As the coronavirus pandemic continues to disrupt daily life and leave Americans uncertain of the future, you do not have to feel helpless. In fact, now is a great time to be proactive and organize your affairs in the event you or a loved one should fall ill. One of the most important things you can do (and should do) is get your estate plan in place. If you can answer the following questions or at least begin to think them through, you can get a jump-start on the estate planning process today.
1. Who Do You Want to Handle Your Financial Affairs?
One major issue that must be addressed during the estate planning process is the control of your money and property. This includes what will happen while you are alive and what will happen at your death. The person(s) you choose to put in charge of your money and property should be trustworthy, detail-oriented, financially savvy, and organized. To assist you with your financial affairs, you may decide to appoint someone to serve as your Agent (aka attorney-in-fact) under a financial power of attorney and/or a successor Trustee of your revocable living trust.
The agent is responsible for carrying out the financial transactions listed in the financial power of attorney document on your behalf while you are alive. The document can be tailored to meet your needs, granting your agent as much or as little authority as necessary or desired. You could grant your agent the authority to do everything you could do (known as a general durable power of attorney), or the agent could be instructed to only open a bank account for the purposes of depositing a specific check (known as a limited power of attorney). You also have the ability to specify when your agent’s authority to act on your behalf becomes effective. With a “springing” power of attorney, the agent can act only if you become incapacitated. The method used to determine whether you are incapacitated is stated in the power of attorney (note: in general, “springing” powers of attorney are not recommended). Alternatively, an immediately effective power of attorney allows your agent to act the moment you sign the document, even though you are still able to conduct your own financial affairs. This feature, however, does not limit your ability to carry out your own transactions - it merely provides that another person can carry them out in addition to you.
Another way a trusted individual can assist you is by serving as a successor trustee of your revocable living trust. When the trust is first created and you transfer money and property to the trust, you will likely serve as the initial trustee and will be in full control of the money and property, just as you were before your transferred it to the trust. In addition to being the trustee, you will also be the current beneficiary, allowing you to continue to enjoy the money and property even though they are technically owned by the trust. For the foreseeable future, this situation will work well. However, the true benefit of the trust arises when you are no longer able to fulfill the role of trustee. At that point, the trusted individual you have appointed as your successor trustee will step in and manage the money and property for you, without court involvement. Your successor trustee can also step up at your death without court involvement. But no matter when the successor trustee takes over, i.e., when you are unable to manage your affairs or upon your death, he or she is required to follow the instructions that have been detailed in the trust document. This means that the money and property will continue to be used for your benefit during your lifetime and for the benefit of those you have chosen at your death.
2. Who Will Communicate Your Medical Decisions to the Appropriate Medical Personnel?
In the event you are unable to communicate your medical wishes, your agent under an advance medical directive or medical power of attorney is the person who can make the life or death decisions on your behalf. Your health care agent should be level headed, able to act under pressure, and most importantly, able communicate your wishes, even if their own wishes or beliefs differ from yours. If you have family members that disagree with your choices, you may want to rethink before giving them the authority to make medical decisions on your behalf. It is also essential that you consider the individual’s availability to act for you. Medical emergencies can happen without warning. It is necessary that the person you choose as your agent is available in the required capacity to make those decisions for you. If the person you would like to choose is across the country, do they have the time and finances to travel? If your first choice has a demanding job or home life, can he or she be reached in a reasonable amount of time in the event a decision can be made over the phone?
Medical decisions are very personal. Even if you have the most capable person appointed as your health care agent, it is helpful if you can provide him or her with your wishes in writing. This can be a valuable tool for your agent. An advance medical directive or ‘living will” allows you to state your wishes regarding your end-of-life care: Do you want medication to help manage any pain? Do you want to be put on a ventilator if needed, etc.? While these decisions may take some soul searching, this information may be crucial in allowing your agent to make the best decisions on your behalf.
3. Who Will Look After Your Minor Children, Even if it is Just Temporary?
If you have a minor child, you know that they require some level of supervision. In case you are not able to take care of your minor child, and the other custodial parent is not available, you must make sure to appoint someone to step in and take care of your child, even if it is just for a short period of time. This person should have the ability to take on the mental, emotional, and possibly financial day-to-day responsibilities of raising your child. Because it is impossible to know in advance the amount of time your child would need to spend with them, you will also need to consider whether the person is geographically desirable or if your child would be required to move, even temporarily.
