By: Nicole T. Livingston – Associate Attorney
In 2016, the Maryland Fiduciary Access to Digital Assets Act became law. This law allows your agent named in your power of attorney, a trustee named in your revocable living trust, or a personal representative named in your Last Will and Testament to obtain access to your digital assets. Prior to this law being enacted, agents, trustees, or personal representatives of your estate had a difficult time accessing online accounts or social media sites. Under the new Act, you must have language in your documents that specifically state that your fiduciary has access to your digital assets. Our documents were updated to reflect this new required language. If you have not reviewed your documents in recent years, you should consider scheduling a review meeting with your attorney to discuss this important update to your documents.
As digital assets become more common for all of us to have, it is important to incorporate them into your estate plan. Digital assets include purchased movies, songs, books, or games which can be a significant amount of money. Often clients have digital pictures stored on a cell phone, on a social media site such as Facebook, or a website such as Snapfish or Shutterfly. These accounts are at risk if you do not appropriately plan for your fiduciary to gain access. Your family members may want to retrieve these memories and you do not want them to violate any privacy terms of the service agreement you agreed to when you signed up for these services. With the permission granted in your estate planning documents, your fiduciary can contact these sites and gain access.
Clients who have a business and own a website domain site may need their fiduciary to gain access to the site if you become incapacitated or upon your death to gather pertinent business assets or proprietary information. Electronic access to bank accounts is becoming more common. Gaining access to electronic accounts to administer an estate is no longer a hassle under the Maryland Fiduciary Access to Digital Assets Act. There are systems in place to allow companies to provide a temporary password to gain access to the data and ease the administration of your estate.
There are steps you can take now to ease the burden on your fiduciary. First, you should update your documents with the required language if you have not already done so. Second, create a list of your online accounts and keep the list updated on a yearly basis. When you file your tax return each year, you can schedule a reminder to verify that the list has not changed. Third, provide the passwords to your fiduciary using a secure method. There are several businesses that offer services to store usernames and passwords. Whatever method you choose, make sure your fiduciary knows where and how to find the information. Taking these steps now can ease the burden of administering your estate.
By: Stephen R. Elville – Principal and Lead Attorney of Elville and Associates, P.C.
In yesterday‘s Time to Think blog, we discussed how the inclusion of a Trust Protector provision as part of your estate plan can provide scope, depth, flexibility, beneficiary protection, and more. You can provide for a Trust Protector in your estate planning, elder care-related, or special needs planning documents (Will, Revocable Living Trust, or Irrevocable Trust) in one of two ways: (1) a Trust Protector can be appointed to serve in an active, current role, such as in the case of a special needs trust; or (2) a Trust Protector can be prospective, a special fiduciary who can be appointed at some future time by someone you choose now for this purpose. What’s often important is not how the Trust Protector will ultimately serve, but rather that you have provided for the possibility of a Trust Protector to serve if one is ever needed.
Are you taking the time to think about this planning-related issue?
Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation
By: Stephen R. Elville – Principal and Lead Attorney of Elville and Associates, P.C.
Trust protectors add dimension, scope, and depth to an estate plan, and the essential capability needed to deal with ongoing change in an uncertain world. If your estate plan does not include a trust protector or the potential for the appointment of a trust protector, then your plan likely lacks flexibility. Why leave yourself and your beneficiaries in this potentially untenable situation? If you would like to learn more about the advantages of a trust protector as part of your estate planning, please see the contact information below.
Are you taking the time to think about this estate planning issue?
Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation
Attorney or Financial Planner? Often, Both.
By: Olivia R. Holcombe-Volke – Partner, Elville and Associates, P.C.
Let me start with a PSA (public service announcement). Everyone over the age of 18 should have a basic estate plan in place. This advice is based upon the reality of the risk of incapacity – from which no one is exempt – and the desire to protect against court-ordered guardianship. It has nothing to do with the amount of money you have. If you are 18 and have a significant amount in assets, good for you – you definitely need to call me. But if you are the more common 18 year old, with a checking account and (maybe) a car, you still need to call me, because you are now considered an adult in the eyes of the law. If you trip and fall and suffer a traumatic brain injury, and you don’t have a basic estate plan in place, you risk that the court must become involved in your life in order for anyone, including your parents, to be able to help you.
