Every married parent with a child needs a Will. Without a Will, the surviving spouse will receive only half of the decedent’s estate and the children will share the other half. Without a Will and surviving parent, the Court will decide who will raise the decedent’s minor children. Without a Will and testamentary Trust, children will receive their entire inheritance when they reach the age of 18.
Stewart A. Sutton has drafted hundreds of Wills. Most married couples need only a simple Will, which provides that the entire estate is distributed to the surviving spouse and, if there is no surviving spouse, then the entire estate is distributed to the children in equal shares.
A simple Will also contains two other critical provisions. The testator appoints a guardian to raise the minor children, if there is no surviving parent. A simple Will includes a testamentary trust, which provides that the children’s inheritance will be held in trust for their education and healthcare until they reach a certain age, usually 24 or 25.
There are some things that a Will cannot do. Property owned jointly with a right of survivorship passes automatically to the surviving joint owner. Life insurance proceeds pass directly to the beneficiary. IRAs and 401(k)s accounts also go directly to the beneficiary.
Financial planners and even some attorneys attempt to scare clients into believing that they need an expensive Living Trust to avoid taxes and/or probate. The truth is that 99% of the population does not need a Living Trust, because a Living Trust does not offer the claimed advantages.
Claim: Living Trusts reduce taxes.
Fact: Living Trusts do not save estate, inheritance, or income taxes.
Claim: Probate must be avoided at all costs.
Fact: Probate in Maryland is not a complicated or expensive process.
Claim: Only Living Trusts can be used to manage affairs and avoid guardianship.
Fact: A durable power of attorney can avoid guardianship.
Claim: Living Trusts save time and money.
Fact: Living Trusts cost substantially more than Wills.
Claim: Living Trusts can be used to avoid creditors.
Fact: Living Trusts cannot be used to avoid creditors.
Claim: Living Trusts ensure privacy.
Fact: Living Trusts do not guarantee privacy.
The estate tax is a tax on property (cash, real estate, stock, or other assets) transferred from deceased persons to their heirs. Only the wealthiest estates in the country pay the federal tax, because the estate’s value must exceed a specified exemption level, currently $5.34 million per person (effectively $10.68 million per married couple).
Only 1.4 estates out of a thousand (0.14%) will owe any estate tax in 2013 according to the Tax Policy Center. Unless you are extremely wealthy, you do not need to worry about the estate tax.
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Germantown, MD | Gaithersburg, MD | Boyds, MD | Damascus, MD | Poolesville, MD | Rockville, MD | Montgomery Village, MD | Kentlands
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