4. How Do You Want Your Money and Property Divided at Your Death?
When considering how to divide your money and property, think about what is in the best interests of each person. You do not have to give the money and property to your loved ones outright: You have options.
If you are concerned about giving a chosen beneficiary access to 100% of the money and property they will inherit, you could choose to stagger distributions over a period of time. For example, the beneficiary could receive 25% at age 25, 50% at age 40, and the remaining 25% at age 60. By staggering the distributions in this fashion, your younger beneficiary may be able to use the last portion as a nest egg for retirement.
In the event you would like to incentivize certain behaviors, you can set aside money or property to be distributed when a beneficiary accomplishes certain milestones (i.e., graduates college, stays sober for 180 days, gets their first full-time job). This can be helpful if you are concerned that the inheritance might derail a beneficiary from a productive path. By making the distributions contingent on certain behaviors, you can help ensure that they are staying on the right track even after you are gone.
For some beneficiaries, it may be more appropriate for any distribution to be solely within the complete discretion of the named successor trustee. Although this may sound harsh, there are many types of beneficiaries that can be safely provided for using this strategy. If your beneficiary has creditor issues, their creditors can only take the money or property that has been given to the beneficiary. So long as the money and property remain in the trust, and the trustee is not required to make distributions to the beneficiary, the money can stay out of the hands of the creditors. Additionally, a properly structured trust can prevent the beneficiary’s former spouse from taking the inheritance due to the limited control your beneficiary has over the money. This does not mean that your beneficiary will never receive any benefit from the trust - it just means that the trustee has the ability to ensure that distributions are truly in the best interest of the beneficiary, at the best time, and in the right amount.
We Are Here to Help
We are here to help you navigate through the estate planning process during these unprecedented times. Let us help you be proactive and get your affairs in order.
David Lucas is an attorney in the Estates & Trusts and Business & Tax practice groups at Miller, Miller & Canby. He focuses his practice in Estate Planning and Trust and Estate Administration. He provides extensive estate and legacy planning, asset protection planning, and retirement planning.
Contact David at 301.762.5212 or via email. To learn more about Miller, Miller & Canby's Estates & Trusts practice click here.
Do you remember the unfortunate story of Terri Schiavo? In February 1990, Terri Schiavo, a Florida resident, suffered a heart attack that deprived her brain of oxygen for several minutes and caused brain damage. Terri slipped into what doctors describe as a “persistent vegetative state,” which is an irreversible loss of consciousness. Terri could no longer communicate with others, her movement was limited to minor reflexive nerve and muscle activity, and she could only survive with the assistance of an artificial feeding tube. Terri was only 26 years old.
For several years, Terri’s husband and her parents requested that Terri be kept alive with an artificial feeding tube. Initially, the family hoped that this would give Terri some time to recuperate from her injuries. Unfortunately, by 1998, Terri had shown no signs of improvement, and her husband requested the removal of the feeding tube because he felt that Terri would not have wanted to continue to live in this condition. Terri’s parents vehemently disagreed with the request to remove the feeding tube - they would not let go of the hope that Terri might improve.
The ensuing legal battle over Terri’s right to die consumed her loved ones and the court system. For seven painful years, both parties fought to convince the courts that they knew best what Terri would have wanted in these circumstances. The Florida courts consistently ruled in favor of Terri’s husband, but Terri’s parents wouldn’t give up - they appealed the courts’ decisions again, and again, and again.
No matter how you may feel about the moral and political issues that Terri’s case brings to the forefront, most people would agree that they would not want their loved ones to suffer the 15-year nightmare that Terri and her family experienced. Fortunately, the means to plan for end-of-life medical decisions are available.
Legal Options That Can Prevent Family Turmoil
Terri Schiavo’s case highlights the fact that the elderly are not the only people at risk of becoming incapacitated and being compelled to face life and death medical decisions. Moreover, all Americans have the legal right to make decisions about what kind of medical treatments or procedures they choose to have, or choose not to have, if death is imminent or if they are permanently unconscious and have no reasonable expectation of recovery. Every state in the country has passed laws detailing how to exercise those rights. In 1990, Florida law provided Terri the right to make a Living Will which would have allowed Terri to express her wishes to her family and to prevent the years of family turmoil and court involvement.
