Myth: The State of Maryland will take all of your money if you do not have a will.
This is one of the most common misconceptions we hear when counseling prospective clients regarding their estate plans. While this is incorrect, the only way to make sure your wishes are followed is to write them in your Last Will and Testament.
Truth: Maryland’s statutes dictating how your assets should transfer upon death most likely do not follow your wishes.
The majority of married couples with minor children tell us that they want their spouse to inherit 100% of their estate when they pass away. Then, when they both have died, they want their children to inherit their estate. Maryland law, however, does not follow this simple, typical distribution request. Under Maryland law, when the first parent dies without a will, the spouse receives $15,000 plus 50% of the estate after taxes and the children inherit the balance.
Who do you trust to administer your estate fairly?
Do you want a traditional burial or to be cremated?
If you pass away with children under the age of eighteen, who do you trust to be their guardian?
These are all personal decisions. You can state them simply in your will but, absent such a document, any one of these choices can lead to prolonged disputes and litigation among your surviving family members.
Myth: Trusts are valuable in limiting estate tax liability – especially for married couples.
This used to be true. Prior to 2015, estates with assets appraised for over $1,000,000 were subject to Maryland’s estate tax. While this was intended to only impact the very affluent Maryland residents, it began casting a much wider net. A middle class individual who purchased a home several years ago and saw the property value increase due to rising real estate values could find themselves subject to Maryland estate tax upon death. Today, for most Maryland residents, estate tax is no longer a major consideration in drafting an estate plan.
Truth: A will is an effective and, when compared to the fees incurred when drafting trust documents, a cost efficient estate planning instrument.
Maryland legislature changed its estate tax law to raise the ceiling before tax will be assessed. In 2017, this means that estates that do not exceed $3,000,000 are exempt from tax. This exemption will increase to $4,000,000 in 2018 and approximately $5,900,000 in 2019. This means that, while there are circumstances where a trust may be the best estate planning tool for a prospective client, oftentimes a will is enough.
If a will is not the best option for you, we will advise you of more appropriate alternatives. So please call Frank G. Lidinsky, P.A. at (410) 494-4490 to assess your estate planning needs. Our initial consultation is free.