Annapolis, Maryland Wills, Trusts & Estate Planning

Estate Planning for Collections, From Coins to Cars - Annapolis Estate Planning

Inheriting bank accounts and IRAs may seem complicated, but they pale in comparison with inheritances that includes tangible goods, like coins, stamps, automobiles and other collectibles.

If your favorite uncle is an avid collector, be prepared for a challenge says Forbes in the recent article, “Astute Estate Planning For Art, Antiques And Valuable Collectibles.” Unless the owner of the collection has done their homework, someone in your family—maybe you—may be spending long nights gathering information, organizing and documenting that collection. If it’s your collection, here’s a list of what you should be doing to protect your collection’s worth and make it easier for your heirs.

Tracking. Personal property items are easily “lost” or misplaced. Use inventory software or keep copious records. You should also retain receipts, appraisals and other imprimaturs and bona fides of provenance.

Assignment and Transfer. Since personal property can “walk off,” it’s smart to make certain that all applicable parties, such as heirs, are informed of inventory lists or other tracking methods, with clear instructions on who gets what. You can even add in your will an addendum “Exhibits A-Z,” to make sure that nothing gets lost. Photographs, serial numbers, and other identifying data can be added for more fungible items, like firearms.

Security and Insurance. Use precautions like safes, safety deposit boxes and alarm systems because transportable valuables present greater risks of theft and of fire/disaster. There can be different insurance rules based on the item. You may need separate deductibles, endorsements, riders and proofs of location and ownership to have proper insurance coverage.

Documentation. Particularly for art and important antiques, it is vital to have documentation that supports authenticity and records provenance. This can include certificates of authenticity, bills of sale, condition reports, artists’ notes and photographs, along with appraisals and insurance reports. A gap in documentation can result in challenges in establishing provenance and authenticity.

Valuation. Most personal property is in a very illiquid market, and the price is very much whatever the market will bear. Specialized knowledge may be needed to arrive at a fair price.

Estate Tax Issues. Retain accurate inventories to make certain that all value is properly accounted for, if an estate tax return is due. It’s not uncommon for these items to be “forgotten” at tax time since, unlike securities, bank accounts and real estate, the IRS can’t easily track estate ownership of the assets, whether or not they’re taken by members of the family.

Be aware that selling a collection is not always an easy task. Values of certain collectibles change from year to year. An artist that was once prized and whose work sells in the thousands may fall out of favor and the value of their work could shrink considerably. Coins that were promoted as investment grade may turn out to be worth face or melt value only. The items that you have gathered may hold more sentimental value for you than monetary value to your heirs. By doing all of the tasks listed above and learning what the market value of your collection is from the get-go, you and your heirs will be far better positioned as to what to do with the collection: sell, save or share.

Reference: Forbes (April 8, 2019) “Astute Estate Planning For Art, Antiques And Valuable Collectibles”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Making Sure Your Aging Parent Has the Correct Plan in Place - Annapolis Estate Planning

As parents age, there are certain legal and financial matters that their adult children must attend to. They include a Power of Attorney and an Advance Health Care Directive.

It’s a delicate discussion, but when parents are aging, their children should find out if their parents have several basic estate planning documents in place and talk about their final wishes. If they have not done any planning, now is the time—before a crisis occurs.

The Monterey Herald’s recent article, “Financial planning: Making sure Mom is taken care of,” says to first make sure that she has her basic estate planning documents in place. She should have a Will and an Advance Health Care Directive. Talk to an experienced estate planning attorney to make sure these documents fully reflect your mother’s desires. An Advance Health Care Directive lets her name a person to make health care decisions on her behalf, if she becomes incapacitated. This decision-making authority is called a Power of Attorney for Health Care and the person receiving the authority is known as the agent.

Based on the way in which the form is written, the agent can have broad authority, including the ability to consent to or refuse medical treatment, surgical procedures and artificial nutrition or hydration. The form also allows a person to leave instructions for health care, such as whether or not to be resuscitated, have life prolonged artificially, or to receive treatment to alleviate pain, even if it hastens death. To limit these instructions in any specific way, talk to an attorney.