Unfortunately, Terri did not exercise her right to execute an Advance Medical Directive, Living Will, or Health Care Power of Attorney before her heart attack. As a result, the Florida courts had no choice but to get involved in Terri’s personal affairs once her family could no longer agree on how to treat her condition. The most important lesson from Terri's case is that every adult should create a proper legal document expressing his or her wishes regarding end-of-life medical care.
Maryland Health Care Law and Advance Medical Directives
The Maryland Health Care Decisions Act provides that any competent adult can make decisions regarding the provision of health care to that individual or the withholding or withdrawal of health care from that individual. In Maryland, these decisions are expressed in writing through the use of an Advance Medical Directive. An Advance Medical Directive typically consists of two parts. The first part is the “Appointment of Health Care Agent,” where you name the individual who will make health care decisions for you if you are unable to make those decisions yourself. You should also name successors or back-up agents in the event your primary agent is unable or unwilling to serve as your agent. The second part of your Advance Medical Directive is your “Living Will,” where you express your wishes concerning end-of-life medical treatment.
Planning Early is Critical
An Advance Medical Directive should be prepared by an attorney who understands the laws and issues involved and can customize a plan according to your wishes. By being proactive, you give yourself the greatest chance that your wishes will be enforced. Terri Schiavo could have spared her family years of bitterness, strife, and public disharmony if she has just taken the time to clearly and unequivocally express her wishes. While her tragic end may have been impossible to avoid, Terri’s family would likely have been at peace had they known that Terri would have chosen to remove the feeding tube. Maybe if Terri had made her voice heard, her family could have remained united in the face of their common tragedy.
With appropriate planning, you can guarantee that your family is not challenged with making difficult decisions while they are already confronting a traumatic situation. Granted, it is difficult to face our own mortality and consider the inevitable. But by addressing these issues head on and discussing them, you will alleviate potential crises and show your loved ones how much they mean to you. The most important step you can take in creating any plan is to discuss your intentions with those who will be affected by it before the plan is needed.
Finally, it is crucial to remember that even if you have a Will, Trust, or other end-of-life legal documents in place, if they have not been recently updated, changes in the law or your own views could prevent them from accomplishing your intended objectives. An Advance Medical Directive is only one of several legal documents that every adult needs for an effective and complete estate plan.
David A. Lucas is an Attorney in Miller, Miller & Canby’s Estates & Trusts and Business and Tax Practice Groups. David is committed to providing his clients with a well-crafted estate plan so they may avoid probate, protect their assets and legacies, and provide for the security of their loved ones. He takes a special interest in ensuring that the dreams parents have for their children and grandchildren are not lost to taxes, poor planning, or procrastination. He speaks frequently on a variety of estate planning topics to both the general public and private groups.
David has focused his practice on helping families preserve their financial wealth and legacies for future generations through the use of Trusts, Wills, Powers of Attorney, Advance Medical Directives, Living Wills, and other estate planning strategies.
Contact David at 301-762-5212 to discuss your estate plan to take advantage of the laws available today and ensure flexibility for future changes. For more information on Miller, Miller & Canby’s Estates & Trusts Practice, click here.
- Posted April 13, 2018 at 4:02 PM
- Categories MM&C Happenings, Featured Events, Estates & Trusts, Elder Law
The National Business Institute (NBI) is holding a two day conference on “Estate Planning A-Z” in Timonium, Maryland on May 9-10, 2018. The two-day comprehensive course is an ultimate guide to estate planning. From client intake through tax planning and business succession strategies, attendees will receive tips, sample forms and answers to the most pressing questions. The conference will also cover the latest knowledge on effective will and trust planning techniques.
Miller, Miller & Canby Estates & Trusts Attorney, David Lucas, will give a presentation on “Trusts 101”on the second day of the conference, May 10th. Mr. Lucas’ presentation will cover:
• Types, Goals and Functions of Trusts;
• Major Laws Governing Trust Creation and Administration;
• Who are the Main Parties? Their Duties and Responsibilities to a Trust;
• Revocable vs. Irrevocable Trusts;
• Choosing Trust Status; and
• Trust Funding Basics.
