On October 1, 2009, Maryland created legally enforceable trusts specifically benefiting animals by providing a broad policy but giving little guidance on how to assure that the wishes of the deceased pet owner are actually followed.

Specificity is key in creating a pet trust in Maryland. While there are two options, creating a pet trust in a last will and testament or creating a pet trust in a revocable living will, there are several steps in which the creator will want to be as explicit as possible.

First, identify the animal(s). Pictures, microchips, tattoos, detailed descriptions, etc. can be used to specify which animals are included. It may also be helpful to include a provision that will also cover any animals acquired after the trust is created to avoid residual updates.

Next, identify the parties to the trust. Appointing a caregiver requires a great deal of thought. This decision should be made after considering the physical capabilities of an individual and confirming their willingness to care for the animal. A trustee is also necessary. The trustee will manage the funds and should have time to check in on the health and safety of the animal(s).  It is a good idea to make the trustee and the caregiver different people as a method of checks and balances.

Now, determine how much money to put in the trust. Many states restrict the amount to “reasonable” or what is actually required to care for the animal throughout its life. Factors to consider are the type of animal, its health history, and the lifestyle the animal is accustomed to living. Again, specificity here is crucial. By identifying specific costs, it shows that the creator has put significant effort into assuring that their animal will be well cared for.

The final step is identifying a remainder beneficiary who will get any money left after the death of the last surviving animal.  The remainder beneficiary should not be the caregiver or trustee to avoid any conflicts of interest between the health of the animal and its death. It is not uncommon for a remainder beneficiary to be an animal rescue or advocacy group.

Providing for their care after our death can keep our beloved pets and family members out of a shelter and in loving arms. Just remember to be specific about your wishes and select the best and most willing parties to take care of your animals.

First, ensure that the Social Security Administration has been notified of the death.  The funeral home usually takes care reporting the death, but the Personal Representative should double-check to avoid having to return funds to the Social Security Administration.

Second, all automatic payments and debits from a decedent’s account need to be reviewed and, in most cases, stopped.  If you have access to the decedent’s recent bank statement or credit card statement, it is easy to spot these payments and debits.  These payments may include an EZPass account, utility payments, car payments, rent payments, credit card payments, student loan payments and mortgage payments.  Remember, for banks to speak with a Personal Representative and allow him or her to make changes to an account, the Personal Representative must provide them with a death certificate and Letters of Administration (or Letters Testamentary).

Third, if the decedent was the only person at his or her residence, have the cable and telephone service cancelled.  Keep all e-mail accounts open, if possible, to receive any notices or statements the decedent agreed to receive electronically.  The electric, gas, and water bills should be retitled in the name of the Estate until the property is sold or transferred to a beneficiary.  You may have to provide a death certificate and Letters of Administration to these companies as well.

If the decedent was not the only person at the residence, the other resident(s) must take over payment of the household bills, including utilities.  The decedent’s name should be removed from all accounts.

You might be wondering how to address a mortgage or rent payment.  The method depends on whether the mortgage or lease was in the decedent’s name alone, or there is someone else who is also responsible for those payment obligations.  If there was a co-mortgagor or co-lessee, that person becomes solely responsible for all payments after the decedent’s death.  If the decedent was the only person responsible, the Estate steps into the shoes of the decedent and becomes responsible for payment.

Lastly, remember that in Maryland the Personal Representative should not pay any debts of the decedent until the six (6) month statutory creditor period has passed.  If the Estate ends up being insolvent (not enough assets to cover the debts of the decedent and the expenses of the Estate) a statute tells the Personal Representative in what order to pay the debts.  If the Personal Representative does not follow the correct priority of payments, he or she could be personally liable to the unpaid creditors of higher priority over the paid creditors of lower priority.

Our next post will address debts of the decedent, the creditor period and priority of payment.

What is probate?

