Estate Planning: Choosing Your Personal Representative

In thinking about those who are to receive our possessions after we pass from this earth, many of us weigh and balance this decision carefully. For example, it is not uncommon during the estate planning process for people to create extensive lists of their tangible personal property – including jewelry, tools, art, furniture, and other important items – and designate specific items to many different individuals. It is also not uncommon to name various individuals or charities to receive sums of money specified in a will. While deciding how to distribute our property is a key decision in preparing a will, it is equally important to think through the choice of a personal representative. A personal representative, who may also be called an executor, is the individual who is responsible for paying the final bills and taxes of the decedent, distributing the property of the decedent in accordance with his or her wishes, and generally interfacing with appropriate governmental agencies to ensure that all the business affairs of the decedent are conducted appropriately. It is important to remember that a personal representative is a type of fiduciary. When acting as a fiduciary a special relationship is established. One party places trust, confidence, and reliance in another. A fiduciary has a duty to act for the benefit of the party who nominated or appointed him or her. In the context of estate planning, at its most basic, a personal representative must be able to account for every dollar that flows into the estate and every dollar that flows out of the estate. The goal of the personal representative is to...

The Legal Divorce

No matter how long spouses have lived apart, no matter what the financial arrangement between spouses is, and no matter if spouses interact with one another or lead completely separate lives, a married couple cannot be legally divorced without an order from a court. At a minimum, to obtain a legal divorce, one spouse must initiate a divorce action by filing a complaint in court alleging specific facts to meet certain statutory requirements and must subsequently prove his or her case before a judicial official. While a legal divorce requires certain action by the court, the manner in which divorce litigation proceeds is greatly influenced by the behavior of the parties. Most people seek an “amicable” divorce, but the legal way of framing this procedure is either as a “contested” or an “uncontested” divorce. Interestingly, the overwhelming majority of family law cases settle before a judge has to make a decision. In cases with protracted litigation, a judge’s decision may be the only way a case can resolve. With this in mind, it is important to understand how the “emotional divorce” and the “financial divorce” affect the “legal divorce.” The likelihood of a procedurally simple legal divorce is greatly enhanced if parties make the effort to work through emotional and financial issues ahead of a formal filing with the court. In particular, a comprehensive and clearly written marital settlement agreement that is reached by the parties can serve as a map to remind the parties of their obligations to one another and to their children. While it may be confusing to enter the realm of contracts and courts, depending...

Transferring your vehicle after death: Life has been made a little simpler

While it is true that government is not always the easiest entity to deal with, this year in Annapolis, the General Assembly passed HB 492, a bill that modifies Maryland’s Transportation Article. This new legislation should make tending to estate planning a little bit easier. Beginning October 1, 2017, a sole owner of a motor vehicle may designate a beneficiary of the motor vehicle to a specified beneficiary by noting the beneficiary on the title of the motor vehicle. This designation of a beneficiary may be shown by the words “transfer-on-death” or the abbreviation TOD. On the death of the owner of the motor vehicle, the ownership of the motor vehicle passes to the beneficiary if the beneficiary survives the owner. Such a motor vehicle passes outside of the decedent’s probate estate. Of course, if the designated beneficiary does not survive the death of the owner, then the motor vehicle is part of the estate of the deceased owner and will be subject to a probate action. This new legislation also calls for the adoption of regulations to implement the purpose of the bill. We can expect to see new forms – likely available on-line – to assist the owner of a motor vehicle in the process of directly designating a beneficiary. Many people already know to whom they wish to give their tangible personal property after they pass on, including their vehicles. Procedurally, this new law will give owners of motor vehicles a new option to dispose of an important asset. We can thank the General Assembly this year for this initiative, and most especially the chief sponsor...

Adventures in Annapolis

At the stroke of midnight on April 10, the Maryland General Assembly concluded its work for the regular 2017 session. While the busy legislative season is officially over for the year, some legislators are suggesting that a special session may be on the horizon to address certain unfinished business dealing with obtaining licenses for medical marijuana and with terminating parental rights when children are conceived through nonconsensual sex. Calling for a special session is the prerogative of the Governor. While we can’t know if he will call for a special session, we are assured that Governor Hogan’s staff has been busily reviewing bills passed by the Maryland General Assembly to determine, among other things, that the bills meet the requirements of the United States and Maryland Constitutions. The final result of this review process will be concluded in May when we will know for sure which bills will receive the Governor’s approval, which bills will go into effect without his signature, and which bills will be vetoed. In the 2017 session, a great deal of attention was focused on earned paid sick leave, fracking, bail, and the looming presence of President Trump and the impact he may exercise in Maryland. Bi-partisanship was in evidence in terms of budget matters; the General Assembly passed a budget without a great deal of wrangling. Only a few family law bills made it through the legislative process. New definitions of child abuse and neglect and new protections for victims of sex trafficking were added to the Code. Domestic violence orders in protective order proceedings may be used as evidence to prove a ground...

The Financial Divorce

Generally speaking, there are three interrelated aspects of divorce: the emotional divorce, the financial divorce, and the legal divorce. While each phase of the divorce process has its distinct characteristics, for many people it is usually the financial aspect of divorce that provokes the greatest anxiety. Transitioning from one household of composed of two adults to two households composed of one adult in each household can be a major undertaking that may require a new evaluation of income and expenses, along with an overview of assets and liabilities. This anxiety is typically enhanced when children are involved in the re-organization of the family. It is not unusual for people to panic when facing this situation. While panic may be an understandable reaction to the prospect of divorce, cool and calm collection of information while facing a new financial situation is an effective way to reduce anxiety and prepare for a new living situation. To the extent possible, it is a good idea to become a bookkeeper and become well informed about recurring monthly expenses. Many people simply do not know with great precision where they spend their money or how to budget effectively. To become more aware of spending habits, it is very useful to do something as simple as keeping receipts in an envelope each month for each and every item that is purchased (including coffees at Starbucks!). In this way, an accurate picture can emerge. Similarly, it is important to know sources of income which can typically be determined by reviewing pay stubs, tax returns, or attachments to a tax returns such as a W-2 form or...