Who Should Attend?
• Estate and Financial Planners
• Trust Officers
• Tax Professionals
Click here for the NBI conference overview and to REGISTER.
Mr. Lucas is an attorney in Miller, Miller & Canby’s Estates & Trusts and Business & Tax practice groups where he focuses his practice on Estate Planning, Trust and Estate Administration, Elder Law and Business Law. David is committed to providing his clients with a well-crafted estate plan so they may avoid probate, protect their assets and legacies, and provide for the security of their loved ones. He takes a special interest in ensuring that the dreams parents have for their children and grandchildren are not lost to taxes, poor planning, or procrastination. He speaks frequently on a variety of estate planning topics to both the general public and private groups.
For more information about Miller, Miller & Canby’s Estates & Trusts and Business & Tax Practices, click here or contact David at 301-762-5212.
- Posted February 14, 2018 at 6:41 AM
- Categories Press, MM&C Happenings, Estates & Trusts, Business & Tax, Elder Law
Miller, Miller & Canby is pleased to welcome David A. Lucas to the Estates & Trusts and Business & Tax Practices, where he will focus his practice on Estate Planning, Trust and Administration, Elder Law and Business Law.
“Miller, Miller & Canby’s Estates & Trusts and Business & Tax, Elder Law and Business Law practices have served families and businesses throughout Maryland and Washington, DC for decades,” said Robert E. Gough, Managing Shareholder for the firm. “We are very pleased to welcome David. His extensive private practice experience in estate and legacy planning, asset protection planning, retirement and business planning services will strengthen and expand our capabilities in these important disciplines.”
Mr. Lucas is committed to providing his clients with a well-crafted estate plan so they may avoid probate, protect their assets and legacies, and provide for the security of their loved ones. He takes a special interest in ensuring that the dreams parents have for their children and grandchildren are not lost to taxes, poor planning, or procrastination. He speaks frequently on a variety of estate planning topics to both the general public and private groups.
Prior to joining Miller, Miller & Canby, Mr. Lucas was in private practice for 14 years. He began his legal career by serving as a Law Clerk to The Honorable Dennis M. McHugh of the Montgomery County Circuit Court in Rockville, Maryland. After his clerkship, he worked for a general practice firm, where he gained practical experience in a variety of disciplines, including civil litigation, employment law, workers’ compensation, administrative law, family law, estate planning, and business formation. Since 2006, Mr. Lucas has focused his practice on helping families preserve their financial wealth and legacies for future generations through the use of Trusts, Wills, Powers of Attorney, Advance Medical Directives, Living Wills, and other estate planning strategies.
Mr. Lucas is licensed to practice law in Maryland and the District of Columbia and is admitted to practice before the respective local and federal courts. He is a member of the Maryland State Bar Association, the District of Columbia Bar Association, and the Montgomery County Bar Association. He earned a B.A. in Sociology from The Catholic University of America in Washington, D.C. and earned his Juris Doctorate, cum laude, from The Catholic University of America’s Columbus School of Law.
Click the download button below to view the firm's formal press release. For more information about Miller, Miller & Canby’s Estates & Trusts and Business & Tax Practices, click here or contact David at 301-762-5212.
Glenn Anderson and Helen Whelan of Miller, Miller & Canby’s Trusts & Estates Practice Group will be speaking at the National Business Institute’s CLE Program on Tuesday, October 18. Titled “Wills & Trusts: Mistakes to Avoid”, their talk will focus on how to prevent and correct estate planning mistakes. It’s designed for attorneys, accountants, estate and financial planners, trust officers and paralegals. Among other topics, the program will include information on correcting errors in will drafting, trust administration and trust structure documents. It will highlight the differences between wills and revocable living trusts, and will also delve into legal ethics. Practical tips for understanding and anticipating client needs, as well as finding the right balance between broad and restrictive trust language will also be explored. For more information or to register for the program, which will be held in Frederick, MD, click here.
Glenn Anderson leads the firm’s Business & Tax and Estates & Trusts Practice Groups. As both a CPA and apracticing attorney, he has developed a recognized expertise in estate planning with an emphasis on tax law and business succession planning.