I am an attorney, and my areas of expertise are estate planning, special needs planning, and asset protection planning, with some estate and trust administration, elder law, tax, and fiduciary litigation knowledge and experience thrown in for good measure. Luckily, I work at a law firm where there are experts in all of these areas, and so my clients, and any clients of Elville and Associates, can feel secure in the guidance they receive from us regarding trusts (of any kind), wills, advance directives, financial powers of attorney, guardianship, probate, SSI/SSDI/DDA/Medical Assistance, veteran’s benefits, fiduciary litigation, nursing home placements, and many other ancillary matters that fall within these areas.
What I am not equipped to do, other than know enough to be dangerous, is to carry out Roth conversions on traditional IRAs, or instruct on the proper diversification of investments, or whether long-term care insurance or 529 college savings planning are appropriate pieces in a client’s overall financial puzzle. When clients have questions about anything of this sort, the appropriate expert to bring into the conversation is a financial planner.
Which leads me to my second PSA, which is that if you have questions about planning your financial future, or the right investments to make with your money, you need the guidance of a financial planner. If you have hundreds of thousands of dollars sitting around and you are not sure what to do with them, you definitely need a financial planner. But even if you are nowhere near that, if you desire guidance or to have questions answered regarding your financial actions, a financial planner is the expert you need.
In what I found to be an amusing exchange, a family member who is starting her professional career in the financial planning world, with whom I have been family for 11 years, recently said to me, “You do trusts? I didn’t realize!” Now, whether or not this is indicative of the fact that I am a good dinner companion who does not dominate the conversation with talk of my honorable status as one of millions of attorneys, I found this to be insightful, speaking to the reality that I am extremely well-versed in what I do, but not necessarily so in the areas of expertise of other professionals. And that the same is true for other professionals.
This insight was additionally bolstered by a recent comment from a potential client, who said, “My financial advisor said I don’t need to do a Revocable Trust to avoid probate – I can just set all of my accounts up to be POD (payable on death).” This was actually the second time I had heard this in as many months. As a brief aside, the reason not to do this, as a general rule, is because this type of “plan” risks any number of contingencies (the recipient of the POD asset is deceased when the time comes, or in the process of divorce, or is being sued, or is receiving government means-tested benefits that they will lose if they receive the POD asset – just as a few examples). A well written Will or Revocable Trust (or other estate planning document) will address many, many contingencies, and provide many contingency plans, to address the “what ifs” that may exist or occur at the actual time of death. But my overarching point is that clients who rely solely on their financial planners for estate planning advice are getting expert advice from the wrong type of expert – and vice versa.
I would argue that everyone over the age of 18 needs to have a basic estate plan in place. And I would also argue that most adults, if not all, will benefit from having a financial plan in place. The key is using the right expert in the right role. A quality estate planning attorney will recognize her or his areas of expertise, and not attempt to provide guidance on subject matters that fall outside of those areas of expertise. The same is true – or, should be true – for other professionals with other areas of expertise. The best experts in their respective fields know this, and will help guide clients accordingly.
By: Stephen R. Elville, J.D., LL.M. – Principal and Lead Attorney of Elville and Associates, P.C.
Most people approach estate planning as an important but long-put-off project. A natural tendency in this process is to view the planning as ”permanent” and ”forever”. This is a mistake and actually represents the first step towards plan failure. The correct and healthy way to view and approach estate planning is as a continuous process – one where you design and implement the best estate plan you can based on current facts, circumstances, goals, and intentions, with the knowledge and understanding that the estate plan should be reviewed periodically (every 1 to 2 years) throughout your remaining lifetime. By using this holistic approach, several things will happen, among them these: the task of selecting fiduciaries will become easier due to the knowledge that the plan will be revisited; the treatment of beneficiaries and beneficiary shares will be less stressful due to a longer-term approach; the alignment of assets within the planning structure can be fully reviewed and refined over time thereby ensuring that assets flow properly; and the possibility of the estate plan working as you intend are greatly increased. A healthy, holistic approach towards estate planning can and will lead to its ultimate success.
