Estate Planning and Will Writing Tips

Planning an estate and writing a will are two important steps that anyone can take to aid in planning for the future. No matter how small or large, everyone has an estate, and planning for the distribution of this estate upon death can save many headaches down the line. Listed below are a few will writing tips to aid in the process.

Organization

One of the most important tips for writing a will is to keep it organized. Create a storage system for all financial records, titles, or insurance claims in a safe, marked location, which can be easily found by a family member. This ensures that all the proper information that is needed during the probate process can be found. This is also a great time for an individual to review all of his or her paperwork in order to make sure the wording is clear, there are no existing errors on the documents, and that any beneficiary designations are not out of date.

What is probate property?

When writing a will, it is important for an individual to understand which of his or her assets are subject to probate. Regardless of if a will is present, many assets must still go through the probate process. This is to ensure that after an individual’s death, all of his or her financial obligations are met, which may include selling parts of the estate that are subject to the probate process. There are certain assets, however, that avoid this route and may pass directly to any named beneficiaries. IRA accounts, life insurance policies, 401(k)s are common examples of non-probate property. Those assets that pass through internal designations cannot be modified by your will.

Professional Guidance

Although it is not necessary, seeking direction from an experienced attorney can aid greatly in the will planning process. These individuals can answer any questions about creating a will, maintaining a will, and the entire probate process and distribution of assets upon death.

Things to Consider Before Planning Your Estate

Planning an estate is not something that anyone wants to think too much about. After all, you are planning for your own passing, which is never an enjoyable thing to consider. However, there are a handful of considerations that you should make before you start drafting your will.

Your Immediate Family

The first thing that you should think about is your own immediate family. Do you have a spouse? Do you have an ex-spouse? Do you have any children? How many do you have and how old are they? Are they from your current marriage or from a previous one?

Your immediate family’s situation is often the most important thing to think about when you plan out your estate. How you distribute your assets to them can make a huge impact on their lives.

For example, if you have two children, and one of them is a doctor but the other is a struggling painter, then it can make sense to give more to the artist than to the doctor. However, if there is bad blood between the two, then not splitting things evenly might lead to the will being contested, which would take legal fees out of the estate to resolve, resulting in less for both of them.

Sometimes, there may be other reasons for splitting your assets unevenly between your immediate family. Many people use their wills as a final way to show their preference for one person over another. Deciding if this is something that you want to do, and how you want to do it, is something to carefully consider before sitting down to draft your last will and testament.

What is "community property"?

"Community property" is a legal concept in which all marital property is considered equally owned.  This concept comes into play when couples choose to divorce.  In some cases, this may affect how property is probated.  Maryland, Virginia and D.C. are not community property jurisdictions. 

Does your spouse have a claim to your estate?

In some states, there is a statutory share that is mandated to  go to a spouse regardless of whether your will bequeaths it.  This share is described in the law as "dower" and "curtesy" rights.  Marital property laws differ from state to state.  Maryland abolished dower and curtesy rights in 2013, Virginia abolished them in 1991, and D.C. abolished them in 1962.  

How Much You Have to Give

How much you have to give in your will is always a limiting factor to what you can do. In fact, for some people without many assets at all, deciding not to have a will might even be a fine decision.

Before drafting your will, however, it is a wise decision to make an extensive and detailed list of everything that you own. If you do this, you will rest assured that you are not leaving anything out, and are controlling who gets everything.

Estate Taxes

A final thing to consider is estate tax. Minimizing how much money goes to the government maximizes how much ends up in the hands of the people you want to give it to. This is generally no longer a problem, as the federal estate tax for 2019 has been waived up to $11.4 million for an individual and $22.8 million a married couple.  Maryland will exempt up to a $5 million estate in 2019. D.C. increased, and then lowered, the individual exemption so that it is now $5.6 million in 2019.  Virginia has no estate or inheritance tax.  Because Congress and the local jurisdictions are always changing these exemptions, it will be important to review your estate plan every few years.  For instance, the current federal exemptions are due to expire in 2025.