Helen Whelan is a Principal in the firm’s Estates & Trusts Practice Group, and is also a CPA and practicing attorney. She has earned a recognized expertise in estate planning with an emphasis in Elder Law (special needs for the elderly and disabled) and is also certified by the Department of Veterans Affairs to counsel clients with respect to veterans’ benefits.
Miller, Miller & Canby has assisted clients with estate planning for 70 years. Please feel free to contact Glenn or Helen at 301-762-5212 for estates & trusts and elder law planning needs. View more information about Miller, Miller & Canby's Elder Law and Estates & Trusts practice by clicking here.
- Posted May 1, 2015 at 4:56 PM
- Categories Elder Law
National Elder Law Month was established by the National Academy of Elder Law Attorneys (NAELA) as a way to recognize the area of law which supports the senior community.
Elder Law relates to the type of person who is served and Elder Law attorneys represent, counsel and assist seniors, people with disabilities and their families with a variety of legal issues.
According to the Administration on Aging, the population 65 and over has increased from 35 million in 2000 to 41.4 million in 2011 (18% increase) and is projected to increase to 79.7 million in 2040. Within 20 years, persons over the age of 65 will comprise 20% of the U.S. population. Planning for this age group must include consideration of long-term care, a cost that can be incredibly expensive and often has very a significant effect on the immediate family.
For more information about Elder Law and selecting an Elder Law Attorney, click the download button below for a complimentary copy of NAELA's brochure, titled Questions & Answers When Looking for an Elder and Special Needs Law Attorney. For more information about the Elder Law practice at Miller, Miller & Canby click here.
Advance Medical Directives are familiar to most of us. As written statements that detail a person’s wishes regarding medical treatment, they are prepared to ensure those wishes will be carried out if he or she becomes incapacitated and incapable of communicating them.
Most of us understand that it will be important to prepare these documents at some point in our lives. By thinking ahead, we can spare our loved ones the unnecessary stress of having to make difficult decisions on our behalf.
In Miller, Miller & Canby's estate planning law practice (planning for the management and transfer of a person’s assets with an emphasis on minimizing applicable taxes) and our elder law practice (planning for a person’s disability with an emphasis Medicaid, VA benefits, and long-term care issues) we typically see clients come in to plan these documents because one of two things has happened. The client's parents may have had no instructions in place and, as a result, the client experienced firsthand the anxiety of having to make difficult decisions, and would want to spare loved ones the same fate. On the other hand, the client may have experienced peace of mind in a situation where instructions were prepared and, therefore, wants to ensure the same positive experience for loved ones.
Equally as important as creating the Advanced Medical Directive is planning for what to do after the paperwork is prepared. Where should the directive be stored? If the directive is prepared, but cannot be accessed or found at the appropriate time, it might as well not exist. Unfortunately, this happens more often than it should.
You’ve Prepared the Directive…What’s Next?
Clients will want to provide copies of their Advance Medical Directive to their doctors and to the person designated to make the medical decisions for them (or let their agent know where the original is located). If your preference is for your children or other loved ones not to see the Advance Medical Directive ahead of time, as it might cause unnecessary stress, they should at least know that you have one and where to find it or the attorney who prepared it in the event it does become necessary to access the documents. Your attorney may also retain a duplicate of the original for you. There are also programs that allow for storing the Advance Medical Directive in the cloud so it may be accessed by any medical personnel universally.
Advance Medical Directives can be drafted to give clients a choice: (i) do they want to give the agent flexibility, e.g. the ability to do something different than stated in the document, in the event something "unforeseeable" occurs and the agent believes it is in the principal's best interests, or (ii) do they want to stipulate that the agent simply follow the instructions as set forth. Most of the time, clients will know whether or not their agent is likely to follow their instructions and choose accordingly. The document can be revoked orally or in writing, which allows you to make changes if desired.
Thinking Beyond the Advance Medical Directive
The Advance Medical Directive is only one of the documents that should be in place when planning for disability or incapacity. There are additional documents that are equally important, such as a Financial Power of Attorney. But the Advance Medical Directive and Financial Power of Attorney both terminate in the event of death...which is why it is also necessary to plan for how your estate will be distributed when you pass away.
The bottom line is…it is always better to plan than to allow fate (or someone who ultimately may not make the decisions you would want) to make decisions for you and spare your loved ones any additional anxiety during what is already an extremely difficult time.