Have you taken the time to think about this issue?
Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation
By: Stephen R. Elville, Principal and Lead Attorney of Elville and Associates, P.C.
“The issue of how important legal documents can be notarized during the COVID-19 emergency has been resolved. Yesterday Governor Hogan waived the requirement of in-person notarization of documents and authorized the remote notarization of documents. This important pronouncement means that the execution of important estate planning and other legal documents can now proceed uninterrupted despite the need for social distancing and the stay-at-home requirement. Thanks to the leadership, foresight, and proactivity of our Governor, critical personal estate planning documents such as financial powers of attorney can continue to be implemented during the national/world health crisis. If you or any family member are in the process of implementing or updating estate-related, elder law-related, or special needs planning-related documents, traditional notarization requirements are no longer a barrier. Elville and Associates has responded immediately to the Governor’s Executive Order by effectuating processes and procedures for the remote notarization of documents in accordance with the Order.
“Have you taken the time to think about this issue?”
Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation
By: Stephen R. Elville, Principal and Lead Attorney of Elville and Associates, P.C.
March 31, 2020 – At present there are few things more important than containing and stopping the spread of COVID-19, taking care of those who are infected, supporting doctors, nurses, other medical personnel, and hospitals, providing vital masks, ventilators, protective and other equipment that is urgently needed, and sympathizing and supporting those who have lost loved ones (in Maryland, in the U.S., and around the world). Elville and Associates urges Marylanders and any persons reading this article to adhere to CDC, national, state, and local pronouncements and policies concerning safety, social distancing, and sheltering in place as absolutely essential to saving lives and minimizing suffering. To say the least, this is a time for unity, community, action, and contemplation.
For those persons who are concerned about what they and other family members need to do right now in terms of estate planning, elder care and special needs planning, and incapacity planning in the face of the increasing pandemic, the following are practical steps that may be taken by any person of reasonable intelligence, ability, and access to telephone or electronic media and communications. For clarity, I have outlined these as six-step processes.
Powers of Attorney, Advance Medical Directive, and MOLST – arguably the most important planning action any Marylander can take right now is to check on the status and location of their current incapacity planning documents – financial power(s) of attorney and advance medical directive. Furthermore, a working knowledge of the MOLST (Medical Order For Life Sustaining Treatment) is essential, especially for those over sixty (60) years of age. I will cover the fundamentals of each of these documents briefly here.
