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While traditionally used in a courtroom context, the old adage that those who represent themselves have fools for clients could not be more true in the Estate Planning field. When planning for your future and for the security of your family, you cannot walk through the legal and regulatory minefield yourself. Despite the popularity of "do-it-yourself" will kits and other marketing gimmicks, those who rely upon "over-the-counter" products are leaving themselves and their families at risk. For this reason, an experienced estate planning attorney should be consulted in drafting such vital documents as wills, trusts, "living wills," medical care powers of attorney, and other important documents designed to protect your assets.
PREVENTING PROBATE LITIGATION: WHERE THERE'S A WILL, THERE'S A WAY
You can't take it with you, but the IRS and your heirs may fight over what's left. To provide for your future and for the security of your family, your lawyer must draft legal instruments specially designed to meet your specific needs, goals and circumstances. These needs may be met, in large part, with the following documents:
Last Will and Testament
A Will is a written instrument by which a person decides who shall receive his assets after death. If drafted effectively, your Will should contain a plan which takes into account the needs of your family and the nature of your assets while minimizing potential tax liability. It is also the appropriate instrument for designating the guardians of minor children if both parents die before the children reach the age of majority. Without a Will, state law will determine the division and distribution of one's assets -- not the person's wishes.
Maryland Living Trusts
An alternative to the traditional Will, but not a complete substitute. As its name suggests, the Grantor of a Living Trust transfers most of his assets into the trust during his lifetime. The Grantor continues to manage his assets for as long as he is capable and may even revoke the Living Trust during his lifetime. The terms of the Living Trust determine the distribution of assets upon the Grantor's death. While the Living Trust allow families to avoid the complexity and expense of probate proceedings and other administrative burdens, not all assets are appropriate for a Living Trust. Even when appropriate, the Grantor must still sign a more simplified "pour-over" Will to catch any assets not previously transferred to the Living Trust.
Maryland Living Wills
As the controversy surrounding the life and death of Terry Shiavo showed, failing to make life and death decisions can wreak havoc on an unprepared family. A Living Will helps people make life and death decisions before it is too late. This document declares that, in the event that two physicians certify that you have a terminal illness and death is imminent, you do not wish to be kept alive by artificial methods. In some states, this is combined with the Medical Care Power of Attorney into an "Advance Health Care Directive" designed to protect the individual under numerous situations.
Medical Care Power of Attorney
Beyond the provisions of a living will, a Medical Care Power of Attorney grants to others the right to make medical care decisions on your behalf, including the right to withdraw or withhold life support systems. This grant of authority goes beyond the very limited circumstances covered by the Living Will. In some states, this is combined with the living Will into an "Advanced Health Care Directive."
General Durable Power of Attorney
A General Durable Power of Attorney grants to another the right to make decisions regarding your financial affairs. This is especially useful if you are rendered incapable of managing your own affairs due to some disability. Because most state laws render ordinary Powers of Attorney void upon the individual's disability, estate planning attorneys must include language to make the Power "durable" so that it will still be effective in the event of disability -- precisely the time when it is most crucial.
Maryland Insurance Trusts
An insurance trust allows the placement of life insurance policies into a trust without gift tax or estate tax consequences. Unlike a Living Trust, it is irrevocable. The Trust is the owner and beneficiary of the life insurance policies. The biggest advantage is the ability to remove the life insurance proceeds from the insured's estate or that of his/her spouse. It may also provide liquidity for the payment of estate taxes without adding to the tax burden. Very specific notices and administrative procedures are required to take advantage of the tax benefit.