Another option is to create a revocable living trust. In some states, estates worth more than a certain amount are subject to probate—a costly, lengthy and public process. Smaller value estates usually can avoid probate. When calculating the value of an estate, you can exclude several types of assets, including joint tenancy property, property that passes outright to a surviving spouse, assets that pass outside of probate to named beneficiaries (such as pensions, IRAs, and life insurance), multiple party accounts or pay on death (POD) accounts and assets owned in trust, including a revocable living trust. You should also conduct a full inventory of your parent’s accounts, including where they’re held and how they’re titled. Parents may also need to update the named beneficiaries on IRAs, retirement plans and life insurance policies.

Reference: Monterey Herald (March 20, 2019) “Financial planning: Making sure Mom is taken care of”

Holden & Campbell, LLC – Annapolis Estate Planning

Filing Taxes After a Parent Dies - Annapolis Estate Planning

There are estate taxes, inheritance taxes and final taxes that all must be addressed when a person dies. What taxes must be paid and how much must be paid depends upon the size of the estate and what state the decedent lived in.

The death of a parent results in a flurry of paperwork, including taxes. One of the tasks that must be taken care of is what is grimly referred to as the “final” individual federal and state tax return, as explained by nj.com, in the recent article, “What tax returns need to be filed after someone dies?”

All of the income, starting at the beginning of the year up to the individual’s date of death, must be reported on the tax return. All of the tax deductions and tax credits that the person was entitled to may be claimed. This final return is typically filed by the surviving spouse or by the executor of the individual’s estate.

The final return can be either electronically filed or filed on paper. The tax preparer should also be sure to write “deceased” after the taxpayer’s name and include the date of death, so that the IRS knows that this will be the last individual return filed.

However, at the death of a taxpayer, a new taxpaying entity—the taxpayer’s estate—is automatically created to make certain that no taxable income escapes review by the IRS. Income that’s earned during the tax year up to the date of the person’s death is reported on the final individual tax return, and any earnings after that date are taxable to the decedent’s estate. Earned income of the estate is any income for which the decedent was entitled to during the year that occurred after the date of death. This could include any dividends or interest from stock or bond investments held in the decedent’s name that was collected between the date of death and the end of the calendar year.

In addition, beneficiaries of assets paid directly to them outside of probate, like IRAs already in distribution mode or life insurance policies, may be subject to what is called “income in respect of a decedent,” or IRD. Two things must apply for this to occur: (i) the asset earns interest before the balance is transferred or paid to the beneficiaries; and (ii) the interest isn’t reported on the deceased taxpayer’s final tax return. If both of these occur, then beneficiaries are responsible for reporting IRD on their own tax returns.

This is a situation where an experienced estate attorney should be contacted. 

Reference: nj.com (March 21, 2018) “What tax returns need to be filed after someone dies?”

Holden & Campbell, LLC – Annapolis Estate Planning

Without an Estate Plan, Family Members Face More Than Grief - Annapolis Estate Planning

It is so much easier to put an estate plan into place, regardless of the size or value of an estate, than it is for grieving family members to deal with courts and businesses afterwards.

The unexpected death of a beloved parent is difficult enough for family members. However, when there has been no prior planning, the family must first navigate the legal and financial system before they can even begin to mourn their loss.

The recent article published on WSAV’s website, “Family warns others to not put off estate planning” says that in one instance, the family was forced to leave their mom, while she was dying in the hospice, to try and organize the paperwork done for her estate.

An estate plan is a guide for your family. A good estate plan will include not only a will, but also a health care power of attorney and a living will.

Work with an experienced estate planning attorney and try even harder to get everyone to the table to discuss the issues.

One way to approach aging parents, is to say, “You would be helping me if you could write this down.”

Many regret not taking action sooner to save stress and energy.

"You have every emotion you could ever have, because you are about to lose your loved one and you have to deal with everything else on top of it," one woman commented.

