Maryland Estate Planning Goals And Misconceptions

Estate planning is a tool you never hope to need, but inevitably will. It is also not well understood by most people in Maryland, due in part to the legal complexities involved but also because no one likes thinking about their death and what happens to their affairs after it. However, this article aims to fix that by diving headfirst into the subject of estate planning, including:

• The goals and objectives for the estate planning process.
• Common misconceptions about Maryland estate planning.
• Why estate planning can pay off well before you die.

What Is Estate Planning?

Estate planning is the preparation of your legal and financial situation for situations in which you are not able to act on your own. This will eventually happen to everyone when they die, but as we will see later, it can happen at other times, too.

It is a complex field with a vast array of potential tools, from basic wills to advanced trusts, each of which can serve different objectives with its own set of strengths and weaknesses for doing so. Given the sheer array of documents, techniques, and constraints involved, estate planning is also its own complex legal field.

Estate planning is a tough topic to navigate on your own, but with the help of an attorney, the process can be bent to your will to accomplish a number of essential objectives.

What Is The Ultimate Goal Of Proper Estate Planning?

The core objective in estate planning is to preserve and pass on your estate, turning your wealth and assets into a legacy your family and loved ones can benefit from.

This means that the first goal of good estate planning is ensuring what you have is transferred with the least possible amount of risk and losses to fees and taxes.

Maryland Estate Planning Objective Number 1: Minimizing Losses

Given you want to pass on the wealth you have worked hard to earn, for example, to your kids, you want to make sure the kids do not have to pay away a cent more than they have to in fees (including for attorneys!) or taxes.

Objective 2: Protect Your Family And Loved Ones From Probate

Estates without proper estate planning will inevitably have to go through the very public probate process, which is one of the most common sources of costs and delays. Avoiding it or minimizing its impact is a core objective of many estate plans.

Objective 3: Minimizing Risk For You And Your Beneficiaries

Planning for anything is often about avoiding risks; in estate planning, these can be risks from the market, liability risks, the threat of creditors, or even the possibility of laws shifting or poor handling of your trusts. All of these risks are taken into account and planned for as much as possible in strong estate planning and are often the downfall of estates with insufficient or hasty estate planning.

In other words, overall, estate planning serves to facilitate the transfer of wealth to the next generation as efficiently as possible with the least amount of risk, fees, and taxes.

There are also, however, specific objectives and challenges estate planning can be built to tackle, depending on your situation and needs. For example:

Daniel Razvi is a versatile Maryland attorney focused on providing tax and risk-optimized estate planning services. Attorney Razvi brings considerable experience and a unique perspective to the field of estate planning thanks to his comprehensive approach, which includes retirement planning, estate planning, and tax optimization.

For comprehensive and strategic insights into the field of Maryland Estate planning, connect with lawyer Daniel Razvi and his law firm, Higher Ground Legal.

Call Now (443) 340-6770

What Are Some Examples Of Specialized Estate Planning In Maryland?

Example 1: Medicaid planning.

The Medicaid system in the US and Maryland is very generous and will pay for all your long-term healthcare needs, but only if you are very, very poor. Medicaid planning involves trying to “give away” all of your money sufficiently in advance while you are still alive, of course, so that you can benefit from that care coverage later.

In order to access that long-term care, however, you’ll need to have less than $2,000 to your name. This requires losing direct control over your wealth by putting it into elder care trusts with extensive restrictions on your spending.

Example 2: Blended Families

It is increasingly common for aging Marylanders to be in their second or even third marriage, with kids from more than one union. These kinds of blended families lead to common concerns about what happens when one spouse dies.

Will the other spouse inherit everything? If so, will children from the first marriage get nothing when that second spouse passes on in turn, leaving everything to their children only?

Estate planning aims to empower individuals to answer those questions for themselves, for example, using a trust. A trust can have specific provisions, and they can even have restrictions in the event of another divorce, death, or remarriage that the kids you want to provide for are never cut out and will be taken care of under the terms of the trust.

You can do a lot of things with trust. Whatever restrictions you want to put on it, if you can imagine it, you can probably do it with the help of an experienced attorney.