Probate is the process by which a decedent’s assets are passed on to others.  If the decedent died “testate” (with a Will), the assets are distributed according to the decedent’s Will.  If the decedent died “intestate” (without a Will), the assets are distributed according to the intestacy statute of the state in which the decedent was domiciled (or, in the case of real property, the state where real property is located).  For more information on intestacy statutes in Maryland, D.C., Pennsylvania and New York, please see our prior blog post here.

When is probate required?

Probate is required after death if the decedent held assets in his or her sole name or as tenants-in-common with another person.  There generally is no requirement for when probate must begin, but starting quickly can avoid problems.

In Maryland, a decedent’s Will must be filed with the court even if there are no assets that need to be probated.

How is probate started?

Probate begins when the Personal Representative, Executor, or another interested party files the required documents with the Register of Wills in the county where the decedent was domiciled.

Personal Representatives should be aware that there are various types of estates, each with its own procedural requirements, determined by the value of the assets that the decedent held at the time of his or her death.

I’ve been appointed Personal Representative.  What am I required to do?

As Personal Representative, you are responsible for settling the estate and distributing the assets of the estate in accordance with the decedent’s Will and the law of the jurisdiction in which the assets are being probated.  This could include collecting the decedent’s assets, paying the decedent’s debts, filing financial accounts, and preparing other documents required by the Register of Wills.

Do I need an attorney to assist me to act as Personal Representative?

You are not required to hire an attorney to probate an estate.  However, the Register of Wills office cannot provide legal advice.  Often, in the course of probate, the Personal Representative will have questions that can be difficult to answer without knowledge of case law and statutes.  An attorney can provide services that range from answering these occasional questions to assisting in the probate of the entire estate, including completing forms to be filed with the Register of Wills.

Is there anything else I need to do besides probate the estate?

There may be more to do.  Some states, such as Maryland and Pennsylvania, assess inheritance tax on certain transfers of property at death, so there may be a need to file an inheritance tax return with the state.  In addition, in some states, such as Maryland and D.C., there is a state-level estate tax assessed if the estate assets exceed a certain value.  Lastly, if there is a surviving spouse or if the decedent’s assets and lifetime gifts are valued in excess of $5,250,000, a federal estate tax return may have to be filed.

At the Law Office of Jane Frankel Sims, we have assisted probate clients in a range of ways, from answering the occasional question to providing complete estate administration services.  It is up to our clients to determine the level of involvement they wish our office to have, and we are happy to assist in all situations.  The death of a loved one can be a stressful process, and we strive to make probate as easy as possible for our clients.

This post is not intended to be legal advice.  If you have any questions regarding probate or estate administration, please contact a licensed attorney.

In many loan and account agreements, banks and credit unions reserve a right of “set-off.”  This gives the financial institution the right to take money from your checking or savings account to satisfy your loan before the financial institution issues a check to your Personal Representative.

You might wonder how this affects your estate if the loan will be paid either way.  If your estate does not have sufficient assets to satisfy all of your debts, your Personal Representative will pay your creditors in the order required by §8-105 of Estates and Trusts Article of the Maryland Code.

The first payments your Personal Representative makes are to the Register of Wills and for the costs and expenses of administering of your estate.  The money paid under these categories reimburses your Personal Representative for the cost of litigation (if necessary); distributing your property to beneficiaries; selling your property; maintaining, managing and preserving property; CPA, accountant and appraiser fees; and miscellaneous expenses.

Next, your Personal Representative must pay for your funeral expenses.  After funeral expenses, your estate pays the fees of your Personal Representative and any lawyers and real estate brokers.

Then, your Personal Representative allocates money to the “Family Allowance,” a statutorily-required amount for the surviving spouse and/or minor children.

The next three payment priorities are, in order, Federal and State income taxes due by the decedent, medical expenses of the last illness, rent payable by the decedent (up to three months); wages, salaries or commissions for services performed for decedent within 3 months prior to date of death; and old age assistance claims.