It’s not easy to bring up these conversations with aging parents and they may often wave your questions away. However, if you and other family members can persist, you may find yourselves having unexpectedly productive—and even heartwarming—conversations.

Meet with an experienced estate planning lawyer and prepare the documents that are needed, including a will, power of attorney, medical power of attorney and others, depending upon your personal situation. Aging parents should discuss with family members what they would like to happen if they become incapacitated or when they die, and work together to create a plan. This allows the family to care for each other during the mourning process when the parent passes.

Estate planning truly is a gift to those we love.

Reference: WSAV (February 26, 2019) “Family warns others to not put off estate planning”

Holden & Campbell, LLC – Annapolis Estate Planning

Any R-E-S-P-E-C-T for Aretha’s Estate? Not Without a Will - Annapolis Estate Planning

The Queen of Soul died without putting a will or an estate plan in place. Things are now starting to get ugly. There’s a police investigation and a dispute between the estate and her ex-husband, the father of one of her four sons.

Processing the estate of Aretha Franklin is going to take far longer than if she had a will or an estate plan. The famed singer died at age 76 in Detroit, with an estate valued at tens of millions of dollars.  However, it’s going to be a long time before anything is settled.

The Detroit Free Press reported in a recent article, “Aretha Franklin's ex-husband wants a cut of her music royalties,” that recently filed pleadings in Oakland County Probate Court detail some of the fighting.

"There is a dispute between the estate and Ms. Franklin's ex-husband, the father to one of the heirs, regarding music royalties," David Bennett, a lawyer for the estate, wrote in a pleading.

Aretha Franklin was twice divorced, and the record doesn't name the man, beyond saying that he's the father of one of her four sons. It looks like it’s her first husband, Ted White, who served for a time as Franklin's manager. Franklin and White have a son, Ted White Jr. Her second marriage to actor Glynn Turman didn't occur until 1978—eight years after her youngest son was born.

The recent court pleading was filed in response to a request from Edward Franklin, Aretha’s son, for more financial disclosure from the estate, as it's being processed. Prior to Christmas, a lawyer for Edward Franklin requested that Probate Judge Jennifer Callaghan order the disclosure of monthly financial statements and other records.

Edward wants "copies of all invoices and supporting documents regarding payments to friends and relatives of the personal representative, if any, for services performed for the estate."

The lawyer for the estate, Bennett, asked Judge Callaghan to deny the request for monthly financial updates, because it "would be an exceptional expense to the estate, is time-consuming and would interfere with the administration of the estate."

The IRS filed a claim in December of last year alleging the Franklin estate owed about $6.3 million in back taxes and penalties. An attorney for the estate told the Associated Press that at least $3 million in back taxes had been paid back to the IRS since Franklin's death.

The dispute, said the attorney, relates to what the IRS claims is income. The nature of performing requires considerable overhead for transportation, hotel rooms, singers, lighting, musicians, etc. The IRS is questioning her expenses and an accountant was hired to help with past and future tax returns.

Even if the IRS was questioning the business side of Aretha Franklin, an estate plan would have preempted many other issues for her heirs.

Reference: Detroit Free Press (January 11, 2019) “Aretha Franklin's ex-husband wants a cut of her music royalties”

Holden & Campbell, LLC – Annapolis Estate Planning

A Love Story: George and Barbara Bush - Annapolis Estate Planning

Their lives were devoted to family and public service, and to each other. The passing of George H.W. Bush and his wife gave many Americans pause to consider their leadership and their devotion.

Few were surprised when George H.W. Bush passed less than eight months after Barbara’s death. Their deep connection—from his service in World War II to the Presidency and their role in public service after leaving the White House—was evident to everyone around them, says Forbes in the article, “Valuable Estate Lessons From The Passing Of George And Barbara Bush.”

The death of a longtime married couple in quick succession is often called “broken-heart syndrome” or “widowhood effect.” The thought is that the lives of two people are so entwined they can’t bear to be without each other. The time between the Bushes’ deaths also raises practical questions in estate planning. Timing is critical in an estate plan, and if the deaths of married spouses happen within a short period of time, it can make the administration of an estate more difficult.

