A quick-witted mechanic once told a customer, “I could not fix your breaks, so I made your horn louder.” In life, instead of directly confronting an issue, we sometimes try to cover it up or avoid it completely. The planning for the distribution of one’s finances and family obligations after death is uncomfortable for some but a necessity for all. Nobody likes to think that he or she will die eventually, but it is incumbent upon each and every person to plan for this event.
The first and best way to plan for these eventualities is by creating an estate plan. An estate plan is a set of documents by which a person lays out this vision. Estate planning is a necessity regardless of one’s current or projected financial situation. People tend to think that only those with large bank accounts or tremendous portfolios need to worry about “estate planning.” But the truth is that those with meager means can face the same family squabbles as the rich. And this does not even take into account planning for one’s children
Each of the documents that comprise an estate plan helps people avoid the problems that often arise upon death. Many of these are problems that people never consider during their lifetime or choose to ignore until it is too late. The alternative to being prepared, however, is that the courts can and will make decisions for you. For example, without proper estate planning, the courts will be the ones to decide who watches over a person’s surviving minor children or what to do with any monies left over. A properly-prepared estate plan will let individuals decide for themselves the best choices for their own families. Such pertinent topics include: who should care for minor children, who should receive what property, which charitable organizations should receive a share of their assets, and who should wrap up a person’s affairs.
While there are a number of documents that comprise an estate plan, this article will focus on the central one: the Last Will and Testament. Many people assume that if they die without a Will, their spouse will get all of their money and will have all of the decision-making power. Unfortunately this is not the case. State law is indifferent to the individual needs of a person and operates to distribute assets regardless of that person’s desires. In Maryland, the state grants only a portion of the assets – between one-third and one-half – to the surviving spouse. The rest of the estate goes to certain other family members. The state laws do not take into account any personal relationships one may have. The state laws also do not take into consideration a person’s own preferences. The best way to avoid having the state make all these decisions is to have a Will. A Will is a legal document that is designed to ensure a relatively easy and simple passing of one’s property from generation to generation. A Will enables people to direct the distribution of their assets. For example, they can ensure that their spouse should inherit them, or which child should get the family china, or which organization should receive their support.
Besides financial considerations that are taken into account when one decides to have a Will prepared, another primary benefit is the naming of the guardian. A guardian is one who is legally responsible for the care and management of the person or property of a minor. Many people who have minor children do not think about who should take care of their kids in the event that both parents pass away. Yet, if such a tragedy were to occur and the parents did not have a valid Will prepared, the court would have the final say on who would be responsible, or be appointed “guardians,” over their minor children. When one considers this context, it is obvious why a Will is a necessity for everyone. A court’s decision regarding these matters can never be as good as a parent’s own choice. A Will allows a couple to make this fundamental decision themselves without interference from a judge who, despite his or her best intentions, is not familiar with what is best for the children.
Like all states, Maryland has laws that specify who may “wind up” the personal affairs of someone who has died. This position is commonly referred to as the “executor.” Maryland lawmakers have created a very expansive list of people who may be appointed executor. One would be surprised to find out that the law allows a person’s creditor to be appointed as an executor of the estate. This may well mean that the interests of the executor are at odds with the interests of the family. Moreover, even when a creditor is not named as executor, the court will often appoint one sibling to serve as executor, obviously to the exclusion of the other siblings. This can lead to significant internal family strife, as fights often ensue over whether the division of the inheritance was really fair or whether the sibling who is now the executor has taken advantage of the position. By having a properly drafted Will, one avoids this undesirable scenario by appointing someone to serve as executor who will be fair and honest. A person can choose anyone he or she wishes to fill this position, thereby reducing the chances of family strife after death. These issues, choosing an executor and a guardian, arise for all individuals regardless of their financial situation in life.
For those who have amassed wealth during their lifetime, a Will can be a useful tax avoidance tool. Generally, the federal government taxes the value of a person’s property that exceeds $5.25 million, or $10.5 million for a couple. Although the federal taxation does not affect most people, Maryland’s estate tax is levied on property worth significantly less: 16 percent of the value of any property worth more than $1 million, inclusive of retirement savings and life insurance. While a thorough treatment of estate tax planning is beyond the scope of this article, it is worth noting that consulting a knowledgeable estate planning professional can greatly minimize the potential tax burden.
In conclusion, regardless of one’s current financial picture, it is important that every individual, especially one with a family, take the time to write a Will. The Will provides the best means to ensure that hard-earned wealth is passed to descendants with a minimum of cost, both emotional and fiscal. A Will appoints a guardian for one’s minor children if both parents die, it can specify how to divide up property, and it can help avoid any taxes that may be due upon death. No one wants to build a beautiful family only to see that family fight over possessions when he or she is gone. To prevent this, you need a Will.â—†
The Attorneys at Elefant, Neuman & Katz have evening and weekend hours and make house visits to better and more conveniently serve their clients. The Attorneys at Elefant, Neuman & Katz, LLC can be reached at (443) 814-9897 or info@enklawfirm.com