LASTLY, your Personal Representative pays “all other claims.”  This category includes any loans that remain unpaid at the time of death.  However, if a bank account agreement provides that the account must be used to offset the outstanding loan at death, the bank account will be used to pay off this loan before the Personal Representative can get her hands on it.  In effect, the bank (an “other creditor”) will have jumped in line from last-place priority to first-place priority, at least with regard to that one bank account.  Even the funeral bill and the Family Allowance could not be paid from that account until the loan is completely paid off!

Make sure that you read your loan agreement documents before you sign them.  Ask questions at the bank.  And last, consider holding your savings and checking accounts at a different bank from the one where you obtain your loans, especially if you think that you debts may outnumber your probate assets upon your death.

The following In Terrorem provision was used in the Will of Wolgith in 1046. Today, In Terrorem clauses do not include language invoking eternal damnation:

He that bereaves my will, which by God’s permission I have now made, let him be bereaved of these earthly joys; and may the Almighty Lord — cut him off from all holy men’s communion in Doomsday; and be he delivered to Satan, the Devil and all his cursed companions to hell’s bottom, and there be tortured, with those whom God has cast off or forsaken, without intermission, and never trouble my heirs.

And in the original Old English:

beryaui þe hic nu biqueþen habbe. a Godes ywitnesse; beryaued he worþe þises erthliche mergþes and ashiregi hine se almigti drigten. þe alle shepþe yshop. and ywrogte. vram alre halegene ymennesse. on domesday. and sy he bytagt Satane þane diefle. and alle his awargede yueren into helle grunde. and þer aquelmi mid Godes wiþsaken bute ysuyke and mine irfnumen neuer ne asuenche þisses is to ywitnesse Edward king and manie oþre.

Our firm works with clients in Maryland, the District of Columbia, Pennsylvania and New York.  Each state has different rules for who inherits an estate.  We provide below a summary of each state’s rules, for our clients’ informational purposes only.  If you have any questions regarding the following, please contact our office.

*Note:  the term “per stirpes” indicates that a deceased child’s share of an estate will pass to that child’s own children, if any.

Maryland

-  If you are married at the time of your death and your spouse survives you by 30 days:

• and you have no children or parents living, your spouse inherits your entire estate.
• and you have no children, but your parents survive you, your spouse inherits $15,000 and ½ of the remaining estate.  Your parents (or the survivor of them) inherit the remainder.
• and you have minor children, your spouse inherits ½ of your estate and your children inherit ½ of your estate.
• and you have children who are not minors, your spouse inherits $15,000 and ½ of the remaining estate.  Your children inherit the remainder.

-  If you are not married at the time of your death, but you have children who survive you by 30 days, your children inherit your entire estate, per stirpes.

-  If you have no surviving spouse and no children, your parents inherit your estate.

-  If you have no surviving spouse, children or parents, your siblings inherit your estate, per stirpes.

-  If you have no surviving siblings, ½ goes to your paternal grandparents or the survivor and ½ goes to your maternal grandparents or the survivor, or to your aunts and uncles, per stripes.

-  If you have no surviving grandparents or aunts or uncles, ¼ goes to each set of your paternal grandparents and ¼ goes to each set of your maternal grandparents, or to their children, per stirpes.

-  If none of the people listed above survive you, your estate will go to any stepchildren that you had, or to their issue, per stirpes.

-  If you have no stepchildren and none of the people listed above survive you, your estate goes to the local board of education.

District of Columbia

-  If you are married at the time of your death and your spouse/domestic partner survives you by 120 hours:

• And you have no children or parents living, your spouse/domestic partner inherits your entire estate.
• And you have no children, but your parents survive you, your spouse/domestic partner inherits ¾ of your estate and you parents inherit ¼.
• And you have children who are all children of your spouse/domestic partner and your spouse/domestic partner has no other children, your spouse/domestic partner inherits 2/3 of your estate and your children inherit 1/3 of your estate.
• And you have children who are all children of your spouse/domestic partner and your spouse/domestic partner has children of his or her own, your spouse/domestic partner inherits ½ of your estate and your children inherit ½ of your estate.
• And you have children who are not children of your surviving spouse/domestic partner, your spouse/domestic partner inherits ½ of your estate and your children inherit ½ of your estate

-  If you do not have a surviving spouse or a domestic partner at the time of your death, your children inherit your entire estate, per stirpes.