Financial Power of Attorney – this essential incapacity planning document provides for the management of your financial affairs should you become incapacitated (when you no longer have the ability to manage your own financial matters). Some estate planning and elder law attorneys consider the financial power of attorney to be the most powerful and most important of all estate planning documents. I do not disagree. There is a reason for this – having at least a basic power of attorney means that you are very likely to avoid adult guardianship of your estate or property should you become incapacitated, because by being proactive with the implementation of a properly constructed financial power of attorney you are choosing the private management of your affairs without the necessity of guardianship and the involvement of your local Circuit Court. Moving away from the issue of avoidance of guardianship and self-determination, a well-crafted financial power of attorney also addresses your personal preferences concerning the question of how much flexibility (how much power) you want your agent to have. Should your agent’s authority be limited to only basic fiduciary powers – for example those routine powers such as the management of bank accounts and retirement accounts, the power to buy and sell property, and so forth? Or, should your agent’s authority include broader fiduciary powers, such as the power to create and fund trusts, receive compensation, make gifts of your assets, spend down for Medicaid eligibility, and other more aggressive powers? This issue comes down to one main question: how much flexibility do I want my agent to have during a time of my incapacity? The answer to this question is very personal and will vary for each individual. From an estate planning, and in particular, from an elder law planning perspective, the more flexibility you provide for your agent (your attorney-in-fact under a financial power of attorney), the more options your agent will have to pursue and fulfill your goals should you be incapacitated. Since all planning is goal-driven, it follows that the powers you provide for your agent in a well-crafted and well-considered financial power of attorney should reflect those goals, whether they be for the minimization of taxes, asset preservation, charitable intentions, or the protection of loved ones. Yes, my third and last point about financial powers of attorney in this article relates to this last reference. Most people do not consider that a financial power of attorney is not only for their own protection in the event of incapacity, but is also for the protection of anyone who may be dependent on them. So a comprehensive power of attorney or set of powers of attorney will typically incorporate provisions that provide for the protection and support of not only you, but anyone who may be dependent upon you. This realization is an epiphany for most people. Thus, a financial power of attorney that includes well-chosen agents – those trusted persons (fiduciaries) who will manage your affairs if you are no longer able to – is a substitute for guardianship, provides for great flexibility or limited flexibility for your agent in accordance with your goals, and can provide not only for your support but for the protection and support of any person who may be dependent on you. So during this time of international health crisis a financial power of attorney represents one of the most powerful legal tools you can employ. Based on what we know right now, the COVID-19 illness is much more likely to render a person disabled, at least temporarily, than to cause death. For this reason, every Marylander should take the following action steps regarding financial power(s) of attorney:
(1) Locate your current financial power(s) of attorney document;
(2) Review your financial power of attorney document carefully and determine when it was signed and whether it is a Maryland Statutory Power of Attorney (if so, you will see those words at the top of the first page);
(3) If your Power of Attorney was signed before October 1, 2010, consider executing a new financial power of attorney (or set of financial powers of attorney) as soon as possible, as financial powers of attorney executed before the effective date of the Maryland Power of Attorney Act (October 1, 2010) are not enforceable by law (but not necessarily invalid);
(4) If you executed a new financial power of attorney after October 1, 2010 but have not updated your financial power(s) of attorney since that time, consider executing new financial power(s) of attorney to ensure that your document(s) contains all the updates to the Statutory Power of Attorney Form since that time;
(5) Whether you previously executed a single financial power of attorney or a set of two (2) financial powers of attorney (one Statutory and the other a non-statutory form), you should review the powers contained in the document(s) and determine whether those powers are sufficiently broad to accomplish your goals (this may require the advice of an attorney); whether your agents and their contact information are correct; whether certain agents are no longer desirable choices or are not available to serve as your agents; and whether new agents should be appointed.
(6) If you do not have a financial power of attorney, as a practical matter it is essential that you execute one as soon as possible. This is true whether or not you utilize the services of an attorney. You may obtain a financial power of attorney, including a Maryland Statutory Power of Attorney, online or through an attorney. What’s important right now is that you have a financial power of attorney; that it is executed properly and is valid in the State of Maryland (if you are a Maryland resident); that it reflects the agents of your choice, along with their accurate contact information; and that you have considered when your agent’s power is effective, along with the powers you wish to provide the agent (degree of flexibility).
Bottom line – a financial power of attorney is an essential estate planning document at all times, but especially now during this world and national health crisis. Your financial power of attorney must be witnessed by two independent witnesses and must be notarized. One of the witnesses can also serve as a notary. For further guidance about the requirements of document execution and the practical problems presented by the need for social distancing, please refer to further information on our website at www.elvilleassociates.com.
