When you read about the importance of estate planning from a general perspective, it may get your attention to some extent, but you are looking at theoretical circumstances. However, when you actually have the opportunity to hear about real-life cases, you can see why action is required.
As local Maryland, Maryland estate planning and elder law attorneys, we do not have to theorize, because we speak with clients every day. We have direct personal experiences that always remind us of the positive impact that we have on the people here in the community that we serve.
Not too long ago, we had the opportunity to speak with a client who was faced with a situation that she do not know how to address. Let’s look at the timeline so that you can understand the takeaway in the end.
The Case: Mr. and Mrs. Allen
For the purposes of this case study, we will call our clients Mr. and Mrs. Allen. When they were in their seventies, they decided that they wanted to put an estate plan in place. They assumed that they needed last wills, and they arranged to consult with our firm to help them create the documents.
After we sat down and got to know one another, we gained an understanding of the Allens’ financial situation and their overall estate planning objectives.
They explained to us that they had two adult daughters who were not very good money managers. Their daughters had come to them many times over the years seeking financial assistance.
Mr. and Mrs. Allen were quite concerned about the possibility of their daughters squandering their respective inheritances. Once the inheritances were gone, there would be no one to turn to for support in the future.
In response, we pointed out the fact that a last will would facilitate lump sum, direct distributions to their daughters. There would be no asset protection, and they would have the ability to go forward and spend the inheritances freely.
We explained the value of a revocable living trust as a spendthrift protection tool. If they were to establish a joint living trust and convey property into the trust, they would be able to access the property throughout their lives. After the death of one spouse, the surviving spouse would be the sole trustee.
A successor trustee would be named in the trust declaration, and this trustee would be empowered to administer the trust after the death of the surviving spouse. The daughters could be the beneficiaries.
This trustee could be a professional fiduciary like a trust company or the trust section of a bank. The corporate trustee would manage the trust in accordance with professional standards, and the daughters would not be able to make decisions on behalf of the trust.
The trust would become irrevocable after the death of the surviving spouse, and a spendthrift provision could be included. Assets in the trust would be protected from the beneficiaries’ creditors. Plus, the trustee could be instructed to distribute limited assets over an extended period of time to prolong the viability of the trust.
We also let the Allens know that they could include a pour-over will that would allow the trust to absorb any property that was never conveyed into the trust after the death of the surviving spouse.
The Allens ultimately decided that a living trust would be a good choice for their family.
Incapacity Planning for the Allens
During our consultation we also explained the importance of incapacity planning, and in the end, this conversation yielded very fruitful results.
Many elders become unable to handle their own affairs at some point in time. There are many causes of incapacity, but Alzheimer’s disease is at the top of the list. This disease strikes around 45 percent of people who are at least 85.
We told the Allens that they could include durable powers of attorney to account for possible incapacitation. Mr. Allen could give his wife the ability to act on his behalf in a legally binding manner, and Mrs. Allen could return the favor. In this manner, the healthy spouse could step in to make decisions on behalf of his or her disabled or incapacitated spouse.
They understood the value of incapacity planning right away, so they included durable powers of attorney when we helped them create their estate plan. We should point out the fact that durable powers of attorney are used because a durable power of attorney will remain in effect even if the grantor of the power becomes incapacitated.
About 10 years after we originally helped the Allens devise their estate plan, Mrs. Allen give us a call. At this point, the Allens were both in their eighties. Mr. Allen was suffering from a health problem, and he was unable to handle his own affairs, but his employers needed him to sign some very important legally binding documents.
They would not allow Mrs. Allen to sign the documents. When she asked our firm what to do, we directed her to the durable power of attorney attorney that Mr. Allen signed when the estate plan was created. She showed it to the employers, and she was able to sign the documents on his behalf.
If Mr .and Mrs. Allen never consulted with our firm when they were devising their plan, the power of attorney would not be in place, and this matter would have been difficult to resolve.
Now Is the Time to Act on Your Estate Plan!
As you can see from this case study, there are some very significant benefits that can be gained if you work with a licensed estate planning attorney to put a well conceived, personalized plan in place.
If you make assumptions and act without the benefit of professional guidance, omissions and errors can be made, and they can result in future negative consequences.
We would be glad to help if you would like to work with a professional to create a custom crafted estate plan. To set up a consultation, call us at (410) 573-4818 or send us a message through our contact page.
