Tag Archive for: estate planning

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4 Misconceptions About Revocable Living Trusts

What is a revocable living trust?

A revocable living trust is an arrangement in which a Grantor (the trustmaker) places their assets and property in a trust, which can be updated and revised by the Grantor while they are alive. The trust is then managed by a Trustee, who is tasked with distributing the assets to the beneficiaries of the trust upon the Grantor’s death.

A probate court does not need to distribute assets and property in a trust, because the property and assets have been allocated to the trust. Since assets in trusts are not subject to probate, having a revocable living trust facilitates the distribution of assets by bypassing the probate process, which can be both costly and timely.

If you have considered including a revocable living trust in your estate plan, it is important to be aware of misconceptions that can affect your plan and leave you with a false impression.

Misconception #1: Assets in a revocable living trust cannot be used by the Grantor.

Assets in a revocable living trust can still be accessed by the trustmaker. The Grantor of a revocable living trust has the option to appoint themselves as the Trustee, the person designated to manage the trust. If this is the case, a Successor Trustee may be appointed to manage the trust in the event of the Grantor’s death or incapacitation.

 

Misconception #2: Once a revocable living trust is signed, the Grantor’s assets are automatically exempt from the probate process.

An unfunded trust is still subject to probate. A trust is considered to be unfunded if the ownership titles of the assets are still in the name of the trustmaker.

In order to “fund” a trust, the ownership titles of the trustmaker’s assets must be transferred from trustmaker to the trust. This includes vehicle titles and financial accounts. In the event of the Grantor’s death or incapacitation, the Trustee (or the Successor Trustee) can only manage the assets in a funded trust. Otherwise, the assets may still face probate.

 

Misconception #3: Revocable living trusts are only necessary for those with large estates or many assets.

It is commonly assumed that estate planning tools, like revocable living trusts, are less important for those with smaller estates. However, an estate does not only encompass money and real estate; Estates also include vehicles, electronic equipment, art, and other valuable possessions.

Further, a revocable living trust offers the Grantor flexibility in how their funds and property will be distributed. A Grantor with minor children may prefer to hold funds in a trust, to be dispersed to their beneficiaries in increments.

 

Misconception #4: Revocable living trusts are always the correct option.

Every estate plan is different. Circumstances, family needs, and assets can all have an effect on how one chooses to plan ahead. Some individuals may find a will to be a superior choice for preserving their wishes, while others may benefit much more from transferring their assets into a revocable living trust.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.

When it comes to estate planning, navigating your options can have a great payoff. Seeking the guidance of an estate planning professional can offer much-needed assurance and security.

If you would like assistance with estate planning in Maryland or have questions regarding your situation, we invite you to contact the Law Offices of Elsa W. Smith, LLC at 410-995-7719.

 

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I am a newlywed with few assets. How can estate planning help me?

A marriage is a bond between two people who have pledged to face life together. If you have recently committed to spending the rest of your life with your spouse, there is no better time than now to establish an estate plan.

While preparing for the future can be intimidating, estate planning can ease much of this uncertainty. Newlyweds share a joint effort toward growth and stability, and estate planning is an extension of this aim. Regardless of income, asset value, or homeowner status, newlyweds are in a highly favorable position when it comes to building an estate plan. Where do you begin?

It is helpful to think of estate planning as a way to protect your assets, possessions, and medical preferences. As such, spouses can share this responsibility even if they have few assets or do not own property. A common misconception is that estate planning only encompasses real estate. However, this is not the case. Your estate includes (but is not limited to): motor vehicles, prized personal possessions, heirlooms, and investment accounts.

Newlyweds can begin (or update) their estate plan by having an attorney prepare the following:

 

Will

A well-crafted will can be a source of relief for surviving spouse, family, and loved ones. It includes the decedent’s wishes for the management and administration of their estate. Married couples often combine assets, which can change the nature of an individual’s pre-existing will.

If you have children or plan to have children, a will is a vital avenue for protecting your legacy. Inheritance and guardianship preferences can also be outlined in your will.

Those who have a will and are not yet married, but are planning to be married soon, are highly encouraged to revise their will after marriage. A change in marital status is just one of the significant life events that justify a will revision. Other significant life events include changes in residency, career, and homeowner status.

Power of Attorney

Having a Power of Attorney document in place allows you to appoint an agent to make legal, financial and personal decisions on your behalf in the event that you cannot make these decisions for yourself. Choosing an agent may take some deliberation and discussion with your spouse and the person you decide to appoint. For this reason, it is crucial to start the estate planning process sooner rather than later.

