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Veteran business correspondent Karen Gibbs answers your personal money questions and addresses current topics that affect YOUR finances on a daily basis. Karen is the financial expert in your corner--no question is too basic or too small. Karen boils down the issues simply: here's what you need to know, and here's what you need to do. Send your money questions to AskKaren@mpt.org and post your comments below.

26

March

Estate Planning

Karen Gibbs


Estate planning is not just for the rich and famous.  If you have possessions and relatives, a plan will go a long way in giving you peace of mind while avoiding conflict among family members.

Estate planning is not only in case of death.  What will happen to your belongings if you become disabled or incapacitated?  Having a plan inEstate Planning place before the emergency strikes takes the pressure off of having to make decisions under stress and insulates you against those who might want to exploit your loss.


There are four documents that you should include in your estate plans.  First and foremost is your will.  How do you want your assets to be distributed?  Do you have a business?  Do you want to keep it in the family?  Do you have children from several marriages or a blended family?  Having a written, legal will aids in probate – the legal process of administering an estate, resolving claims against the estate and distributing the deceased’s property to the beneficiaries under the terms of the will.  If you die without a will, your estate is considered “intestate” and there are local laws that deal with the handling of affairs and the distribution of your estate that may not be what you had in mind.


Secondly, you should have a health care directive or living will.  This is a written, legal document allowing a person you have appointed to make health care decisions for you if you become unable to make or communicate your desires, and should be written while you are of sound mind.


Third on your list should be a power of attorney document and, like the health care directive, should be written and signed while you are competent.  It is considered “durable”, meaning that it goes into effect immediately and lasts until it is revoked or until the person granting the power either becomes incapacitated or dies.  Under Maryland Elder Law, there is also a springing power of attorney, which springs into effect upon some future act of incapacity or circumstance, but the determination of incapacity is a process that entails a doctor or doctors certifying the incapacity and may take time and effort to enforce.


Lastly, consider a living trust as a tool to manage your estate during your lifetime and after death.  However, a living trust only covers assets placed in it and it bypasses the probate process.  Also, information included in a living trust may not be for public record, unlike a will which may be filed for public record.


Other instruments that are excluded from the probate process are assets deemed payable upon death.  A jointly owned bank account with rights of survivorship are excluded as are certificates of deposit payable upon death, transferable upon death, life insurance policies, IRAs, 401(k)s and annuities with designated beneficiaries.  If no beneficiary has been named, the probate process kicks in and assets will be distributed according to the law.


Estate planning should not be taken lightly.  While many online sites offer do-it-yourself kits, it’s highly recommended that you consult a lawyer to assist you.  Each of Maryland’s 23 counties and the city of Baltimore has a Register of Wills as provided for by the state constitution.  For more information, visit here

For information on health care directives, visit here. Want to know if a living trust is right for you? Take a look at this.

 

Karen

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