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Question #1 – General
What is the current gift tax exemption?
Answer #1
Every taxpayer can take advantage of the $13,000 exclusion, every year. A taxpayer may make as many gifts as he or she desires as long as no one person gets more than $13,000 of value in any one year. Married couples may therefore give $26,000 to each recipient; if they make a special election, the entire $26,000 can come from one partner’s property.
Question #2 - Trusts
What kind of protections can I get if I create a trust rather than a standard last will and testament?
Answer #2
A trust can give you:
• Control--by protecting your beneficiaries from fraud or mismanagement of your assets, especially in case of your disability or death.
• Continuity--by continuing to manage your assets appropriately if you encounter a life-changing event.
• Privacy--by keeping your affairs out of the public record. A will becomes a public record when it's filed with a probate court upon your death, so if you use just a will for estate planning, anyone can access it. However, almost with any trust, an experienced Estate Planner would recommend a pour-over will for the applicant to cover anything and everything not placed in the trust.
• Tax advantages--by distributing your assets in a way that minimizes your tax burden, or that of your beneficiaries.
There are many types of trusts, each designed to accomplish specific goals. Trusts can be great tools, but they're complex, so it's important to understand how they work and how to get started.
Question #3 – Advance Directive
If I have changed my mind about receiving life support and being an organ donor, can I change my Advance Directive easily?
Answer #3
You may revoke your Advance Directive at any time. You are completely in control of your health care directions, and if your desires change at any time, you should destroy the original and execute a new Advance Directive to reflect your wishes. You should also inform all who have a copy to return it to you to be destroyed, and let them know that you have revoked it, as your health care directions have changed, and if possible, provide them with a copy of the new Advance Directive.
Question #4 – Wills
What can a will not do?
Answer #4
A will cannot cover property held as Joint Tenants/ or Tenants by the Entireties, or property transferred to a living trust. A will cannot cover proceeds of a Life Insurance Policy, money in a pension plan, IRA, 401(k) plan, or other retirement plan. However, you may on your own change the name of the beneficiary on the forms provided by the insurance agency, financial institution, etc. A will cannot cover stocks and bonds held in beneficiary forms. Additionally, a will cannot cover money in a payable-on-death bank account, as a simple form can be obtained from your bank to change the beneficiary listed.
Question #5 - General
What is the Maryland estate tax?
Answer #5
According to the Comptroller of Maryland website - The Maryland estate tax is a transfer tax imposed on the transfer of assets from an estate. The tax rate is limited to 16 percent of the amount that the estate value exceeds $1,000,000. It is based on the maximum credit for state death taxes allowable under § 2011 of the Internal Revenue Code. It is calculated by deducting the inheritance tax paid to the Register of Wills from the allowable credit.
Question #6 – Wills
I am trying to determine whether I need a simple will or if I should go with a trust and pour over will to protect my assets, can you tell me what the cutoff amount is in Maryland? Knowing this would assist me in making a decision.
Answer #6
A Maryland estate tax return is required to be filed for every estate whose gross estate plus adjusted taxable gifts equals or exceeds $1,000,000. If your assets and net worth are less than $1,000,000, no return is required and a simple will may be sufficient. If a return is required, the tax rate is limited to 16% of the amount that the estate value exceeds $1,000,000.
*We recommend that you speak with a qualified Estate Planning Professional if your total assets and net worth equal or exceed $1,000,000.00 so that you can plan properly.
Question #7 – General
What types of gift are generally not taxable?
Answer #7
Generally, the following gifts are not taxable gifts: gifts that are not more than the annual exclusion for the calendar year; gifts to a political organization for its use; gifts to charities; gifts to one's (US taxpayer) spouse; Tuition or medical expenses one pays directly to a medical or educational institution for someone.
Question #8 – Advance Directive
I just underwent a severe surgery and the Nurse asked if I had a Living Will ( “Advance Directive”), I said no but went home and looked it up on the internet. If I have one drafted, who do I give it to and will they listen to it?
Answer #8
You should distribute copies of your Advance Directive to your health care agent, family, doctors and/or medical facility most likely to treat you, otherwise it will be wasted time, money and words on a sheet of paper. Your Advance Directive should be in the hands of the people who need to know about it, so that your health care directions are carried out in accordance with your wishes.
If your Advance Directive is valid (signed by the appropriate amount of witnesses, and the person whom you have listed as your health care agent is not in violation of State law), then your health care agent, doctors and medical facility most likely to treat you must follow your wishes regarding your health care treatment.
Question #9 – Wills
I just joined an organization that I would like to include in my estate plan. I had my will drafted at least four years ago, in 2007. Can I do this easily?
Answer #9
You may make changes to your will whenever desired and should when your current situation changes. For instance, if you move to a new state, get married or divorced, have a baby, have step children or adopt, and if you acquire or dispose of substantial assets, you should change your will to reflect your current situation.
You may make changes by adding a codicil to your existing will or by creating an entirely new will.
Question #10 – Wills
I have multiple digital assets – facebook, twitter, linked In, gmail, Hotmail and yahoo email accounts, a Kodak picture gallery account, a Snapfish picture account and several registered domain names. I heard through some friends of mine that there are ways to include this information in my will or something like that. Can you explain this process/procedure?
Answer #10
You are absolutely correct. There are ways to make reference to your digital assets in your estate plan so that your digital assets upon your death are either terminated or forwarded to a beneficiary that you named prior to your death. MVP works with a company called Entrustet (www.entrustet.com) who has developed software that allows for you to list all of your digital assets and either provide a beneficiary that the asset will be forwarded to upon your death, or state that the account/asset should terminate upon your death. This list is then incorporated into your will by reference. The company listed above only provides the program to list your digital assets, you then would go meet with a qualified Estate Planning Professional to have this list incorporated into your will.
MVP Law Group would like to thank everyone who contributed a question or comment.
Our next “Estate Planning Q & A Forum” is scheduled for Friday, October 21st, 2011!
Please remember to submit your questions/comments on our Website, Facebook or Twitter.
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