Example 3: Getting Creative With Maryland Estate Planning

In one somewhat extreme but entertaining example of the flexibility of estate planning, one Maryland man added a provision in his trust saying that every January 1st, his kids had to get a credit check done. If they owed more than $1 to anybody, they got nothing out of the trust that year; otherwise, they got $50,000.

He wanted to incentivize his children to have good credit habits and not get into a lot of debt or risk losing the income from the trust.

You can do that; you can even be more restrictive, or you can have no restrictions at all and just prioritize the smooth passing of your assets, whatever your plan happens to be.

In fact, the idea that estate planning is a one-size-fits-all all kind of field, or even that only certain people need help to do it, is a dangerous and misleading misconception.

What Are Some Common Misconceptions And Misunderstandings About Estate Planning In Maryland?

There are several myths and misconceptions about estate planning floating around in Maryland, while new ones do crop up from time to time, there are common themes that emerge.

Misconception 1: I Can Do My Estate Planning Myself Or Online Cheaply.

There is a common two-part myth that people can handle their own estate planning cheaply or easily, and while this is technically true, it often comes hand in hand with the lie that it will be just as good as having an attorney do it. It is also commonly perpetuated by advertisers for online estate planning “services.”

As a result, people assume that they do not really need anything complicated that might require the help of an attorney, like a trust. Some even believe that they can bypass probate with a simple transfer-on-death deed or a beneficiary deed. They think this will be easier, cheaper, and better than doing so with a trust. But that is only partially true.

There’s always a little bit of truth, in this case, it might be easier and cheaper in the short run, but in the long run, the advantages of a trust usually outweigh the costs. Especially if you own real estate.

Not all myths are perpetrated by deceptively cheap online services however, even some attorneys are guilty of failing to show their clients the full picture.

Misconception 2: Estate Planning Is A One-Time Transaction You Never Have To Think About Again.

Some Marylanders, or their estates, end up in trouble because they never followed up on their estate plan, for example, by failing to adapt it to a new development in their life. Sometimes, this is because they had an attorney help them create an estate plan in the past, but it was just a simple transaction, and they never heard from the attorney again.

This can lead to serious problems, however, further down the line. It is something we try to actively combat here at Higher Ground Legal.

To do so, we will schedule ongoing reviews with you to help make sure your estate plan is still doing what it’s supposed to be doing and make any necessary adjustments. Estate planning is all about the long-term, and that is the kind of relationship we always aim to build, not a transactional one.

Misconception 3: I Don’t Need Estate Planning If I Plan To Give Everything Away.

Some Marylanders have no children or loved ones to whom they need to pass their wealth, and they choose instead a cause or charity to donate to. This can be a wonderful gesture and give your legacy a lasting impact on many lives, but that doesn’t mean it is any simpler, if anything, it makes it even more essential that you work with an attorney.

All of the same risks and losses apply, such as taxes and fees, with additional complications due to the nature and/or number of beneficiary organizations involved.

How Can Estate Planning Provide Protections And Benefits While I Am Still Alive?

We mentioned one misconception, in particular, at the start of this article about how estate planning is often too closely associated with death. Indeed, many in Maryland assume they will only need or benefit from it when they die, but this is not quite true.

There are many forms of estate planning and estate planning tools you can benefit from while you are still alive. For example:

• Domestic asset protection trusts provide privacy and liability protection for your assets and money.
• Charitable trusts provide immediate and/or ongoing tax benefits while you are alive, not just when you die.
• Certain real estate trusts, like deferred sales trusts, can defer certain taxes over time.

And that isn’t even touching on much simpler documents like medical powers of attorney or living wills, which nearly any estate planning attorney can set up for you, to provide benefits and safeguards while you are alive in the event of your incapacitation, for example.

If you recognize yourself in any of these misconceptions or myths, it may be time to revisit your estate plan with an attorney who will help you unlock the full potential of carefully optimized estate planning tools. For more information on Understanding Estate Planning In Maryland, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (443) 340-6770 today.