Estate Planning

In the Matter of Watkins (2017) marks Maryland’s first application of the unclean hands doctrine in an estate case, where a surviving spouse sought an elective share after allegedly procuring a marriage through undue influence. The appellate court found the doctrine applicable, barring the claim as it was tied directly to improper conduct. This case illustrates how equity principles can override statutory rights when fraud or manipulation is involved.

Transferring property in Maryland, whether by adding a co-owner or transferring full ownership, is a complex process requiring accurate preparation of a new deed. Key steps include preparing the deed, notarization, filing a lien certificate, and paying transfer and recording fees. Consulting an expert is highly recommended to avoid costly mistakes.

Maryland law protects surviving spouses from disinheritance through the elective share, allowing them to claim a portion of the augmented estate, which includes probate and non-probate assets. This right ensures fairness, but spouses must act within strict deadlines to claim it. The amount varies based on whether the decedent left surviving children or not.

This blog explores key distinctions between types of property ownership: fee simple absolute, fee simple subject to condition subsequent, and fee simple determinable. Each form affects control, transferability, and estate planning strategies. Understanding these distinctions is essential for effective property and estate planning in Maryland.

Life estate interests grant property rights for the duration of a holder’s life, with future ownership predetermined. They offer benefits like avoiding probate and enabling multi-beneficiary planning, often within families. However, they can carry tax implications and are generally irrevocable, so careful planning is crucial.

In Maryland, a will can be contested by an interested party, such as a beneficiary or heir, if there are legitimate grounds. Common reasons for contesting a will include lack of testamentary capacity, undue influence, fraud, or failure to meet legal requirements. The challenge must be filed within 6 months of a personal representative being appointed. The process involves submitting a formal petition to the Orphan’s Court, presenting evidence, and possibly appealing the decision if the challenge is unsuccessful.

Selecting a personal representative (PR) for your will is crucial. The PR ensures the will’s terms are carried out, managing debts and distributing assets. Trust, dependability, and competency are essential qualities in a PR. It's also important to consider how the PR’s relationship with other beneficiaries might affect the process. Careful selection is key to avoiding issues during estate administration.

In Maryland, estate administration involves handling a decedent’s assets and debts. If the decedent had a viable will, the estate process is simpler, as the will provides instructions for distribution. The will must be filed with the Registry of Wills or the Orphan’s Court, and a personal representative is appointed to manage the estate. If there’s no will, the estate is handled according to Maryland’s intestacy laws. The personal representative pays debts and distributes assets, following the will or intestacy rules. Estates under $50,000 are considered small, while those above are regular, with some exceptions for spouses.

In Maryland, a trust is created through a "declaration of trust," where the trustor transfers assets to a trustee who manages them for the beneficiaries. The trustee assumes a legal obligation to follow the trustor's instructions. Trusts can end when a beneficiary passes away, a set date or event occurs, or when assets are determined to belong to the beneficiary. The Maryland Discretionary Trust Act provides rules for creating and managing trusts.

Direct transfer ownership is an essential estate planning tool that allows Marylanders to transfer assets outside of probate. There are three key subtypes: beneficiary designations, which apply to life insurance policies and retirement accounts; payable/transfer on death accounts, used for bank and brokerage accounts; and revocable/irrevocable trusts, which provide flexible asset distribution.

Life estate interests provide present possessory rights to the holder while allowing the original owner to control future ownership. This structure is commonly used in estate planning to ensure that property ultimately passes to a designated beneficiary. The main advantages include limited ownership control and predetermined future distribution. However, the downsides include increased legal complexity and a trend against limited ownership structures due to their technical nature.

Marylanders can hold title to property in different ways, impacting estate planning. Individual ownership gives full control but requires inclusion in a will for smooth distribution. Co-ownership structures include tenancy-in-common (TIC), allowing fractional interests with flexibility, and joint tenancy with rights of survivorship, where ownership automatically transfers to surviving co-owners, avoiding probate.

A last will and testament in Maryland consists of several key sections. It begins with a declaration of intent, which certifies the creator’s wishes. The next sections identify family members and beneficiaries, followed by the executor (personal representative). The will then outlines real and personal property bequests, specifying how assets are distributed.

Tenancy-in-common (TIC) is a form of property ownership in Maryland where multiple individuals or entities hold undivided interests in real estate. TIC interests can be freely transferred, lack a right of survivorship, and may be included in a will. They are often used for investment purposes, including revenue-generating properties, and can be involved in a 1031 exchange to defer capital gains taxes.

A trustor (also called a settlor) creates a trust to control asset distribution, appointing a trustee to manage it under a fiduciary duty. Trustees must follow trust instructions, ensuring assets are used as intended. Breaching fiduciary obligations can lead to serious consequences, including financial restitution, removal, and even criminal charges.

Wills are highly customizable, with each will having a structure tailored to the creator’s specific preferences and estate. One key section in a will is the Identification of Executor/Personal Representative, which must clearly identify the individual appointed to manage the estate, including their full name, address, and phone number, as well as any alternates.