Although the passing of long-time married spouses in close succession is not uncommon, the way in which the estate will be handled is based on the time between the two deaths and the details of their estate plan. In many instances, trusts or wills have survivorship provisions that require a spouse to survive for a specified period of time. If a spouse dies within a certain period—such as two weeks—they may be designated as having predeceased the other spouse and that may have implications under the document. Therefore, rather than having to probate the two estates successively, the estate administration is made into a simpler process.

The senior Bushes, however, wouldn’t have been aided by such a provision, because nearly eight months had passed. However, solid strong estate planning can help in a long-term marriage of older spouses to have the estate flow a certain way.

One thing President Bush might have used is a qualified disclaimer. With this, a beneficiary makes an irrevocable election to refuse to receive an interest in the property. This can be an effective tool when a surviving spouse doesn’t need those assets.

When spouses die within a short period of time of each other, there may be difficulties with beneficiary designations. Most spouses leave their retirement plans to the surviving spouse and their children as contingent beneficiaries. However, when death occurs in quick succession, the second spouse to die may not have yet rolled the first’s retirement account into their own account with beneficiaries. That can cause issues. This can mean having no beneficiary and the retirement account winds up going to the estate of the first spouse. When this occurs, there’s probate and no chance to stretch out retirement distributions.

In situations like the Bushes, where the surviving spouse doesn’t need the funds, it might be smart for the couple to rework their beneficiary planning to pass over the spouse and distribute immediately to the children in an inherited IRA.

The romantic nature of spouses, who literally cannot live without each other, is very touching. However, there are estate planning implications that must be addressed. An experienced estate planning attorney will be able to explain how the timing of one spouse’s death impacts the other, and how to prepare their estate, in case this should happen.

Reference: Forbes (December 3, 2018) “Valuable Estate Lessons From The Passing Of George And Barbara Bush”

Holden & Campbell, LLC – Annapolis Estate Planning

The Executor is Making a Mess of the Estate: What Now? – Annapolis Estate Planning

Estate litigation is never pleasant, but heirs have rights, and, in some situations, they have to fight back, when an executor is not acting in the best interest of the beneficiaries.

When siblings are able to work together to settle their parent’s estate, it may take a little time and there may be some negotiating. However, the details are worked out. Sometimes the family bonds become even stronger. There are also ugly stories where families are fractured.

This occurs when the executor acts with some (or a great deal of) self-interest, especially when it’s one of the siblings. That daughter may feel entitled to more than an equal share, because of the care she’s given the parent or because she resents her siblings’ successes, or any of a number of reasons.

What if the eldest sister gets her siblings to sign away their rights to everything? Perhaps some do, but when one sibling says no, this evil executor gets the will probated anyways. Subsequently, the lone hold-out finds out there was a testamentary trust created because she didn't sign away her rights, and—you guessed it—the eldest sister is the trustee. That’s dirty pool!

When the hold-out beneficiary requested an accounting of the trust, the evil executor/trustee refused. When an executor or trustee tries to keep the deceased parent’s estate and trust a secret, it’s not appropriate or acceptable, and she’s breaching her fiduciary duty.

nj.com’s recent article, “Your rights when family fights over a will,” explains that executors and trustees serve in a fiduciary capacity. It means they have a legal obligation to act for another (the beneficiaries) in a fair, honest, and transparent manner. While executors and trustees have the legal authority to manage the affairs of an estate or trust, she’s accountable to the beneficiaries and must inform them of what she’s doing.

When a person dies, the executor must notify, in writing, all beneficiaries named in the will (and all heirs at law, like those entitled to inherit by intestacy) that a will has been probated. This must be done within a specific number of days of the will being probated. The executor must also provide a copy of the will upon request. After receiving the notice of probate, individuals may contest the will within a specific timeframe.

When the will is reviewed, beneficiaries can see that a testamentary trust was created. Once appointed, an executor must settle and distribute the estate as quickly and efficiently as possible. Both executors and trustees have a duty to collect and preserve assets, deal impartially with beneficiaries and act at all times with the best interests of the estate and trust in mind to be certain that the estate and trust are distributed, according to the decedent's wishes.

