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Wednesday, November 23, 2011

Next Estate Planning Q&A Forum - Friday, January 13, 2012

MVP Law Group is excited to announce the launch of our “Estate Planning Q & A Forum.” Every other Friday, we will post the 10 most frequently asked questions received during the week from our Facebook/Twitter followers and website visitors. We will answer those questions on our Estate Planning Blog.

Our next “Q & A Forum” will take place Friday, January 13th, 2012. Act now and submit your questions!

Monday, November 7, 2011

MVP LAW GROUP – Estate Planning Q&A Forum, Friday, November 4, 2011

MVP Law Group, P.A. makes available the information and materials in this forum for informational purposes only. The information is general in nature and does not constitute legal advice or any contractual obligations. Further, the use of this site, and the sending or receipt of this information, does not create an attorney-client relationship between us. And, therefore, your communication with us through this forum will not be considered as privileged or confidential.

Question #1 – General
What's the difference between an inheritance tax and an estate tax?

Answer #1
The inheritance tax is imposed on the clear value of property that passes from a decedent to some beneficiaries. The tax is levied on property that passes under a will, the intestate laws of succession, and property that passes under a trust, deed, joint ownership, or otherwise. The tax is collected by the Register of Wills located in the county where the decedent either lived or owned property. Property passing to a child or other lineal descendant, spouse of a child or other lineal descendant, spouse, parent, grandparent, stepchild or stepparent, siblings or a corporation having only certain of these persons as stockholders is exempt from taxation, all other individuals are taxed at a rate of 10%.
The Maryland estate tax is a state tax imposed on the transfer of property in a decedent's estate. Accordingly, an estate tax return is required for every estate whose federal gross estate equals or exceeds $1,000,000. Therefore, if your federal gross estate does not equal or exceed $1M, you do not have to worry about the Maryland estate tax. The tax rate is limited to 16% of the amount that the estate value exceeds $1,000,000.

Question #2 – Trusts
What does it mean to have a living trust and why is it important?

Answer #2
A living trust, also called an inter vivos trust, is a trust which is effective during the lifetime of the person who created the trust. The person who created the living trust, the creator (grantor), may change the terms of the living trust during his/her lifetime. A living trust typically contains instructions for managing trust assets during the creator's lifetime as well as instructions for distributing trust assets upon the creator's/grantor’s incapacity or death, thereby eliminating the need for conservatorship or probate proceedings.

Question #3 – Wills
If my children are under 18, still legal minors, can they inherit anything that I leave them?

Answer #3
The Maryland Uniform Transfers to Minors Act (MUTTMA) allows the donor of the gift to transfer title to a custodian who will manage and invest the property until the minor reaches the age of 21.

Question #4 – Advance Directive/Living Will
Does power of attorney medical care mean that only my attorney can make decisions regarding my health?

Answer #4
The term ‘power of attorney’ is a term of art; it does not mean that your attorney may make decisions regarding your health. You may in fact appoint your attorney to serve as your health care agent; however, anyone whom you trust may serve as your health care power of attorney and/or financial power of attorney.

A power of attorney is a document that allows you to appoint a person or organization to handle your affairs while you're unavailable or unable to do so. The person or organization you appoint is referred to as an "Attorney-in-Fact" or "Agent.

Question #5 – Trusts
If I create and irrevocable trust and later decided that I need to amend it, is there really nothing that can be done to change it?

Answer #5
An irrevocable trust is a trust that cannot be modified or terminated without the permission of the beneficiary. The creator/grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust. This is the opposite of a "revocable trust", which allows the creator/grantor to modify the trust.

Question #6 –Wills
What is probate?

Answer #6
The Office of the Register of Wills for the State of Maryland provides the following:
The literal interpretation means to prove, as in proving one's will. It can be done administratively in the Register of Wills Office or judicially by the Orphans' Court when necessary. It is the marshalling of assets, the payment of all creditors and the transference of all property in the decedent's name to the beneficiaries either named in the will or who would inherit under the laws of intestacy (dying without a will).

Question #7 – Wills
What property is included in an individual's probate estate?

Answer #7
An individual’s probate estate includes only property subject to estate administration after the death of the individual. Examples of probate property are houses, cars, furniture, stocks, bonds, and bank accounts titled in an individual’s name. Examples of property not typically included an individual’s probate estate are assets which pass pursuant to a beneficiary designation form such as life insurance policies, annuities, and certain retirement accounts, or assets held jointly with others with rights of survivorship, or assets titled in the name of the deceased individual's trust.

Question #8 – General
What is a conservatorship?

Answer #8
A conservatorship is a court procedure where a Judge declares an individual unable to take care of his/her own legal matters and appoints another individual, known as a conservator, to do so.

Question #9 – Trusts
In what ways can I protect my child who has special needs in case of my death? Is there anything special that I need to do?

Answer #9
You could create a Special Needs Trust. A special needs trust is created to ensure that beneficiaries who are disabled or mentally ill can enjoy the use of property which is intended to be held for their benefit. In addition to personal planning reasons for such a trust (the person may lack the mental capacity to handle their financial affairs) there may be fiscal advantages to the use of a trust. Such trusts may also avoid beneficiaries losing access to essential government benefits. A common feature of trusts is that they may be run either by family members (a private trust) or by trustees appointed by the court. Especially where a trust is to be established for a disabled child or young person, great care is generally taken in the choice of appropriate trustees to manage the trust assets and to deal with future replacement appointments.

Question #10 – General
What is estate tax and how does it affect me?

Answer #10
The Maryland estate tax is a state tax imposed on the transfer of property in a decedent's estate. Accordingly, an estate tax return is required for every estate whose federal gross estate equals or exceeds $1,000,000. Therefore, if your federal gross estate does not equal or exceed $1M, you do not have to worry about the Maryland estate tax.

MVP Law Group would like to thank everyone who contributed a question or comment.

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