Advance Medical Directive – this essential health care document allows you to choose and appoint your health care agents; provide specific instructions and customizations in nearly unlimited fashion; set forth your goals, values, and preferences; determine when the power of your agent(s) becomes effective; make end-of-life decisions or preferences in advance; choose pain relief to alleviate potential suffering; decide whether your agent has the flexibility to change your decisions, or whether your decisions should not be changed even if there is some “better” choice (in the opinion of your agent); make organ donation and bodily donation choices; and make final arrangement decisions, including funeral and burial, cremation, or other arrangements or instructions. Similar to what I’ve described about financial power of attorney documents in this article, an advance medical directive that includes well-chosen agents – those trusted persons (fiduciaries) who will manage your health care affairs if you are no longer able to – is a substitute for guardianship of your person, and during this time of the world and national health crisis is one of the most powerful legal and healthcare tools you can employ. For some people, the advance medical directive is the most important estate/elder law document.
Because of the fairly recent introduction of the MOLST Form (2013-2014) discussed below, there is much speculation that the advance medical directive is no longer important. To this I say “don’t believe it.” The advance medical directive is still very important because (a) it facilitates the appointment of your chosen agents and as mentioned above represents a substitute for guardianship of your person; and (b) it is a written representation of your expressed wishes concerning your health care – and as such it is part of your right of self-expression and self-determination. What could be more important? For these reasons, and especially in light of the COVID-19 threat, every Marylander should take the following action steps regarding their advance medical directive:
(1) Locate your current advance medical directive documents;
(2) Review your advance medical directive carefully and determine when it was signed;
(3) If your advance medical directive does not contain the more recent additions by the Attorney General pertaining to flexibility and the ability of an agent to change your decisions (have flexibility concerning your stated preferences), consider executing a new advance medical directive as soon as possible (assuming flexibility for your agent is desirable);
(4) Review the number of original, executed advance medical directives you may have. If you only have one original copy, consider making photocopies as these are readily accepted by hospitals and medical facilities;
(5) Review your choices and the provisions as set forth in your current advance medical directive and determine the following: do these choices and provisions represent my current choices or preferences, and my overall goals (this may or may not require the advice of an attorney)?; are my agents and the order of my agents correct, and is the contact information for each agent updated and correct?; are any of agents no longer desirable choices and should they be replaced?; are my agents still available to serve as my agent and can I depend on them at a time of crisis?; and are there any practical or other limitations that would prevent my chosen agent(s) from serving as such?
(6) If you do not have an advance medical directive, then as a practical matter it is essential that you execute one as soon as possible. This is true whether or not you utilize the services of an attorney. You may obtain a Maryland advance medical directive online, from the office of the Maryland Attorney General, from a health care facility, or through an attorney. What’s important right now is that you have an advance medical directive; that it is executed properly and is valid in the State of Maryland (if you are a Maryland resident); that it reflects the agents of your choice, along with their accurate contact information; that you have considered when your agent’s power is effective; and that you authorize the ability of your agent to change your stated preferences (flexibility) or not authorize such ability to deviate from your decisions.
Bottom line – an advance medical directive is an essential estate planning and health
care document at all times, but especially now during this world and national health crisis. Your advance medical directive must be witnessed by two witnesses in accordance with Maryland law. No notarization is required. As I wrote in a recent blog, at this time of health care crisis, perhaps the most important and practical thing any person can do is to ensure that they have an advance medical directive and an understanding of MOLST (some states call this POLST). An advance medical directive may be easily implemented in writing, orally, or in electronic form, and there is no requirement that it be notarized. Access to information is easy and straightforward – for a comprehensive overview of Maryland Advance Medical Directives, alternative forms, health care decision making policy in Maryland, and MOLST, please follow these links:
https://mhcc.maryland.gov/mhcc/pages/hit/hit_advancedirectives/hit_advancedirectives.aspx
https://mhcc.maryland.gov/consumerinfo/longtermcare/AdvanceDirectiveInformation.aspx
https://www.marylandattorneygeneral.gov/Pages/HealthPolicy/AdvanceDirectives.aspx