-  If you do not have a surviving spouse, domestic partner, or children, your grandchildren inherit your estate, ­per stirpes.

-  If you do not have a surviving spouse, domestic partner, children or grandchildren, your parents (or the survivor of them) inherit your entire estate.

-  If you do not have a surviving spouse, domestic partner, children, grandchildren or parents, your siblings inherit your estate, per stirpes, or if there are no siblings, your nieces and nephews inherit your estate, per stripes.

-  If you do not have a surviving spouse, domestic partner, children, grandchildren, parents, siblings or nieces and nephews, your surviving grandparents inherit your estate.

-  If you do not have a surviving spouse, domestic partner, children, grandchildren, parents, siblings, nieces and nephews, or grandparents, your aunts and uncles, your grand-uncles and -aunts, your great-grand-uncles and -aunts, grand-nephews and -nieces, great-grand-nephews and -nieces, your first cousins and first cousins once removed (relations within the fifth degree), who survive you, inherit your estate.

-  If you have no relations within the fifth degree, your cash passes to the Department of Human Services for emergency assistance grants, and your other property passes to the Mayor of the District of Columbia for the benefit of the poor.

Pennsylvania

-  If you are married at the time of your death and your spouse survives you by 5 days:

• And you have no children or parents living, your spouse inherits your entire estate.
• And you have no children, but your parents survive you, your surviving spouse inherits $30,000 plus ½ of the remainder and your parents inherit ½ of the remainder.
• And you have children who are all children of your spouse, your spouse inherits $30,000 and ½ of the remainder and your children inherit ½ of the remainder.
• And you have children who are not all children of your spouse, your spouse inherits ½ of your estate and your children inherit ½ of your estate.

-  If you do not have a surviving spouse, your children inherit your entire estate, per stirpes.

-  If you do not have a surviving spouse or children, your parents (or the survivor of them) inherit your entire estate.

-  If you do not have a surviving spouse, children or parents, your siblings inherit your estate, per stirpes or if all of your siblings have predeceased you, your nieces and nephews inherit your estate, per stirpes.

-  If you do not have a surviving spouse, children, parents, siblings, nieces or nephews, your grandparents inherit your estate.

-  If you do not have a surviving spouse, children, parents, siblings, nieces or nephews, or grandparents, your aunts and uncles inherit your estate, per stirpes.  If all of your aunts and uncles have predeceased you, your cousins inherit your estate, per stirpes.  If all of your cousins have predeceased you, your cousins’ children who survive you inherit your estate, per stirpes.

-  If none of the people listed above survive you, the Commonwealth of Pennsylvania inherits your estate.

New York

-  If you are married at the time of your death and your spouse survives you by 120 hours:

• And you have no children, your surviving spouse inherits your entire estate.
• And you have children and a surviving spouse, your spouse inherits $50,000 and ½ of the remainder and your children inherit ½ of the remainder.

-  If you do not have a surviving spouse, your children inherit your entire estate, per stirpes.

-  If you do not have a surviving spouse or children, your parents (or the survivor of them) inherit your estate.

-  If you do not have a surviving spouse, children or parents, your parents’ children inherit your estate, per stirpes.

-  If you are not survived by a spouse, children, parents or parents’ children, your grandparents (or their issue, down to their grandchildren) inherit your estate, per stirpes.

-  If you are not survived by a spouse, children, parents, parents’ children, grandparents or their issue (down to their grandchildren), your grandparents’ great-grandchildren inherit your estate, per capita.

-  If you are not survived by any of the people listed above, the State of New York inherits your estate.