A fiduciary also has a duty to account to the beneficiaries. Therefore, in the event a beneficiary has questions about how an estate or trust is being handled, he can request an accounting and copies of supporting documents. Likewise, a trustee is required to keep beneficiaries reasonably informed about the administration of the trust and information necessary for the beneficiaries to protect their interests. The trustee must promptly respond to the beneficiary's request for info on the administration of a trust. If a fiduciary willfully neglects or refuses to render an accounting or breaches her fiduciary duties, you can ask the court to remove her as the executor or trustee.

In this particular scenario, the older sister is legally bound to provide an accounting of the estate. If that shows that anything was done wrongfully, she may be personally liable for misconduct. She may even be liable to pay the legal fees incurred by other family members.

This can get messy, and it can be a tough time for everyone in the family. If it sounds all too familiar, you’ll want to speak with an attorney with experience in estate litigation.

Reference: nj.com (September 28, 2018) “Your rights when family fights over a will”

Holden & Campbell, LLC – Annapolis Estate Planning

Will Your Heirs Receive What You Wanted, Or Will There Be a Family Battle? - Annapolis Estate Planning

One of the reasons that people do estate planning, is to make sure that their assets go to the people they want.  However, when things change, and estate plans aren’t updated, it doesn’t always work out.

If you are like most people, most of your assets are in retirement accounts, annuities, life insurance policies and pensions, says MD Magazine in its recent article, “Making Sure Your Heirs Get What You Intend.” These accounts require that a beneficiary be named, and those assets go directly to the beneficiary on the death of the owner.

It’s not uncommon after a few years, for a person to forget which beneficiaries they specified for a life insurance policy or pension. Perhaps it’s a first spouse and they’ve now remarried. There’s no “do-over” after you’re gone, which can lead to considerable confusion and stress. It will also ultimately disappoint your intended heirs. In addition, based on whether and how some other assets are designated in estate planning documents, some states may send the matter to probate. This can be a long and expensive process, since if the estate plan was done right in the first place, it wouldn’t be needed.

To be certain the heirs you intend inherit the assets you intend, remember these points:

• Keep track of the beneficiaries you’ve designated for your accounts. If you don’t recall, check with these institutions.
• Don’t rely on cookie-cutter, one-size-fits-all estate planning products. Get a custom plan from an experienced estate planning attorney, even though it may cost a little bit more money.
• Regularly review the beneficiary designations on your financial accounts and those in your will, to be sure they’re in sync and current.

Some people think they are required to create a trust for estate planning, when a well-drafted will and clear beneficiary designations will suffice. Talk to your attorney to determine if a trust is a good idea for your specific situation. The primary reason in some cases to have a trust is potential incapacitation.  Therefore, a trust can empower heirs to manage your estate without first going to court to get a conservatorship, which can be time-consuming and costly.

A trust can also be way to manage your estate “from the grave.” A trustee is appointed to assure that assets are distributed according to specified instructions. This can be a good way to make sure heirs with dependency issues don’t burn through their inheritance quickly or spend it on the wrong things. Trusts can also be a smart way to ensure the care of a disabled relative.

A qualified estate planning attorney will help you create an estate plan, which should include a thorough evaluation of all of your assets and updating your beneficiary designations.

Reference: MD Magazine (July 25, 2018) “Making Sure Your Heirs Get What You Intend”

Holden & Campbell, LLC – Annapolis Estate Planning

Battle Over Campbell’s Estate More Complicated with Probate Frozen - Annapolis Estate Planning

The estate of one of America’s best loved country singers is facing a struggle, since the interim administrator of the estate is asking the court for the legal muscle he needs to hire accountants and other professionals.

Stanley B. Schneider, Glen Campbell’s publicist, has filed a motion in Davidson Probate Court in Nashville for additional legal powers, so he can move forward with the singer’s estate. According to The Tennessean’s article, “Glen Campbell estate 'paralyzed' as will contest looms, lawyers say,” while the estate was filed nine months ago, the court set strict limitations on his ability to act and that has hampered the probate process.

