WILLS & ESTATE PLANNING
I work in the following areas wills, trusts, and estate planning:
Caveats (contesting a will)
Codicils (changing or updating your will)
Durable power of attorney (for healthcare during illness)
Healthcare advance directives ("living wills")
Mediation of estate-related issues
Non-U.S. citizens and permanent residents: QDOT trusts & more
Powers of attorney (for health care, financial matters, etc.)
Special needs trusts
Revocable and irrevocable trusts
Getting the Job Done
Most clients do not relish the thought of having their wills written, attending to estate planning, making health-care choices should they wind up in a "persistent vegetative state", or otherwise planning for an orderly transition after they pass away. In fact, most people postpone the task as long as possible. Often they wait until just before they leave for a long trip, or until after an illness that makes them realize that their failure to get their wills and estate in order may jeopardize the well-being of those who are left after they pass away.
I will be happy to help you with your wills, trusts, and estate planning, and assist you in getting all your documents in order. My job is to make our discussions as personalized and painless as possible. I listen to your needs and wishes, discuss your various choices and the ramifications of such choices, and offer alternative solutions where that is possible. This process includes making sure you have made any necessary changes to your beneficiary forms for your insurance, IRAs, 401k's, etc., to achieve your estate-related goals.
Working with or without a financial advisor
Often clients contact me after they have seen a financial advisor, accountant, or professional estate planner, and ask me to write the documents they have been advised to execute. Just as frequently, clients tell me, “My case is very simple”, or “I know exactly what I want”. Whether using a financial planner or coming up with one’s own estate planning ideas, the client is not always aware of the full picture: the financial planner may not have explained all the personal ramifications of a recommended estate plan, and, similarly, the client who initially feels s/he has constructed a satisfactory plan on the personal level may not have been aware of all the financial/tax ramifications of that plan.
I am happy to work with a financial advisor, and happy to do as the client says, but I take the time to go one step beyond: I inquire what the client wants to achieve, and why, and usually come up with creative solutions or alternatives to achieve clients’ goals.
Ascertaining your goals
Saving inheritance or estate taxes is often the main goal -- but not always. For example, someone I will call Veronica asked me to place all of her extensive farmland holdings into a trust that would spring into life immediately upon her death, with income to be paid to her husband (if he outlived her). Control of the land would vest in another person. The ostensible goal was to diminish the amount of her “estate” (everything she owned at death) so that the value of the farmland would not cause her estate to be overburdened with taxes. Since, in our free-ranging discussion, she had told me how much she loves her husband, I asked whether she realized that creating such a trust would leave her husband with no say-so whatsoever regarding the land. She realized how much that would hurt her husband, told me to disregard the tax consequences – admittedly an unusual attitude – and make sure her husband inherited the farmland outright.
Finding creative, alternative solutions
Another client, whom I shall call Klara, asked me to cut one of her three adult children out of her will. Klara explained that she had not spoken to that son in years due to his mental and emotional instability, and had no desire to leave him anything at all. At the end of a long discussion, during which it was clear to me that she still loved that son dearly, I suggested that Klara have me set up a trust for him. With her input, I wrote closely-tailored instructions for the trustee to make payments to that son based on the progress in his lifestyle and other considerations.
Issues relating to non-U.S. citizens, including G-4 visa holders
Many particular issues arise regarding non-U.S. citizens. It is therefore important for your lawyer to know what an American will, written here, can and cannot achieve if and when the client returns to his/her home country.
For example, in Germany, as in many other countries, the testator (the person writing the will) is not allowed to disinherit a child. Each child must get his or her so-called “Pflichtteil” (forced or mandatory share), and any testamentary provisions to the contrary will not be given effect. A client absolutely determined to leave as little as possible to a child in those countries might consider divesting him/herself of as much property as possible while still alive.
In Norway, regardless of what a will written in the United States provides, the surviving spouse and the children are entitled to their forced shares. This sometimes means that the spouse must pay the children out in order to stay in the family home. When there are no liquid funds to make such payment, or for other, non-monetary reasons, the best solution may be for the surviving spouse to “sitte i uskiftet bo” (to delay probate and the closing of the estate indefinitely), subject to certain conditions – a concept we do not have in this country. Knowing that this would happen when the client moved back to Norway, we were able to plan the rest of the transfer of the client’s estate accordingly.
In most countries, virtually anything to do with the transfer of land – as opposed to movable property or monetary assets -- will be governed by that country’s laws, regardless of the propriety of the will under American law. In such cases, I inquire into the foreign law – my clients often have a clear knowledge of that law – and plan for the asset distribution accordingly. When the will is probated abroad, the land in the foreign country will be transferred according to the local (foreign) law, and in most cases the other provisions of the American will are honored.
