Probate Alternatives — Trusts and Family Limited Partnerships
Experienced Maryland wills trusts and estates attorneys
Estate planning can be difficult to face as we contemplate our own mortality. Some say that getting older is not for the weak. The estate planning process may not be for the weak at heart, either, but it provides at lease some opportunity to provides security for your family and loved ones after your death. A more extensive estate plan can provide legal authority and guidance for those who make the difficult decisions regarding your care and affairs should you become incapacitated.
Montgomery County, Maryland estate planning attorney Dan Willard understands that comprehensive estate planning can help you achieve your vision for your assets after your death or incapacity. With your active participation, we can analyze your estate and strategize your preferred means of transferring your assets, minimizing taxes, establishing guardianship for your children, supporting personal philanthropic causes and protecting your loved ones. We can draft a will that reflects your desires and can establish trusts and living trusts if they would be beneficial to your estate.
We are commonly asked how to “avoid” probate.
Someone who dies without a will may be deemed by the state to be “intestate” and their assets may be subject to higher death taxes than otherwise.
While probate is a time-consuming process, at least some assets may have to go to probate, even if other strategies are used. There are advantages to probate, including certainty and court supervision.
If you think your survivors may need liquid assets for support, you may want to look for alternatives to probate that may put those assets in their hands more quickly than through probate.
What are some alternatives?
Setting Up a Trust
“Inter vivos trust, living trust, revocable trust“. With a living trust, assets you name are placed in the trust but you have the power until your death (or sooner, as with a significant medical disability, if you choose) to change which if any assets remain in the trust. This way you still have full control of all of your assets. In addition, you can name successor trustees and create a detailed set of trust instructions delineating what will happen to your assets after death.
If you properly set up a living trust, the assets you identify would be in the name of your trust. At your death, those assets in the trust would avoid probate and pass according to your trust instructions.
A backup will, often called a pourover will, is commonly drafted for those assets not placed in the trust.
Because the trust is revocable, it commonly has no tax reduction advantages, other than avoiding intestacy.
“Irrevocable Trust” Like a revocable trust, an Irrevocable trust helps speed assets past the probate process. Unlike an irrevocable trust, if done correctly, the transfer of assets to the trust is not reversible by you. That places the maker of the trust at risk of the trustee misuses the trust assets. The fact of losing control over the assets however, allows accomplishment of certain tax planning benefits. If done soon enough, it can help avert total loss of the estate in the case of catastrophic final illness.
Tenancy by the Entireties and Joint Tenancies Both the marital estate of “tenancy by the entireties” and “joint tenancy with right of survivorship” can transfer title to a co-tenant on the death of one of the owners simply as a matter of law.
Family Limited Partnerships In a Family Limited Partnership, the client can be a general partner and, family members, can be limited partners. Assets may be transferred through periodic transfer of limited partnership interests over time, often related to the gift tax amounts in effect each year of the transfers. Limited patners generally cannot control the assets of the limited partnership, leaving 100% control of the assets (say, a family beach house) in the control of the client, with no control in the hands of the beneficiaries.
Structured Gifts As with a family limited partnership, the transfers can be direct transfers of almost any asset.
Life insurance beneficiaries. Insurance documents can be styled to avoid probate, as a contract right in the beneficiary.
While these are common ways to avoid probate of your estate. setting up these mechanisms are not always simple so you may want to contact an experienced estate planning attorney.
By Dan Willard
Contact the meticulous estate planning lawyers at the Law Office of Daniel S. Willard, P.C.
The Law Office of Daniel S. Willard, P.C. serves clients in Bethesda and throughout Maryland and Washington, D.C. To schedule an appointment, call us at 240-483-0725 or contact us online today.