Medical Order For Life Sustaining Treatment – MOLST – attorneys are generally not physicians, physicians’ assistants, nurse practitioners, or nurses, have little or no background in the medical field, and are not qualified to render medical advice. So the following information is based on opinion and observation from the legal side – that aspect of estate, elder, and special needs planning that involves helping and counseling clients through the decision making process for health care decision making. To begin this brief discussion, we’ll note a few basics: the MOLST form is required in Maryland under certain circumstances – Maryland is one of only a handful of states that requires MOLST; the vast majority of Maryland residents are still not aware of MOLST, what it is, and what its purpose and function is, including persons who have been appointed as health care agents and are advocating for their principal; MOLST is ambiguous and its relation to the advance medical directive is confusing at best; how and when MOLST is implemented, and by whom, is mysterious to the individuals, health care agents, and the public; education for the public about MOLST is relatively limited and ineffectual; and the mechanism by which an individual may provide advance input or preferences – mainly, the Health Care Decisions Worksheet (or MOLST Worksheet) is virtually unknown to the public, including senior health care officials. All this to say that because MOLST is required in Maryland, it must be considered as part of planning for health care decision making in Maryland. Therefore, from a legal perspective, every person who executes an advance medical directive and all their appointed health care agents should have (arguably must have) at least a working knowledge of what MOLST is, its purpose and function, the circumstances under which it is implemented, how it may be changed, and more. All persons, especially those over 60, should review MOLST and the Worksheet with their doctor and get advice about the function of MOLST and whether it is advisable to complete a Worksheet in advance, and how the Worksheet may become part of your medical record.
Wills and Trusts – beyond the important incapacity planning documents, it goes without saying that in general everyone should have a will (a Last Will and Testament) or a will substitute (a Revocable Living Trust), especially at this time of crisis. Whether you use a will or a revocable living trust is not necessarily important, so long as you have provided for what happens upon your death for the disposition of your tangible personal property, any specific gifts or special provisions you may have, how the balance or bulk of your estate will be distributed (the residuary portion), and something that is perhaps of increasing importance given the health crisis, what happens to your property if there is a failure of distribution (your named beneficiaries are no longer living). Yet with this said, an estimated 55% of people in the U.S. have no will or estate plan, with this percentage climbing as high as 62% for divorced persons, and as high as 80% for persons under the age of 44. It’s important to remember that signing a will is easy, and there are many resources available today – via online methods and through traditional attorney representation. What’s important to remember is that while estate planning has many definitions, it may boil down to something as simple as this: estate planning is about disposing of your property to the persons or organizations of your choice, at the lowest possible cost. It can be that simple. Of course many times there are other considerations that add complexity, such as the additional incapacity planning provided by revocable trusts, special considerations for tangible personal property, how assets are passed along between spouses, marital protection, asset protection, tax considerations, and much more. But sometimes, especially during a crisis, whether that be a personal health issue, aging, a special family circumstance, or the current health care crisis, what’s important is to implement a will or revocable living trust as soon as possible without delay. I sometimes refer to this as “stop-gap” planning. For these reasons, every Marylander should take the following action steps regarding Wills and/or Revocable Living Trusts:
(1) Locate your original current will or revocable living trust. If you cannot locate your will, call the Register of Wills for your county to see if the will was registered, or contact the attorney who drafted the will;
(2) Review your will or revocable living trust carefully and determine when it was signed and that it is witnessed. Many people have copies of older wills or revocable trusts that are unsigned;
(3) Review the will or revocable living trust further to determine whether it properly reflects your current wishes concerning how you wish to dispose of your property, including tangible personal property, real estate, and other non-retirement assets. Also consider your retirement plan assets (IRAs and Qualified Plans) and check your beneficiary designations – are these correct and do they flow properly in accordance with your overall goals and planning? Along these lines, check on the same for life insurance and non-qualified annuities. Along these lines, review all assets and asset alignment, including the organization if digital assets;
(4) Review your selection of fiduciaries – your personal representatives and guardians under your will, and your trustees, independent trustees; investment and/or distribution advisors; and your trust protector(s). Are these persons still available and appropriate to serve as your fiduciary? Do you need to make any changes in selection or in the order they are to serve? Consider whether you have provided for the flexibility or lack thereof that you desire;
(5) Determine whether changes are needed to your estate planning documents (including any memorandums of intent or letter of wishes), whether they be clear and obvious changes you wish to make, or those legal-technical changes resulting from the advice of your attorney (after review and recommendation by your attorney); and
(6) If you do not have a will or revocable living trust, it may be a practical necessity that you execute one as soon as possible. As mentioned in this article, this is important whether or not you utilize the services of an attorney. You may obtain a will or revocable living trust via a reliable online/electronic method, or through an attorney.