Trusts come in many different forms, and are an important part of estate planning whether the client is a U.S. citizen or not. Some foreign countries do not have the concept of trusts at all, however, and in those cases my mandate is to design other methods to achieve the same goal. Married couples, of which one or both spouses are non-U.S. citizens (regardless of residency in the United States), should take particular care to make sure their wills contain a so-called “QDOT” – a qualified domestic trust. The QDOT enables the estate to be taxed at the same rate and manner as married American-citizen couples are subject to, including the availability of the marital deduction. Without such planning, a non-U.S. citizen surviving spouse will be taxed at the rate for foreigners: just under 50%.
I will be happy to help you with your wills, trusts, and estate planning, and assist you in getting all your documents in order – including making sure you have made any necessary changes to your beneficiary forms for your insurance, IRA’s, 401k’s, etc., to achieve your estate-related goals.
When should you change your will?
Ideally, you should review your will once a year, and at the least every few years, to make certain it still reflects your wishes. In addition, whenever there are major changes in your life and/or in your financial situation, you should make sure your will reflects what may be your new wishes for distribution after you pass away. Questions you should ask yourself include:
Do I still own the same assets as I did when I wrote my original will?
If your assets have changed significantly -- for example, if you have sold a major asset such as a house or boat, or started up a business, or inherited or even lost a significant amount of money -- you will probably want to change your will to reflect the new reality. If you don't, your executor (called "Personal Representative", or "PR", in Maryland) will have to make guesses as to your intention and spend a lot of time, and money, asking the court for permission to distribute your assets in a way the PR deems fair.
Has a beneficiary (anyone who "takes" under the will) passed away since you last wrote your will? Would you like to add people to your will? Have you decided not to give someone, or a particular entity such as a charity, the assets you had originally thought a good idea?
If your original will specified particular persons or entities to whom you wish to give your various assets, and if those persons have passed away, you should revisit your will and make the necessary changes.
Has anyone who has a role to play under your will passed away, moved away, become incompetent, or is otherwise unfit to carry out the role in question?
In your will, trusts, or powers of attorney (health-care or financial), you have surely named several people to carry out important functions. Those functions include that of executor (Personal Representative) and alternates, or personal guardian for your minor children or manager of their property and their alternates, etc. If any of the persons named to carry out any of these roles has died, fallen gravely ill, become mentally incompetent, moved out of state, or is otherwise unwilling or unable to carry out the duties set forth in your will and related documents, it is time to redo your will.
If you have gotten married or divorced, or remarried, or entered into a civil partnership, your will should be reviewed.
If your marital status has changed, your new will should reflect that fact. Moreover, if you make a designation in your will to "my wife", or "my husband", or "my partner" without naming that person, you may unwittingly be sowing the seeds for a post-mortem (your mortem) court battle. A former spouse(s) or partner may decide to contest your will through a process called a "caveat", claiming that s/he was the wife/husband you meant.
If there are new children or grandchildren in the picture, you may or may not have to have your will re-written. The answer is, "It depends."
If you have children, biological or adopted, or intend to have children, you should review your will to make sure it reflects your present wishes and will adequately protect any new arrivals.
Note that in Maryland, adopted children are considered to be the same as biological children for purposes of carrying out a testator's wishes. ("Testator" is the person writing the will.)
In the vast majority of cases, testators will wish to provide for all of their children, and for the children's children. When writing your will, it is important to think through various scenarios, and to try to provide for those who will be left behind after you pass away. If you allot a certain amount of money, or specific assets, to your children (it would be phrased "my children" in your will), what if one of your children dies before you do? If you only say "my children", then only the children living when you die will inherit under your will. If the deceased child has children, then the grandchild/ren of the deceased child will inherit nothing at all.
Per stirpes: Out of the stirrups, out of the loins.
How do you forestall this outcome? The answer is to add the rather graphic phrase "per stirpes" thus: "To my children, per stirpes", I give...." The literal translation of per stirpes is "out of the stirrups of", or "out of the loins of". The effect of using these words is to provide for the children or descendants of each of your children, regardless of whether or not all of your children are still alive after your own death.
For example, let us say that you had three children, and each of your three children has three children. Suppose, further, that when you wrote your will, all of your children and grandchildren were alive, and you bequeathed one-third of your assets "to each of my children", or stated in your will "I hereby bequeath Asset X to my children, share and share alike". If all three of your children are alive when you die, each of your children will receive one-third of Asset X. When your children die, their children -- that is, your grandchildren -- will, in turn, receive whatever their parents (that is, your children) bequeath them.
