Estate Planning - Generally

 

 

Will the state, district or commonwealth get everything if I don't have a Will? 

Without a Will, property will be distributed to a person's next of kin in accordance with a statutory priority list.  The statutory list rarely matches people's individual desires for distribution of their property.  The state only receives your property if there is no surviving extended family, or the family cannot be located.

 

Will my spouse inherit all my property if I don't have a Will?

In most states, including Maryland, Virginia and D.C., a spouse gets only a portion of the separately titled assets belonging to a decedent.  The remainder is often divided among children (including those from a prior marriage) and parents.

 

Does having a Will create or avoid probate?

Nothing about a Will creates or avoids probate.  A Will is just a set of instructions for what happens in probate.  Whether or not you will have a probate depends on the nature of the assets you own.  Generally, probate is required for all assets titled in the decedent’s name at the time of his or her death, where there is no beneficiary designation and the asset was not owned jointly with rights of survivorship.  This is your “probate” property. 

The general purpose of probate is to inventory, account for and transfer title to assets that a person owns at the time of death.  Probate proceedings must be initiated to appoint a person to act on behalf of a deceased person in carrying out the terms of a Will.

 

Does my Will dispose of all of my property? 

As noted above, a Will only controls the disposition of probate property.  A Will does not control or determine the transfer beneficiary designated or jointly owned property.  A Will is an important estate planning tool, but it must be drafted as part of a plan that coordinates with other methods of transferring assets.

 

Why should I use an Attorney when I can just get a Will online for less money? 

One of the most commonly asked questions.  We have written on this issue several times, the most recent iteration of which can be found here:   LINK TO BLOG (“Why Use an Attorney...”).

 

Do I still need to plan even if all of my property is owned jointly with another person? 

Sometimes owning property jointly with another person is a good idea.  However, most people do not understand the legal implications of joint ownership.  For example: (1) transfers to a joint tenant can be exposed to federal and state estate and gift tax; (2) joint tenancy does not avoid probate, it just postpones it until the death of the survivor; (3) joint tenancy may not take advantage of the estate tax exemptions available to both tenants and does not avoid estate taxes at all; (4) jointly owned property is subject to the judgment creditors of all joint tenants; (5) joint tenancy will result in the complete transfer of ownership to the surviving owner, even if that was not intended by a deceased owner or the deceased owner's Will would provide otherwise; (6) joint ownership can affect qualification for public assistance programs such as Medicaid; (7) all owners, not just the original owner, must agree to sell a jointly-owned asset; and (8) all owners may have equal access to a jointly-owned asset, even if it is a bank, stock or other cash account.

 

Does the same estate plan works for everyone?

The choice to use a Revocable Living Trust, Will, or other estate planning technique depends on a variety of factors.  Every Will or Trust must be carefully tailored to fit a particular situation, and there are numerous other factors to consider for every individual.  Unless two people had exactly the same property, family make-up, life situation, and objectives, no single plan could possibly work for more than one person.

 

Isn't estate planning is only for wealthy people? 

Many factors other than wealth affect the need for estate planning, such as:

  1. Caring for a minor or disabled child;
  2. Transferring ownership of property in accordance with your desires;
  3. Caring for a surviving spouse;
  4. Transferring closely held business interests;
  5. Transferring ownership of property in another state;
  6. Charitable giving;
  7. Incapacity planning;
  8. Avoiding probate;
  9. Avoiding taxes and fees; and
  10. Care of pets.

These are only a few of the reasons to plan your estate.  Each person has his or her own objectives, but having a large amount of property is usually not the primary reason to plan.

 

Don't estate taxes only impact the wealthy?

As a general rule, estate taxes are assessed on the value of all property transferred upon a person's death.  This property can include jointly owned property, most life insurance, homes, all retirements accounts, investments regardless of how they are transferred, personal property and lifetime gifts that are not otherwise excluded.  It is common for people to be quite surprised at the extent of their assets when they add the total value that would be transferred at the time of their death.

Please refer to the prior questions regarding estate taxes for more information.

 

Will there even be an estate tax when I die?

This is an entirely political question.  It is unlikely that the states, including Maryland and DC, will completely do away with their estate tax, and unlikely that the federal estate tax will ever be permanently repealed.  However, in Maryland, new legislation was passed in early 2014 that will gradually increase the amount exempt from the state estate tax from $1 million in 2014 to $1.5 million in 2015, $2 million in 2016, $3 million in 2017, and $4 million in 2018.  Finally, in 2019, it will match the federal exemption which is projected to be $5.9 million, up from $5.34 million in 2014. 

Virginia has no state estate tax for individuals dying after July 1, 2007, and DC has estate tax for estates with a taxable value above $1 million.  However, DC City Counsel has passed a new, and very confusing, estate tax law, which provides that the estate tax exemption amount will increase from $1 million to $2 million in 2017.  One section of the bill appears to indicate that this increase is conditioned on available revenue, and could be delayed.  Another section implies that the change is automatic in 2017.  Thus, depending on the District’s revenue receipts, the increased exemption may take effect as soon as 2017, or it could be several years before the DC exemption is above $5 million.

 

Aren't I too young to plan?

Estate planning deals with possibilities as well as probabilities.  It is probable that young people who do estate planning will revise their estate plan many times before they die.  It is possible that same young person could suffer an accident just after signing.

 

We just added a new baby and we now have three kids.  Do I need to revise our estate planning?

Your estate planning documents should define “children” to include not only the two kids you had when you made the Trust or Will, but also to include any future children born (or adopted) to you (or at least to the two parents together).   If that is the case, it should also say that your trust or estate residue gets divided into an equal portion for each of you children who survive you, and for any predeceased children.  Assuming your planning was done this way, your new baby is already part of your planning.  If not, you either need to do a new will or amend/restate your trust to add the new child. 

Our Attorneys

Norman B. Handler's Profile Image
Norman Handler started his legal career with the IRS, auditing estate tax returns and, in its National Office, developing estate tax policy. He moved into private practice, first as an associate and later as a partner in a large Montgomery County law… Read More

Marc S. Levine's Profile Image
Marc S. Levine has been practicing law since 1992, all with Handler & Levine, LLC, and its predecessor firms.  Marc regularly assists individuals and families in preparing their estate plans, including drafting their wills, revocable trusts, tru… Read More

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