Understanding Estate Planning
By Law Office of Beverly Winstead, LLC of Law Office of Beverly Winstead, LLC
Ben Franklin stated that there are two things certain in life, death and taxes. While this is true, many people try to enjoy living in the moment that they fail to plan for their death. Talking about death is scary because no one wants to die. However, could you imagine your children fighting over a couch that is worth less than $200, which later affects their relationship, to the extent that they do not speak anymore? These are typical problems that families encountered when there’s no estate plan created. You should ask yourself this question: Do you know where your assets will go upon death? If not, it is imperative to create an estate plan. Estate planning is an arrangement and distribution of one’s assets upon one’s death. This process involves preparing a will, trust, power of attorney, advance directives, and more. Many people misconstrue the idea that individuals that are rich need to prepare an estate plan. In addition, many individuals postpone this process or never take the initial steps to ensure that their assets are properly distributed upon death. With an estate plan created, this allows your property to be distributed to the rightful person upon your death. At the Law Office of Beverly Winstead, we explain to our clients about estate planning and we create one that meets their needs.
Many people decide not to hire attorneys to create their estate plan because they believe they can draft a will or trust by themselves or they do not have the funds to hire an attorney. Please remember that estate planning is serious business, with one wrong word or a missing signature can change the intent of the will or trust. Most importantly, estate planning attorneys are necessary for drafting estate planning documents because they are familiar with the various changes in the estate and trust laws. They also understand the complexity of the estates and trust law. Lastly, estate planning attorneys can help sort out complex family or financial situations. Hopefully after reading this blog, you will understand the need to seek legal assistance with preparing an estate plan or modifying the estate plan you have.
To understand estate planning and the probate process, it requires understanding some of the following terminology. A will is a legal document that is signed by the person creating the will, which identifies how you want your property distributed upon your death. When a person that dies with a will, the will determines who gets what property and if there’s any contesting the will, the Orphan’s Court judge will resolve the issue. In Maryland, the Orphan’s court resolves matters regarding the validity of the will and the transfer of property. It becomes a little challenging when someone does not have a will. A person that dies without a will is considered intestate. When a person dies intestate, the law decides how one’s property is distributed upon heirs. For example, if Jon dies without a will, a certain percentage of what he owns goes to his wife and the rest will be distributed upon his children. The reason why this can become complicated because sometimes heirs will argue over who gets what and if there’s no will in place, it can be very confusing. With this being said, the probate process can extend between six to nine months which is the timeline to ensure that all property is distributed.
On the other hand, most people create a trust to prevent going through the probate process. A trust is a legal document that creates a relationship where the property (real or personal) is held by one party for the benefit of another. Trusts are used to manage flexibility in the operation of the estate plan. Creating a trust provides the settler (the person that creates the trust) with more discretion and control even after death. However, the main difference between a trust and a will is that a trust is effective immediately upon signing and funding the trust and a will is effective after probate process, which can take about six to nine months.
Another important document for estate planning is a living will. A living will expresses your last wishes regarding health care decisions and burial options. This is similar to a Health Care Directive, which gives your designated agent the authority to make health care decisions on your behalf, in the event that you are incapacitated.
In addition, a financial power of attorney is a legal document that gives your designated agent the capability to make financial decisions on your behalf, in the event that you are incapacitated
What is the Probate Process? A probate asset is an asset held in the decedent’s name alone. A decedent is the deceased person. For example, a probate asset can be a house that has one owner or even a vehicle that has one owner. Unlike probate assets, non-probate assets are not held in the decedent’s name alone such as a house owned by a husband and wife. This is important to differentiate because non-probate assets do not go through the probate process.
If the decedent has a will, and the decedent has property subject to probate, the probate process begins when the executor presents the will for probate in the Orphan’s Court, in the county where the decedent resides. If the decedent has no will, someone must ask the court to appoint someone as the administrator of the decedent’s estate. “Once appointed by the court, the administrator or executor becomes the legal representative of the estate.”
There are four steps to probate. First, the executor or administrator must file a petition and give notice to the heirs and beneficiaries. Secondly, the personal representative of the estate must give written notice to all known creditors of the estate based on state law. Thirdly, all estate and funeral expenses, debts, and taxes must be paid from the estate. Lastly, the legal title in the property is transferred according to the will or under the laws of intestacy. This is just an overview of the probate process. Furthermore, it is imperative to understand the estate planning documents.
Lastly, all of the documents stated above and other documents, can help you develop a comprehensive estate plan that will ensure that your loved ones have the information, guidance, and resources they need in the event of your incapacity or death.
Are your assets protected? Do you know where your assets will go upon your death? If not, it’s time to create an estate plan.
http://wills.about.com/od/youandyourattorney/a/doineedatty.htm (last visited July 2014)
MD Code, Estates and Trust, §4-102 (West 2014).
https://www.legalzoom.com/articles/the-probate-process-four-simple-steps (last visited July 16, 2014).