But what if one of your three children has predeceased you? Would you want the two of your three children who are still living at the time of your death to "share and share alike"? That would mean that the children of your deceased child will get nothing. Very few parents would prefer that outcome, but, unfortunately, that is what would happen if you fail to use those two vital words, "per stirpes".
Now let us use the same hypothetical situation where you had three children, but one of them has predeceased you. Presume that you have received proper legal advice and wish to provide for all your children and their progeny, and not have anyone disinherited. The wording to provide for this eventually will be: "I hereby bequeath Asset X to my children, per stirpes, share and share alike. In this scenario, the two of your children still alive at the time of your death will each get one-third of Asset X, and the three children of your deceased child will each get one-third of the deceased child's one-third share, that is, one-ninth of Asset X.
Note: If your children or grandchildren are minors (under the age of 18 in Maryland Virginia, and Washington, DC) at the time of your death, they cannot take control of the assets your bequeathed them. With proper legal advice, you will have appointed a financial guardian or conservator in your will; if not, the court will appoint such a person.
Have you moved to a different state?
If you have moved to a different state, it would be wise to make sure your will conforms to the laws of that state. Testamentary laws can vary considerably from state to state -- for example, the number of witnesses required to make the will valid, or to make the will "self-proving". The latter means that the witnesses to the signing of your original will won't have to be contacted or found in order for the will to be deemed valid.
Your "probate estate" vs. your "non-probate estate"
The process inevitably requires that you list all your assets and divide them into two categories: those that will be part of your "probate estate" and those that compromise your "non-probate estate". Your "probate estate" consists of everything you own or have an interest in that does not automatically pass to another person or entity by operation of law.
Examples of non-probate assets are a jointly-owned house, or car, or bank account. Additionally, beneficiary designations (e.g., a pension, a bank account, an IRA), will take precedence over the terms of a will. The same holds true for insurance policies with a designated beneficiary. (Note: Only the person listed as the "Owner" of an insurance policy can change the beneficiary. Check back to my website periodically for more information about insurance and other matters.)
For example, if you are married, live in Maryland, and own a house with your spouse, you probably own that house as "tenants by the entireties". Those words will actually appear toward the top of your deed. They mean that you and your spouse own your home jointly, which in turn signifies that after one of you dies, the surviving spouse automatically acquires full ownership of the house -- without having to probate the house. The house thus is thus part of your "non-probate estate". (You will, of course, have to have the house re-recorded in your county's property records to show that you now own the house by yourself, and not jointly with your spouse. This is a relatively simple administrative matter.)
Once you have an overview of your assets, you will need to find the documents proving ownership and your best estimate of the value of those assets.
"If not now -- when?” ימתי א אם לא עכשיו
Hillel the Elder
When should I write my will? The answer is ... now. By posing the rhetorical question, "If now, when?" Hillel meant to admonish his listeners not to wait until the perfect time comes to do something (studying the Bible, in his case), since that perfect time may never come.
The most difficult part of writing your will may be the first step: picking up the phone or writing an email to make an appointment with your lawyer. My office is open during Covid, and we can accomplish everything over the phone, Zoom, and email.
To make the process less daunting, we can proceed in steps. What may seem to you the hardest part -- gathering your most important documents (title to your home, insurance and bank account information, retirement specifics, etc.) -- can be done at whatever pace suits you. Once we talk, I can begin to write your will, advise you on options and strategies, and create an estate plan that is tailored to your specific situation and desires. You have all the time you may wish to gather your important documents in one place to make it as easy as possible for your heirs to carry out your testamentary wishes. There are no deadlines in this process, except that:
"Never leave that till tomorrow which you can do today."
"आया है सॊ जायेगा, राजा रंक फकीर"
Hindi expression, literally: "Whoever is born will die, be it a king or a beggar."
We are all going to die, and you may as well make it easy on your family and legatees to figure out your testamentary desires. Once you realize that you can be the master of your timetable, the psychological burden of writing your will suddenly eases up. For example, you can tell me that you want your children to inherit your house, you can designate charities you wish to "take" under your will, you can bequeath specific items to specific people, etc. Your hardest job may be that of finding out current contact information for the people or charities to which you wish to bequeath part of your estate.
