Wills, Trusts, Post Mortem Planning

A Last Will & Testament is an essential part of anyone’s estate planning as it explains how someone wants their property given away or used after their death. Someone who creates a Will is called a testator (or testatrix) and the assets they leave behind through their Will are called their “probate estate”. A Will can be drafted to place restrictions on gifted property, designate preferred guardians for children, and even create testamentary trusts.

A Will also does not transfer property owned in trust created outside the Will or other property such as bank accounts or real estate held as joint tenants, tenants by the entirety, or with pay on death designations.

If someone dies without a Will they are considered to have died “intestate” and their probate property will pass based on the intestacy law of the State or District in which they live. In Maryland and D.C. such property typically will go to a spouse and children of the testator or, if they died without immediate family, to more distant relatives or even to the State in which they lived. Although that may suit the desires of some, for many people that statutory distribution is much different from how they would have liked to have given away their assets.

Trusts are created for a number of reasons, primarily for the purpose of keeping property, whether it be real or personal, tangible and intangible, for the benefit of another individual. There are multiple types of trusts, each designed to fulfill a specific need and outcome. There are Special Needs Trusts, Credit Shelter Trusts, Revocable and Irrevocable Trusts, and Testamentary Trusts. In order to determine what type of trust you may need or be interested in, consult one of the attorneys at Byrd & Byrd.

Credit Shelter Trusts

A Credit Shelter Trust, sometimes referred to as a bypass trust, allows a married individual to reduce estate taxes when passing on their assets to designated heirs. In such a trust, it is prearranged that when the surviving spouse passes away, the assets are transferred to the beneficiary (or beneficiaries) named in the trust. One typical stipulation with credit shelter trusts is that the surviving spouse retains the rights to the income generated from the trust for the remainder of his or her life.

Revocable Trusts

Revocable or “living” trusts allow complete control to the person creating the trust, often called a trustor, creator, settlor, grantor, founder, or donor. The trustor may change, revoke, or terminate the trust at any time and take back the funds. These trusts can be very useful in allowing a trustor to reap the benefits of a trust while maintaining the power to change it at any time before death. Revocable trusts are generally used for asset management, probate avoidance, and estate tax planning; however, revocable living trusts will not protect your assets from lawsuits, or if you have to qualify for government benefits in order to pay for long term care. Revocable trusts are not used for Medicaid planning or asset protection.

Irrevocable Trusts

Irrevocable trusts generally cannot be terminated and can only be changed in limited ways after they are created. Any assets transferred to the trust may only be used or distributed by the trustee as dictated by the terms of the trust document. Although the trustor may be entitled to receive income from the trust, the trustor does not have the right to the principal in the trust. This type of trust is often used for the protection from potential creditors or for Medicaid planning purposes.

Testamentary Trusts

A testamentary trust is one created by a person in their Last Will & Testament which becomes effective only after that person has died. Although a testamentary trust will not avoid probate, it can be useful in reducing estate taxes for married individuals, managing assets given to a minor child, or providing for the care of a disabled individual.

Asset Preservation and Asset Protection

Guaranteeing the safety of your income and assets is crucial. Not only does it provide you with peace of mind, but it can also ensure your current funds will be available in the future to cover your costs as you age. In this time of economic difficulty and confusion, it is important to make informed decisions when it comes to investments, income, insurance plans, IRAs and much more. Make sure you are prepared for any unanticipated circumstances, especially the possible need for long term care, that might threaten the security of your assets. Given the complex laws and regulations associated with asset preservation and protection, a consultation with an attorney can be invaluable in helping you preserve your assets.

Social Security Retirement Planning

A person’s “Golden Years” are supposed to be full of fun and enjoyment where seniors can spend time traveling, sightseeing, spending time with loved ones, and doing all the things they couldn’t do when they were bound by the 9-5 routine of their working years.  Although this time is coined as the “Golden Years,” it can also be some of the most stressful financial times a single person or married couple can endure –being on a fixed income.  That is why it is so important to ensure you maximize your lifetime Social Security Retirement Benefits by taking advantage of various strategies available.  Using these strategies, it is not uncommon for a married couple to increase their received lifetime benefits by over $100,000.00!  Here at Byrd & Byrd, as part of our Estate Planning practice, we can also help you plan and prepare for your retirement by helping to ensure that you are receiving the maximum amount of Social Security Retirement Benefits to which you are entitled.  Please contact us if you are interested in meeting with one of our attorneys.

Medicaid Planning

Many people are afraid that they will end up in a nursing home because their family cannot provide the level of care they require as they get older. Not only does this mean losing the autonomy of living at home but it means spending all, or most, of one’s lifetime of savings. In 2011, a typical nursing home in the Maryland and D.C. area can cost over $100,000 a year. That cost is expected to continue to rise. For many people, this cost means that their savings will quickly run out and they will have to rely on government programs such as Medicaid. People who do not need immediate long-term care are in the best position to protect the maximum amount of assets. The law provides several ways to do this prior to Medicaid’s five (5) year look-back period. The “look-back” is a period of time (currently five years) during which the State of Maryland has the legal right to review your financial records and determine what, if any, transfers you have made for less than fair market value (i.e., gifts). If you have made any gifts during this “look back” period, then the State may impose a penalty period before benefits will be paid. Medicaid planning can help avoid, or minimize, this penalty period, during which you must pay with your own funds.

Even if there is a penalty period imposed, Medicaid planning can help you cure and/or reduce that penalty period, and save many of your assets through a variety of techniques.

Your best strategy is to consult with our experienced Medicaid attorneys who can advise you on how you can save your hard-earned assets and provide longer and better care for you or your loved one.