by Kym Byrnes
August is National Make a Will Month, and while thinking about the end of life is never easy, taking the time to plan now can bring peace of mind to you and your loved ones later. Creating a will and making key decisions in advance ensures that your wishes are documented and respected, easing the burden on those you care about. Every adult should have specific documents in place regardless of age or wealth. Attorney Damian Halstad of Westminster-based Hoffman, Comfort, Offutt, Scott & Halstad, LLP provides the following guidance on where to get started and what to consider when planning a will.
Documents You Need
- Power of Attorney
This document appoints someone to manage your financial affairs if you are unable to do so. You should name a primary agent and a successor agent, a backup in case the primary cannot or will not perform the task. If you don’t, and you become disabled, your family will have to attempt to obtain guardianship over you, which is time-consuming, expensive and by no means assured. - Medical Directive
This document appoints someone to make medical decisions on your behalf if you are unable to do so, and it also allows you to state end-of-life decisions in writing. - Will
This document designates who will handle your estate, to whom and in what percentage you wish your assets to be distributed. It also allows you to state whether your beneficiaries are capable of responsibly handling the assets you leave them or whether you think it is necessary to have a third party watch over the money through a trust.
If you have minor children, your will should name a guardian to care for them until they reach the age of 18. If you have a child with disabilities, that child may need a guardian and a trustee for the duration of their life. According to Halstad, the most challenging decision people have to make is who will care for their child when they are gone.
Finally, your will should address and attempt to mitigate any state or federal taxes your estate may face at your death.
Factors To Consider
- When considering fiduciaries, a person or entity who manages money or property on behalf of someone, try to match the skill set with the job. For example, if you have a child who is an accountant, they may be well-suited to be your financial power of attorney. A child who is a nurse may be well-suited to be your medical decision-maker.
- Technically, powers of attorney, medical directives and wills do not expire. However, Halstad notes that once a document is approximately 10 years old, banks and other financial institutions may be hesitant to accept the document due to its age. The 10-year mark may be an opportune time to review and update your documents.
- If you have concerns about your children and your will, consider appointing a trusted friend or a professional, such as your accountant or attorney, to serve as your executor.
- You do not necessarily have to give your fiduciaries a copy of your documents immediately but do let them know where these documents can be found in case of an emergency. As to your original will, Halstad recommends that it either be held by your lawyer or by the office of the Register of Wills until your death.
- If you wish to express your dissatisfaction with a family member, Halstad recommends that you do so in private correspondence rather than in your will. At death, a will becomes a public document.
- Regarding charities, Halstad says his personal opinion is that local is better. A charitable bequest to a local organization can have a profound impact, increasing the likelihood that your donation will be used for its intended purpose.
Common Misconceptions
- If you do not have a will, the state of Maryland does not receive your money. However, the state does, through its intestacy law, determine who gets your money and who will be your executor.
- Executors and lawyers do not charge 10% of the estate as a fee. In Maryland, the fee is capped at 3.6%, and often,
if the executor is a family member, they may choose to forgo the commission altogether. - A revocable living trust is merely a probate avoidance technique. It does not save taxes, does not protect you from creditors and does not help you qualify for Medicaid.
- In Maryland, there is no inheritance tax on assets left to spouses, children, grandchildren or siblings. There is also no estate tax if your total estate is less than $5 million.
- Internet wills are often not state-specific and generally do not explore the many details you will need to think about in drafting an appropriate will.
- Halstad says that while 99% of his clients leave their estate to their families, they are not required to. You’re also not require to leave $1 to a disinherited family member. However, if your will leaves nothing to your spouse, unless there is a prenuptial agreement, your spouse nonetheless has a right to a percentage of your estate.
Editor’s Note: The information contained within this article is provided for informational purposes only and should not be construed as legal advice on any subject. Consult an attorney for your specific needs and situation.