If you are considering buying property with your significant other prior to marriage there are several issues you both must be ready to tackle.

The first is how are you going to title the property?  As an unmarried couple, you have two options, tenants-in-common or joint tenants with right of survivorship.  As tenants-in-common you can each own unequal portions of the property, but if one owner dies, their portion of the property passes through intestacy (to their parents, siblings, or others as described by state law) or to beneficiaries under their will.  If you choose to own property as joint tenants, each party owns an equal portion of the property and if one owner dies, his or her portion of the property passes to the other owner (the right of survivorship).  Deciding whether joint tenancy or a tenants-in-common arrangement will be best for you will depend on your unique situation as a couple.

Cohabitation agreements are a great way to put your intentions in writing.  Through this contract, a couple can state which expenses each person is responsible for and how the property will be divided if the couple separates during the time they own the property.  Another question that can be addressed in the property agreement is what to do if one party becomes disabled or otherwise cannot work and is unable to contribute the full amount toward the expenses of the home.  Without a cohabitation agreement, if one party wishes to remain in the home, a judicial action to partition the property can be costly.  It is best that each party have his or her own attorney review and approve the cohabitation agreement.

Creating or updating your estate planning documents will also help you and your significant other divide your home and its contents in the event of one of your deaths.  If you choose to title your property as tenants-in-common, you can give your property to the co-owner through a Will or a trust.  While a joint tenancy gives the co-owner the sole title to your home if your significant other passes away, it does not include the items of tangible personal property inside.  A Will or a trust gives each partner the ability to state how their tangible personal property should be distributed in the event of their death.

Remember, you are never too young or too old to plan for the future of those you love.

The Law Office of Jane Frankel Sims, LLC

A common sense approach to complex legal issues

Section 1411(a)(2) of Chapter 2A applies to estates and trusts and imposes a 3.8% surtax on the lesser of the undistributed net investment income for the taxable year or the excess of the adjusted gross income for the taxable year over the dollar amount at which the highest bracket in section 1(e) begins for that year.  In other words, for 2013, the surtax will only apply to an estate or trust with an adjusted gross income exceeding approximately $12,000, and the 3.8% rate will apply to the lesser of the undistributed net investment income for 2013, defined as income from interest, dividends, annuities, royalties, rents, etc., or the excess of the adjusted gross income for 2013 over approximately $12,000.

The new 3.8% surtax will also apply to individuals, but only at much higher income thresholds.  White the surtax will affect estates and trusts with adjusted gross incomes exceeding approximately $12,000, it will only apply to married couples with adjusted gross incomes exceeding $250,000 and unmarried individuals with adjusted gross incomes exceeding $200,000.  In order to take advantage of the differences between the tax regimes, personal representatives and trustees should carefully consider making distributions from estates and trusts.

THIS IS A FRAUD.  Any correspondence regarding estates or estate tax filings in Maryland come from the Register of Wills office in the County the estate was opened or from the Office of the Comptroller of Maryland.  In addition, if you have engaged an attorney to assist you with administering the estate, the attorney always receives duplicate notices from the Register of Wills or the Office of the Comptroller.

Please contact your attorney or the Comptroller’s Office at the number below if you receive a notice from IRFS.

Contact information for the Comptroller of Maryland:  1-800-MD-TAXES or by email at taxhelp@comp.state.md.us

Information from Southern Maryland News Net at http://smnewsnet.com/archives/46365

1. Verdicts and settlements;
2. Transactions;
3. Representative clients;
4. Experience;
5. Honors and awards;
6. Special licenses and certifications;
7. Position within law firm;
8. Bar and or other professional activity;
9. Pro bono and community service as a lawyer;
10. Scholarly lectures and writings;
11. Education and employment background; and
12. Other outstanding achievements.

No more than 2.5% of the lawyers in Maryland are named to the Rising Stars list, so Jane and Laura are truly in distinguished company!  Congratulations!

Find them on page 70 of the 2013 Maryland Super Lawyers Magazine.