The petition alleges that Schneider's duties are now curtailed to only collecting money paid to the estate and making mandatory non-discretionary payments.  It asks Probate Judge David "Randy" Kennedy to schedule a hearing later this summer to rule on the expanded duties request.

Glen Campbell died on August 8, 2017 at age 81, after a long battle with Alzheimer's disease.

Schneider, the court-appointed administrator for his estate, recently arrived at a partial preliminary estimate.  However, it is only a small fraction of the previous estimates of its value.

He claims that the estimated estate assets are roughly $410,000. Earlier estimates of Campbell's total estate value were near $50 million.

The estimate excludes future income rights from royalties, and notes that an appraisal is required.

Three of Campbell's children have served notice that they are contesting the will, which specifically excludes them from any estate assets. His will names his wife Kimberly as executor. She and his five other children are listed as beneficiaries.

Without the power to properly value the estate and its assets, which is done by qualified professionals who have to be retained and paid, coupled with a looming federal tax deadline, this estate may take a long time to unwind, even without the will contests that are waiting in the wings.

Reference: The Tennessean (July 2, 2018) “Glen Campbell estate 'paralyzed' as will contest looms, lawyers say”

Holden & Campbell, LLC – Annapolis Estate Planning

Have It Your Way, With a Will - Annapolis Estate Planning

Without a will, decisions about your life, property and children will be made by someone who does not know you or your family. With a will, you have the ability to express your wishes. You need a will!

Having a will is not just for wealthy folks, who need to pass large amounts of money across generations. It is a legal document that protects you while you are living, protects minor children if you die and also distributes property after you pass. Less than half of all adults in America have an estate plan, according to a 2017 survey by Caring.com, and what’s worse, only 36% with children under the age of 18 have a will.

Inside Indiana Business’ recent article, “With a Will, It's Done Your Way,” explained that if you die without a will (i.e., intestate), the law of the state where you reside determines how your property will be distributed. For example, in Indiana, here’s what happens:

• If you’re married, your spouse gets half of your assets and your children/grandchildren get the other half.
• If you’re married without children, your spouse gets three-quarters of your assets, and your parents will receive one-quarter.
• If you’re single, 100% of your assets go to your children.
• If you’re single without children, your parents get one-quarter of your property and your siblings, nieces, and nephews will receive the rest.

The court will also appoint some individual to take care of your children. That’s known as a guardian, and it’s usually a family member. While that may sound OK, a judge’s criteria may not be the same as yours. It’s better if you decide which family member or perhaps skip your family altogether and choose a friend to serve as guardian. Without a will, you give up your right to choose.

Talk to an experienced estate attorney who can prepare your will to be certain that your wishes are clearly articulated and minimize the potential for others to contest the terms.

An executor (also known as a personal representative) is the individual you name to carry out the wishes detailed in your will. He or she also is responsible for settling all your affairs. Consider carefully the person you select for this responsibility. You should also name a successor executor, in case your first choice is unable to act. An executor's job includes the following:

• Determining your assets;
• Contacting those you've named to receive property and distributing it to them;
• Notifying the credit agencies of your death;
• Canceling your credit cards;
• Opening a bank account for your estate;
• Ensuring debt payments, utilities, taxes and other outstanding expenses are paid, while your estate is open;
• Paying debts;
• Closing social media accounts;
• Filing the will in the right probate court; and
• Filing a final tax return and possibly an estate tax return.

Certain assets are distributed outside of the will, including property that is owned with another person (joint with rights of survivorship), life insurance policies, annuities, retirement accounts and other accounts with a named beneficiary. Be aware that anything with a beneficiary designation passes outside of the will, meaning that directions in the will about these types of assets will not matter: the beneficiary designation overrides the will.

Reference: Inside Indiana Business (June 11, 2018) “With a Will, It's Done Your Way”

Holden & Campbell, LLC – Annapolis Estate Planning