Estate Planning FAQs
Frequently Asked Questions About Estate Planning and Probate in Maryland
- What is Estate Planning?
- What is a Will, and do I need one?
- What is Probate?
- Can I avoid Probate?
- What is an Advance Healthcare Directive?
- What is a Power of Attorney?
- What is a Living Trust?
What is Estate Planning?
Estate Planning is the process where you arrange your assets to reach their maximum potential so that they work best for you. Additionally, it allows you to direct where those assets go after death. This can be accomplished through the use of wills, trusts, tax planning, and insurance.
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What is a Will, and do I need one?
A will is an important legal document that directs how your property will be distributed after your death. In addition to providing for property distribution, a will has several other purposes, including:
- Allows you to name a Personal Representative to handle your estate.
- Decide how estate taxes will be handled.
- Allows you to choose a person you have confidence in to become the legal guardian of your minor children.
- If you die without a will, Maryland’s intestacy statutes will determine how your estate is distributed.
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What is Probate?
Probate is the court-supervised process of inventorying and distributing your assets in accordance with your will. Property involved in the probate process includes:
- Items listed in your will
- Real property titled in individual name
- Life insurance proceeds paid to your estate
- Social Security and Veterans Administration benefits
- Civil lawsuit monetary damages
- Trusts written in your will (Testamentary Trusts)
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Can I avoid Probate?
There are several ways for property to skip the probate process. Non-probate property includes:
- Real property held in Joint Tenancy or Tenancy by the Entirety
- Placing assets in a Trust (not a Testamentary Trust)
- Pay on Death Accounts (POD)
- Transfer on Death Securities (TOD)
- Named beneficiaries on 401k, Health Savings Accounts (HSA), and IRAs
Though these items do not go through probate, they are still included in your gross estate, so they are subject to Federal and State Death Taxes. To find out how to minimize your potential estate tax, contact our office to schedule your meeting with our Annapolis, MD Estates and Trust Attorney.
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What is an Advance Healthcare Directive?
An Advance Healthcare Directive is legal document that allows you to express the type of medical treatment you want if you are deemed terminally ill or unable to make your own competent decisions. It also permits you to appoint a Healthcare Agent, who is empowered to make healthcare decisions on your behalf when you are terminally ill or unable to make your own competent decisions.
A Power of Attorney (POA) is a written document where you, as the principal, appoint another individual to act as an agent, who is authorized to perform specific acts for the principal. There are various forms of POAs:
- General POA: allows the agent to perform a variety of acts
- Limited POA: allows the agent to perform a few specific acts
- Medical POA: the agent becomes responsible for making medical care decisions when the principal becomes incapacitated. Medical Power of Attorney is also referred to as Durable Power of Attorney.
The State of Maryland’s General and Limited Power of Attorney Act, effective October 1, 2010, provides two statutory form financial powers of attorney: a Personal Financial Power of Attorney and a Limited Power of Attorney. Although there is no legal requirement that the forms be executed, the Act provides that a person (including banks, insurance companies and brokerage firms) may not refuse to accept an acknowledged statutory form financial power of attorney.
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What is a Living Trust?
A Living Trust, also called an Inter Vivos Trust, is a financial and estate planning tool that allows you to avoid the probate process and provides for long-term asset management should you become incapacitated.