Advance Directive

Advance directives are also important regardless of the size of your estate. In this document, you may choose a healthcare agent to make medical decisions for you. The decision-making power of your healthcare agent can be limited or general. Specific medical preferences, such as “Do Not Resuscitate” orders, are also included in an advance directive.

 

As much as we try to plan ahead for emergencies, unforeseen situations are inevitable. In starting a new life together, you and your spouse should prioritize your approach to financial and medical well-being; these major decisions cannot be left to fate. Those with small estates have the ability to grow and maintain assets in the years to come and take comfort in knowing they are in control.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.

Having an estate planning professional not only offers clear communication and direction but allows for peace of mind. An estate plan is a crucial tool to help you achieve your goals, both individual and shared. If you would like assistance with estate planning in Maryland or have questions regarding your situation, we invite you to contact us at the Law Offices of Elsa W. Smith, LLC. 410-995-7719

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5 Estate Planning Myths Held by People in Their 20’s

Estate planning can be an intimidating process, but it doesn’t have to be. Having your wishes clearly defined can alleviate your family and loved ones from a great deal of stress. Planning ahead will only benefit you in the long run. As a young adult, estate planning allows you to take stock of your assets as they grow. Here are five myths that often stop people in their twenties from starting the estate planning process:

  1. Myth: People in Their Twenties are Too Young to Begin Planning Their Estate

It is common for young adults to assume estate planning is for retirees or those facing end of life. However, estate planning is equally important for young adults.

Adults in their 20’s are in a unique and beneficial position when it comes to estate planning. Many are in the process of defining long-term goals, establishing their life plan, and working toward acquiring assets while being far from retirement. It is an ideal stage in which to consider options for wealth-building and maximizing retirement benefits, and planning. In addition, it is important to consider unforeseen circumstances.

One estate planning age restriction: You must be at least 18 years old to create a will in Maryland.

  1. Myth: Estate planning only applies to real estate owners.

The belief that estate planning is only for homeowners is a widely-held misconception among people in their 20’s. Contrary to this belief, is not necessary to own a home or have sizeable assets to plan your estate.

Estate planning encompasses all of your assets, not only real estate. This includes, but is not limited to: vehicles, electronic equipment, investment accounts, family heirlooms, and valuable personal possessions.

  1. Myth: Estate planning is not necessary for those with no children or beneficiaries.

Even with no children or heirs, it is important to consider the people you leave behind and preemptively mitigate disputes or confusion that may arise in your absence.

Petcare is an often-overlooked aspect of estate planning. While a pet cannot be a beneficiary, there are ways to ensure your pet’s needs are met in the event of your death or incapacitation. One option is a pet care trust, which allows for funds to be allotted to the care of a pet after the death of its owner.

Charitable estate donation is an appealing choice for those with no heirs, and can be laid out in one’s will. It is an alternative to dying intestate, which leaves asset distribution in the hands of the state.

  1. Myth: A will is enough.

There is more to estate planning than making a will. While a will protects your assets and possessions, a will alone does not cover everything.

In the event that you can no longer make or communicate your healthcare decisions, it is essential to delineate your legal, financial, personal, and medical wishes. You may also wish to appoint an agent you trust to make these decisions on your behalf. A Power of Attorney (POA) form authorizes an agent to make legal, financial, and personal decisions on your behalf.  For example, the POA is helpful for college students who may be studying abroad and need a parent to assist with taxes or other financial matters while they are gone.

Advance directives are medical powers of attorney. An advance directive protects your right to request specific treatment for medical care or refuse medical treatment that you do not want in the event that you become incapacitated, and appoints a healthcare agent to make specific or general healthcare decisions on your behalf.

 

  1. Myth: Estate planning is a one-time task.

Estate planning is a continuous process. Get into the practice of revising your estate plan periodically, especially following significant life events. This includes:

  • Changes in marital status
  • The birth or death of family members
  • Change in homeowner status
  • Change in residency (state or country)
  • Change in career/income

Estate planning in your 20’s may not be on the top of your must-do’s, but it should be. Making important and sometimes tough decisions now will lay groundwork for the more complex planning that will come later. You will also spare your loved ones the hassle and heartache of distributing your assets if and when the unexpected happens. If you live in Maryland, contact us at the Law Offices of Elsa W. Smith, LLC to schedule your estate planning consultation today.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.