For more information about the preparation and planning of Advance Medical Directives, please contact Helen Whelan. To learn more about Miller, Miller & Canby’s Estates & Trusts and Elder Law practice click here.
Helen Whelan is a principal with Miller, Miller & Canby and concentrates her practice in Elder Law, Estate and Tax Planning and Trust & Estate Administration. She is licensed to practice law in Maryland, the District of Columbia and West Virginia and is also a CPA with a Masters’ Degree in Taxation.
May is National Elder Law Month. Learn more about this fast-growing area of the law here.
On December 19, 2014, the Tax Increase Prevention Act of 2014 (the Act) was signed into law. Within the Act there was another bill, the "Achieving a Better Life Experience Act (ABLE) of 2014." ABLE establishes a new type of tax-advantaged account for persons with disabilities; which allows them to save money for future needs while remaining eligible for government benefit programs.
Beginning in 2015, the Act allows states to establish tax-exempt Achieving a Better Life Experience (ABLE) accounts to assist persons with disabilities in building an account to pay for qualified disability expenses. An ABLE account can be set up for an individual (1) who is entitled to benefits under the Social Security Disability Insurance (SSDI) program or the Supplemental Security Income (SSI) program due to blindness or disability occurring before the age of 26 or (2) for whom a disability certificate has been filed with IRS for the tax year.
Annual contributions are limited to the amount of the annual gift tax exclusion for that tax year ($14,000 for 2015). Distributions are tax-free to the extent they don't exceed the beneficiary's qualified disability expenses for the year. Distributions that exceed qualified disability expenses are included in taxable income and are generally subject to a 10% penalty tax. However, distributions can be rolled over tax-free within 60 days to another ABLE account for the benefit of the beneficiary or an eligible family member. Similarly, an ABLE account's beneficiary can be changed, as long as the new beneficiary is an eligible family member.
Except for SSI, ABLE accounts are disregarded for federal means-tested programs. Additionally, some ABLE accounts are provided limited bankruptcy protection.
Miller, Miller & Canby has assisted clients with estate & tax planning for over 65 years. Helen Whelan, a Principal with Miller, Miller & Canby, is an estate and trusts and Elder Law attorney who works closely with clients to assist them in planning for their care. She can recommend valuable resources to help individuals who may begin caring for a person who is elderly, disabled, or with special needs. She is a member of The National Academy of Elder Law Attorneys (NAELA), which was founded in 1987 as a professional association of attorneys who are dedicated to improving the quality of legal services to seniors and people with special needs. Helen is a member of Elder Counsel, a network of professionals who center their attention on the needs of the elderly, disabled and those with special needs. She also holds the accreditation from the Department of Veterans Affairs (VA) to provide counsel and representation to veterans and their families. As both a CPA and a practicing attorney, Helen has developed a recognized expertise in elder law and taxation law.
View more information on Miller, Miller & Canby’s Elder Law Practice. Contact Helen Whelan at 301-762-5212 or send her an email to schedule a meeting or discuss the benefits of ABLE accounts.
- Posted November 17, 2014 at 12:21 PM
- Categories MM&C Happenings, Featured Events, Estates & Trusts, Business & Tax, Elder Law
Miller, Miller & Canby is pleased to announce that the firm now holds the accreditation from the Department of Veterans Affairs (VA) to provide counsel and representation to veterans and their families. The firm advises veterans on the levels of financial benefits for which they may qualify.
Applying for benefits is often a long and difficult process. Many VA laws are complex, and they are subject to frequent changes. It is helpful to have guidance in navigating through the regulations and the process.
When To Consult An Attorney
Although many veterans try to go through the process alone, an attorney accredited by the VA can provide valuable assistance in explaining the VA and non-VA benefits to which the veteran and his family may be entitled. An attorney can explain the steps necessary to qualify for those benefits, and assist in the process. Additionally, an attorney may help with putting together a subsequent plan. “There are specific instances where counsel is helpful in applying for benefits,” said Helen Whelan, an attorney at Miller, Miller & Canby who also is a CPA. “For example, it may be advantageous to move assets into trust as part of a long-term financial plan.”
