Estate Planning

Estate planning aims to maximize estate value and ensure proper distribution using legal instruments like wills and trusts. Key terms include intestate, codicil, irrevocable trust, beneficiary, and joint tenancy

In Maryland, a codicil serves as a legal amendment to a will, subject to specific requirements such as written format, testator capacity, and witness signatures. While codicils are suitable for minor changes, creating a new will is advisable for extensive revisions or multiple alterations to ensure clarity and adherence to the testator's intentions. Ultimately, the choice between a codicil and a new will hinges on preserving the integrity of asset distribution in alignment with the testator's wishes.

Divorce can have significant financial implications, making it crucial to revise your estate plan accordingly. Updating documents like wills, trusts, and insurance policies is essential to ensure assets are distributed according to current wishes. Additionally, understanding and adjusting to financial changes such as legal fees and support payments is necessary for long-term financial stability. Consulting with an estate planning attorney can help navigate these complexities and safeguard your estate post-divorce.

Estate planners in Maryland focus on minimizing both estate and inheritance taxes, the only state in the US to levy both. Estate tax applies to estates above $5 million, with a graduated rate beyond. Inheritance tax, paid by recipients, is a flat 10%, independent of estate value. Exemptions exist for relatives and certain beneficiaries, including specific scenarios like inheritances under $1,000.

Estate planning is a vital aspect of maximizing and distributing one's wealth through lawful strategies, with trusts serving as crucial tools in achieving these goals. This blog explores the differences between irrevocable and revocable trusts, emphasizing that irrevocable trusts, being more enduring and separate tax entities, offer additional tax benefits.

A revocable living trust is a flexible legal instrument allowing individuals to manage and distribute their resources based on predetermined goals. This trust can be dissolved at any time by the trustor without specific requirements. In some cases, the trustor acts as the sole trustee and beneficiary, making the trust a "disregarded entity" for tax purposes. The first steps involve defining the trust's purpose and identifying involved parties, followed by the creation of a detailed trust document to formalize intentions and obligations, with legal counsel recommended for the process.

In estate planning, trusts fall into taxable and nontaxable categories. Taxable trusts operate as independent entities, filing separate tax returns and paying taxes on generated income. Nontaxable trusts, typically with a unified creator and beneficiary, are treated as disregarded entities. Key considerations for taxable trusts include their independent status, the need for an Employer Identification Number (EIN), and strategic income distribution to optimize tax rates. Given the complexities, seeking guidance from a proficient trust attorney is crucial for successful trust establishment and management.

This article explores trusts in estate planning, highlighting their types and fundamental structure involving trustor, trustee, and beneficiary. Trusts provide a flexible way to manage property, ensuring both efficient resource utilization and clear identification of beneficiaries. The narrative emphasizes the stability trusts provide amid unpredictable events in one's estate, making them a vital tool. The example of an aging parent establishing a trust for specific asset distribution and educational purposes illustrates the practical benefits. The complexity of trusts necessitates expert guidance for effective estate planning.

When delving into estate planning to maximize the value of one's estate, understanding key terminology is crucial. This post focuses on the concept of "joint tenancy" in the context of Maryland estate planning. Joint tenancy involves co-ownership where each owner has an equal share in the property and the right to inherit the entire property if the other co-owner passes away, commonly used among relatives. This form of ownership is compared to "tenancy-in-common," which allows multiple co-owners with varying percentages to freely sell their stakes without disrupting the property's structure, making it relevant in IRC Section 1031 contexts for exchanges.

The IRC Section 1031 is a powerful tool for tax deferral and wealth-building in real estate investment. It allows taxpayers to defer their tax liability from the sale of an investment property and reinvest the profits in a replacement property. By exchanging more valuable properties, taxpayers can potentially increase their earning power and overall financial condition. In estate planning, the beneficiaries of real estate assets acquired through 1031 exchanges will receive a "stepped-up basis" equal to the fair market value of the property at the time of the original owner's death. This enables beneficiaries to sell the property without incurring a significant tax burden, resulting in a substantial financial improvement.

This post discusses two main pillars of estate planning in Maryland: the use of trusts and the minimization of tax consequences. Trusts are legal entities that can be established for various purposes, such as ensuring assets are distributed to beneficiaries in a specific manner or for a particular purpose. Trusts have three key players: creators, trustees, and beneficiaries, with the trustee being responsible for carrying out the instructions set forth in the trust. The post emphasizes the importance of selecting a trustee who can fulfill their fiduciary responsibility to the trust.

The post provides an introduction to fundamental terminology in the field of estate planning. It defines and explains five key terms: will, beneficiary, revocable and irrevocable trust, intestate, and power of attorney. It emphasizes the importance of having a basic understanding of these terms to ensure effective estate planning and consulting with professionals in the field.

In our most recent piece, we discussed some basic facts about the federal estate tax. Let's go over some other issues involved with Maryland’s estate tax.

In our most recent piece, we discussed some basic facts regarding the federal estate tax, Maryland’s estate tax, and Maryland’s inheritance tax. This post will discuss some of the other issues involved with Maryland’s estate tax.

This article should be sufficient to round up our series on Maryland’s state-level estate tax and inheritance tax...

Most people are aware that the government imposes a federal estate tax. However, fewer people know that individual estates often impose an additional tax on their own.