate deeds
  • Copies of recent statements for brokerage accounts, bank accounts, retirement plan accounts and investment/stock accounts
  • Original life insurance policies
  • Original titles to cars, trucks, trailers, boats, etc.
  • Hospital bills

If you can't find these items, don't worry, just bring what you have.

Please do not close any bank accounts, re-title any assets, roll over any IRAs or collect any life insurance until we have had an opportunity to meet with you in person, since this can result in extra taxes. We will provide you with more information about these and other financial issues during our meeting.

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