Once you get this far, I can virtually promise you that you will breathe a sigh of relief from just knowing you have started the process. The next steps are to get the details of your assets, such as the names and contact information of investment brokers, bank accounts, addresses of real estate holdings, etc., and convey them to me for inclusion in your will, trust(s), and other estate planning documents. This process proceeds at whatever pace you find comfortable, and need not become a burden to you at all.
What happens if I die without a will?
If you die without a will, all your assets that don't automatically go to your named beneficiaries (pay-on-death bank accounts, retirement proceeds, insurance benefits, etc.) or by operation of law (such as a jointly-held house) are distributed according to your state's laws of intestacy (dying without having written a will). This distribution varies from state to state, and may or may not be what you would have wished. The court will either appoint an administrator for the "estate", or a close relative or other person who considers herself/himself an appropriate candidate for the job will ask the court to be appointed administrator. That person will attend to paying all relevant taxes, administrative expenses, debts, and funeral expenses, and will then distribute the remainder as dictated by your state's intestacy law. In general, state intestacy laws provide for the current spouse and children. The percentages for distributions to children often vary depending on whether some or all the children are minors or not; the age of majority also varies by state. The laws of intestacy are complicated and will likely not produce the result you would have desired. It is far, far better to bite the bullet and get your will written -- the sooner, the better.
Members of the LGBTQ community should be sure to have their wills written.
The LGBTQ community should take particular note that if partners are not married under their relevant state's laws, even if they have lived together for many years, the death of one partner who dies intestate may lead to the surviving partner's being left with nothing at all under that state's intestacy laws. Moreover, in some states, within a same-sex, state-authorized marriage, if the surviving spouse is the biological parent but the other spouse dies intestate without having adopted the child/ren, that child/ren will not receive anything at all from the intestate's assets. This unwished-for result and other potential scenarios can, of course, be avoided by writing one's will.
THE JOYS OF PROBATE
"Probate is not a four-letter word."
I am indeed taking the liberty of quoting myself regarding probate -- the process of "proving" that a will is valid so its terms can be carried out. The reason is that many people have an entrenched antipathy toward probate, and go to great lengths to avoid it. Often, however, in states including Maryland, the process is relatively painless and smooth, and carries with it many advantages the testator may actually want to embrace.
Joint ownership of your home is not always a good tool in your estate-planning toolbox.
Not only is joint ownership not always a good tool. Often it actually operates as a two-edged sword that may create more problems than it solves.
If you are thinking of adding your child/ren, for example, to the title/deed on your house, note that child/ren will become a joint owner the moment you change the title, and will automatically become the owner of the house when you and your surviving spouse have both passed away. The house will therefore not have to be probated. Your first reaction may be to say, "Great. That's what I want." Perhaps it is, but think about the following considerations regarding that house.
"[I]n this world nothing can be said to be certain, except death and taxes."
-- Benjamin Franklin
Let's say that the house you bought 30 years ago for $500,000 is worth $1,200,000 when you die. You were intent on your children avoiding probate, and so you made them joint owners of your house while you still were alive. When you die, they will own the house outright, without having to probate the house. Thus far, you have achieved your goal: no probate. But let's look deeper into this scenario.
Let's assume that shortly after your death, your children decide to sell the house. Since it is now worth $1,200,000, your children will have to pay the capital gains tax on $700,000, the nominal profit on the sale of the house. The reason is that when you gave the house to your children by making them joint owners, their tax basis is deemed to be the same as yours -- the original cost of your house, $500,000. The $700,000 "profit" will be deemed to be a capital gain, and the tax burden on your children will be heavy. You have unwittingly reduced the amount your children will inherit from you because you wanted to avoid probate -- a high price to pay for having made this choice.
If your children simply inherit the house upon your death via the terms of your will, they will indeed have to probate the house by interacting with the staff of the relevant court. (In Maryland, this court is called Orphan's Court.) However, they will inherit the date-of-death value of $1,200,000 as their tax basis, and will not have to pay capital gains tax on the house if and when they sell it. Going through probate is a small price to pay for having made this choice.
"How sharper than a serpent's tooth it is
To have a thankless child!"
William Shakespeare, King Lear, Act 1, Scene 4
When you add your children onto your house's title/deed to make them joint owners of the house and avoid probate, you are giving your children the power to prevent you from selling or otherwise disposing of or using your house. Let's say your spouse dies and you want to sell your house and spend a year travelling the world with the proceeds, until all the money is used up, after which you want to move in with our children. Your children may think this is a wonderful idea -- or they may not. Your children, as joint owners of your house, now have veto power over anything you may want to do with the house, including selling it. They may want the value of the house preserved so they can inherit it when you die and use the proceeds for their own world travels. You will not be able to sell the house unless all your children who are on your title agree to the sale, since you have made them joint owners with you. You may think that your children would never behave like this -- but you also may not want to take that chance.
