Estate Planning

A Last Will and Testament (more commonly referred to as a “Will”) is the legal document that expresses your final wishes, directs the transfer of your probate assets, and names the Personal Representative of your Estate – the person responsible for the estate administration [link to estate administration page]. Typically, there will be a clause that addresses the payment of your final expenses (including your funeral or memorial expenses and taxes due upon your death) and addresses whether the court will need to approve the payment of such expenses.

Your Will also directs how your Personal Representative distributes your assets – your tangible personal property, your business and/or home, your financial accounts, digital assets, etc. – which are in your individual name. If your Will creates testamentary trusts for beneficiaries rather than directing distribution outright, it will also provide the name the Trustee of those trusts, how the trust should be managed, and who will benefit now and in the future. If you have minor children, a Will should name a guardian for those children in the event something should happen to you.

A Revocable Living Trust (“RLT”) is commonly thought of as a Will substitute because it can help to avoid probate and preserve a family’s privacy. In reality, it is only a partial replacement and often accompanies a “pour-over” Will which acts as a catch-all. An RLT will avoid probate only to the extent your assets are retitled into the name of your Revocable Living Trust during your life with the Pour-over Will catching anything that wasn’t re-titled as part of the probate estate administration.

The RLT includes several provisions similar to a Will – providing for the payment of your final expenses and the ultimate disposition of your assets. While the grantor is often the sole Trustee during their lifetime, the RLT should also name successor Trustees who are responsible for the administration of the Trust when the grantor is incapacitated or dies.

A financial power of attorney is a document that names the person or persons (sometimes called your “agent(s)”) who will represent you (as “principal”) and your financial affairs should you become unable to do so yourself while you are living. Since 2010, Maryland has provided two versions of a statutory form power of attorney document – a “Personal Financial Power of Attorney” and a “Limited Power of Attorney” – which are each legally enforceable with all persons or organizations doing business within the state. An estate plan will generally include one of the statutory forms and may include a separate, supplemental power of attorney depending upon the client’s situation and needs.

In any case, for estate planning purposes, it is important that the power of attorney is a durable power of attorney, meaning that it is not revoked or terminated if the principal becomes incapacitated for any reason. In general, we suggest that the durable power of attorney be drafted so that it is effective immediately once signed which is convenient when you are traveling or otherwise unavailable and you would like someone to step into your financial shoes.

The advance directive & designation of health care agent(s) accomplishes two specific goals:

1. Designating a representative to advocate for you and express your wishes for medical decisions in the event that you are unavailable to communicate for yourself; and
2. Outlining your desires on certain medical decisions should you be unable to communicate your intentions; specifically, the level of medical treatment or intervention you would like to receive in certain end-of-life scenarios; whether you would like to receive life-sustaining treatment; whether you wish to have any limitation on the pain medication received; or whether you wish to be an organ donor.

Your health care agent must also be specifically named as your HIPAA representative which allows them to communicate with medical professionals or review your medical records, as necessary. Within the advance directive, you will also specify whether your agent has flexibility in making any such medical decisions (using your directives as guidance) or whether they will be required to follow your directives exactly as they are written.

In connection with the desires expressed in the core documents, clients should consider reviewing and revising any beneficiary designations – whether this is on retirement accounts, other financial accounts, or life insurance. Many clients create beneficiary designations when setting up a new account or starting a new job and forget about reviewing these designations periodically as their lives and goals change. When you name a person, charity, or trust as the beneficiary of a retirement account or life insurance policy, the funds will pass directly to the beneficiary upon your death and not according to the terms of your Will or RLT.

While beneficiary designations are often an important means of avoiding probate administration and ensuring that assets pass to beneficiaries with minimal delays, it is important to consider your beneficiary designations as part of your larger estate plan to ensure that your wishes are being met without placing additional burdens on your beneficiary. There are often certain financial and tax considerations associated with these assets, so it is important to ensure that your goals are being met most efficiently.

Art and other specialty collectors have unique estate planning considerations – whether the collection is comprised of artistic works, historical objects, or other items of specialized interest. It is extremely important to have an accurate inventory of the collection, proof of title and/or authenticity when available or applicable, and an idea of the value of the collection for estate tax planning purposes.

One of the most important decisions for the collector is often who will take care of the collection upon their passing. The collector may have a family member who has an interest in curating the collection or may want to consider gifting the collection to a gallery or museum. These collections often take careful planning and the advice of an estate attorney who focuses on this unique area.

Business owners both large and small should consider the future of their business and how they want the business to continue upon the owner’s incapacity or death. For some businesses, there is a clear succession plan – perhaps a child is involved in the business already and hopes to continue operations. However, other business owners may intend for the business to be sold upon death.

If there are partners involved already, or if there may be in the future, an estate plan should consider any agreements proposed or in place which will affect how a business can be transitioned or transferred and how this may affect any operations or organizational structure. These are difficult conversations and topics to explore, but if the issues are not addressed before death, the outcome can be frustrating for the family who is left behind.