Revocable living trusts

Is a Revocable Living Trust Right for me?

You may have heard the advertisements on the radio or received an invitation to a talk about "reservoir trusts." These trusts are a fancy name for revocable living trusts.  Revocable living trusts are not for everyone.  Call us or come in for a discussion of the benefits and disadvantages of using a trust instead of a will. 

What is a Trust?

A trust is a contractual arrangement between the party who enters property or assets into it for the benefit of others, called the settler, and the person entrusted to manage those properties and assets, called the trustee. The purpose of a trust is to execute the distributive intent of the settler with regard to all property and assets placed into the trust and each of the intended beneficiaries. A living trust can remain in effect for many years after the settler’s death, or terminate many years prior.

Trusts coordinate the distributive intent of the settler with the consummation of time and circumstances required for a beneficiary to legally take possession of a parcel of property. For example, a father might wish to pass down to his teenage son a collection of rare hunting rifles, but the son cannot legally take possession of the collection until age 21. Under these circumstances, the trustee would be charged with possessing and properly preserving the collection until the intended beneficiary becomes 21 years of age or whatever age the settler deems appropriate and specifies in the terms. Also, the settler may establish conditions necessary for the receipt of property, such as, for example, specifying that the son must have graduated college in order to inherit the prized firearms.

Trusts provide professional preservation of items requiring special care, such as wine collections, and ensure that complex financial holdings appreciate at acceptable rates.

What do “Revocable” and “Living” Mean?

A revocable living trust can be changed or repealed by the settler at any time so long as the settler is capable of making legal decisions, whereas an irrevocable living trust cannot amended once it is executed. A living trust is one created and effective during the life of the settler, while a testamentary trust is one written into a will and which becomes effective upon the death of the settler.

How CAN a Trust Serve Me Better Than a will?

Each parcel of property specified in a trust circumvents probate court and will be managed and distributed exactly according to the language of the trust. This provides the settler with the advantage of certainty regarding the distribution of assets because probate courts can sometimes produce unpredictable and unintended results. Also, the fees necessary to execute a trust are clearly recognizable and eliminate the uncertainty of costs associated with probate court.

A living trust also allows flexibility while the settler suffers periods of incapacity. Using durable power of attorney, the trustee or other designee of the settler can amend the trust during such periods while a will cannot be altered while the testator is incapacitated.

CAN i avoid taxes with a trust instead of a will?

No.  If estate taxes are owed because the estate is large enough to be taxed, there will be no taxable benefit to having the assets pass through a trust rather than through a will.

Does a Trust Eliminate the Need for a Will?

Surprisingly, no.  Depending on the nature of the estate assets and the characteristics of the beneficiaries, a trust might not be the best choice for passing down one’s estate. A trust does have the ability to replace a will entirely, however, it is beneficial for a settler also to create a will also because assets that are acquired after executing a trust, and therefore not expressly identified in the trust, will be pass through the probate process, and a will can act as a catch all such items.  When we draft a trust document intended to replace a will, we generally will write a "pour-over" will which states that any property that was not transferred during one's lifetime into the trust will be distributed to the trust.

Drafting a will or a trust

Making a Will

The death of a family member is traumatic. Whether the loss was sudden or the end of a long illness, emotions tend to run high and sometimes prevent people from acting in their own best interest.

Wills and Trusts are created in order to allow a person to ensure that their belongings and everything they worked hard for is distributed in a way that would please them. Specifically bequeathing items is intended to prevent arguments or hurt feelings among the beneficiaries. Most importantly, wills help a person ensure that their wishes are followed rather than allowing the courts to distribute their estate.

How much do we charge to draft a Will?

A simple will costs $500.  More complicated wills and trusts are drafted based upon our hourly fee.  Call us for a consultation.