YOUR CREDIT IS ONLY AS GOOD AS YOUR CHILD'S CREDIT.
“We may have all come on different ships, but we're in the same boat now.”
Rev. Martin Luther King, Jr.
Once you add your children to the title of your house, your credit is only as good as their credit. If your children fail to pay their debts and are pursued in the courts by their creditors, or are sued for other reasons, what you thought of as "your" house will now be the asset of choice for attaching a lien in the amount of your child's debt. The lien can only be removed by paying off the debt, either immediately or whenever the house is sold, since the lien acts as a "cloud on the title" of your home. Once your children own your house with you, you are in the same financial boat. As regards their debt, what's theirs is theirs and what's theirs (the debt) is also yours. Neither you nor your children may have wished for this result, but it is in fact what may happen when you add them as joint owners of your house.
Another danger in adding your children to your deed is that doing so may allow your bank to "call", or "accelerate" your mortgage. In most mortgage contracts, if the homeowner changes the ownership of her/his house, the bank holding the mortgage has the right to demand full payment of the entire mortgage, often within 30 days. This unexpected result will come as a bombshell to most homeowners, and is definitely to be avoided.
"Det er mange skjær i sjøen."
Norwegian expression. Literally, "There are many shoals in the sea."
As the Norwegian saying implies, you should proceed cautiously. The taxman may come -- again -- if potential tax pitfalls are not inquired into when making any major financial decision. In addition to the potential capital gains effect of adding children to the title of your house while you are alive, as described above, or taking other action indicating joint ownership such as adding children to your bank accounts, such steps may be considered as gifts by the IRS. As I write this in the year 2020, the annual gift tax exclusion is $15,000 per person. If you are deemed to have given your children a gift, you will have to file a form with the IRS, noting the yearly amount and keeping track of the lifetime federal gift exclusion.
"I grow old ... I grow old ...
I shall wear the bottoms of my trousers rolled."
T. S. Eliot, The Love Song of J. Alfred Prufrock
Mr. Prufrock in T.S. Eliot's poem might one day be a candidate for Medicaid. Who knows? If Medicaid is or may be an issue for you, you should exercise caution when thinking of taking steps such as adding your children to the title of your home, to your bank account, to insurance beneficiary forms, and the like. Medicaid may consider these steps as gifts, which will count against your eligibility for Medicaid benefits.
Each state has its own Medicaid "look-back period". In California, the look-back period is only 30 months, while in Maryland, Virginia, and Washington, DC, the look-back period is five years counting from the date you apply for Medicaid benefits. This means that your gifts to your children (as Medicaid interprets "gifts"), or anything you sold to them or others at less than fair market value, during the five years preceding your Medicaid application, will actually lead to a penalty in terms of when Medicaid coverage can begin. Note that there are exceptions to this, which your attorney can explain to you.
DISINHERITING FAMILY MEMBERS
"Take my wife ... Please!
Henny Youngman, comedian
Henny Youngman's one-liner may sound outdated today, but for years it delighted his audiences. He actually adored his wife, and was happily married for more than 60 years before she predeceased him.
But what if your marriage has gone sour, you are locked in a contested divorce battle, and would like to disinherit your wife or husband, or one or several of your children, or at least limit what s/he/they will inherit. Motivations vary. Estate planning for testators in many situations -- for example, second marriages where both spouses have children, and one's spouse is independently wealthy -- should ideally be able to take all the circumstances into consideration.
Maryland lawmakers have been grappling with this issue for some time, and recently revamped Maryland law drastically. Effective October 1, 2020, there are entirely new formulas for calculating a spouse's so-called elective share. "Elective share" refers to a surviving spouse's right to reject the amount s/he would receive under the terms of her/his dead spouse's will, and opt for the larger amount s/he may be entitled to under state law. Virginia adheres to the way Maryland law used to be, and Washington, DC has taken its own path. At this time, all states in the United States have laws preventing the complete disinheriting of one's spouse -- that is, all except Georgia, which may become the residence of choice for testators absolutely intent on cutting some or all of their families out of their assets.
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Each decision you make when creating your estate plan will have consequences -- some intended, and some unintended. It is the role of your lawyer to guide you through the various choices, and to let you know how those choices will play out after you pass away. When you choose me as your attorney, we work together to achieve your testamentary goals and make sure there will be no surprises.
I invite you to check back periodically, as the laws of intestacy are evolving.