Miller, Miller & Canby’s Helen Whelan is accredited by the Department of Veterans Affairs for the planning and preparation of claims for veterans. She works with veterans to evaluate and establish eligibility and guides them to capitalize on the benefits to which they are entitled as a result of their service.
VA benefits are generally available to honorably discharged veterans and their families where the veteran has
• At least 90 days of active duty, with one day during a wartime period; and
• A permanent or total disability OR attained the age of 65 years.
If you are a veteran, or family member of a veteran, and have questions about benefits or the application process, set up an appointment with Helen Whelan.
Helen Whelan is a principal with Miller, Miller & Canby and, in addition to focusing in Veterans Benefits; she also concentrates her practice in Elder Law, Estate and Tax Planning and Trust & Estate Administration. She is licensed to practice law in Maryland, District of Columbia and West Virginia and is a CPA with a Masters’ Degree in Taxation.
Many people sign their estate planning documents, file them away and forget about them. As things change in our lives or as tax laws change, these estate planning documents may become outdated. For example, people who are appointed for important positions, such as successor personal representatives or trustees, or as guardians, may no longer be able to serve. In some cases, provisions for children may no longer meet the children's needs or the intended desires for the estate plan. Estate plans must be updated and maintained to stay current and relevant.
Maintaining Your Trust
More people today use trusts in their estate planning. When a trust is designed and created, it reflects existing client conditions and known circumstances in the law and tax code. Inevitable changes in the law, tax code, the client's family, and financial circumstances affect how appropriate the trust plan remains. Without routine updating, estate plans often fail to achieve the very goals the trust documents were intended to accomplish. In order to receive the full benefit of your plan, it is important to review your trust with an attorney to ensure that all assets work as intended and your estate plan is up to date.
Funding Your Trust
For a trust to work properly, it must be funded. Trust funding is accomplished by changing asset title, beneficiary designations, or both. Every time new assets are acquired or old assets disposed of, the trust assets should be reviewed. Unfunded trusts can result in the trust plan failing to meet the very objectives it was designed to accomplish.
Avoiding Funding Pitfalls
Many hazards plague the trust funding process. Clients who attempt to fund their trusts without professional guidance or legal expertise run the risk of committing costly harm and, unfortunately, sometimes irreparable damage.
Some of the most dangerous trust funding pitfalls include:
• Using a Quit Claim Deed to fund real property to a trust.
Consequence: This strategy may void your title insurance policy on the parcel being funded.
• Changing ownership on any qualified retirement plans [e.g. IRAs, 401(k)s, 403(b)s etc.] to a Living Trust.
Consequence: The IRS will consider this transfer to be a total and complete withdrawal of your retirement plan, resulting in the entire plan amount being treated as taxable income.
• Not adding your trust as an "additional insured" to your property and casualty insurance policy.
Consequence: This omission may cause your insurance not to be effective for the property it insures.
• Not obtaining lenders consents when retitling property.
Consequence: This may trigger a "due on transfer" provision and your total mortgage or loan balance may be immediately due in full.
Funding Specific Assets
When transferring assets to your trust, it's important to be knowledgeable about how various types of assets are best funded and then coordinate that with the custom goals of your estate plan. For example, in some cases it is advisable to change ownership by re-titling the asset to the trust. With other assets, it's wise to change only beneficiary designations. In some circumstances it may be prudent to change both. Being informed about these matters is only part of the process.
Other important factors to consider include:
• How to draft legally sound trust funding transfer documents
• How to obtain and accurately complete company-specific transfer forms required by many financial institutions
• How to identify and provide the trust documentation required by financial companies in order to fund the asset properly
• How to secure written verification documenting that an asset has in fact been properly transferred to the trust
Miller, Miller & Canby's estate planning attorneys offer estate plan reviews and assistance with trust maintenance. Miller, Miller & Canby has assisted clients with estate & tax planning for more than 65 years. Glenn Anderson leads the Business & Tax and Estates & Trusts practice groups at Miller, Miller & Canby. As both a CPA and a practicing attorney, he has developed a recognized expertise in taxation law. Please feel free to contact Glenn or any of the estate planning attorneys at Miller, Miller & Canby with your estate & tax planning needs. Learn more about Miller, Miller & Canby's Estates & Trusts practice here.