Bottom line – a will or revocable living trust are always essential estate planning documents, but especially now during this world and national health crisis. For further guidance about the requirements of document execution and the practical problems presented by the need for social distancing, please refer to further information on our website at www.elvilleassociates.com.
Special needs trusts and/or other trusts may also need implementation or adjustment. The same due diligence guidelines outlined above generally apply.
Although six-step processes like the ones outlined in this article are recommended for thoroughness, they can be time-consuming. That’s why Elville and Associates pioneered the concept of Self-Directed estate planning through its Elville Self-Direct programs. Through Elville Self-Direct, clients can expedite the implementation their wills, trusts, powers of attorney, advance medical directives, and other planning documents without sacrificing the client educational planning element Elville and Associates is known for. This Self-Directed program includes: client educational review of all estate planning documents including in-person review (or via telephone or videoconference), client exercises and homework, audio and video learning tools, coordination and collaboration with financial and tax advisors, and a family meeting. Elville Self-Direct also incorporates our review of your current estate planning documents, whether or not those documents were drafted and produced by Elville and Associates.
At Elville and Associates, our attorneys and staff are committed to serving our clients, their families, and our communities by way of our caring for clients model and client legal education through counseling and superior legal-technical knowledge. If you would like to set an appointment with Stephen Elville by way of video conference or telephone conference to discuss estate, elder law, or special needs planning issues, please contact Mary Guay Kramer at 443-741-3635, or via email at mary@elvilleassociates.com.
Understanding the New SECURE Act – INCOMING!!
By: Stephen R. Elville, J.D., LL.M. – President and Principal Attorney of Elville and Associates, P.C.
On March 7, 2020 at our recent Client Care Program continuing legal education event at Anne Arundel Community College, I stated that the SECURE Act, and the income tax ramifications it has for most of our clients (mainly, the acceleration of income tax to beneficiaries of inherited IRAs), is arguably the most important tax and asset protection issue clients have been presented with in the past 10 years. Before we go any further, amidst all the confusion there are, in my view, basically two main issues (or questions) clients and their families need to address. They are: (I) determine whether any changes need to be made to your estate planning documents (in consultation with your estate planning attorney); and (II) determine whether you wish to (or should) address the income tax and other impacts of the SECURE Act on your retirement plan assets, your non-exempt beneficiaries, and your estate plan as a whole, including the acceleration of income tax to your beneficiaries, loss of tax deferral to your beneficiaries, and potential loss of asset protection to your beneficiaries (in consultation with your financial advisor, CPA, and estate planning attorney). If you can focus on these two main overarching issues (questions), I believe you can determine what to do about the new SECURE Act law (if anything) from an estate planning and income tax planning perspective, and act accordingly with minimal confusion or anxiety. In the paragraphs below, I will try to help make sense of the SECURE Act, including what it is, who it affects, and who is exempt. After all of this is summarily explained, I will recommend certain SECURE action steps for estate planning, tax planning, and financial planning, and then I leave you with some questions that only you will be able to answer, about SECURE and whether it represents anything positive despite its negative implications for many people.
Let us begin. About seven months ago I wrote an article for this Newsletter describing the then vague prospect of the SECURE Act, proposed legislation that would constitute a series of expansions for individual participation in and contributions to retirement plans in the U.S., along with tax credits, incentives for businesses and individuals, changes to certain long-standing retirement plan-related policies, and the unfortunate elimination of the “stretch” IRA. Introduced by way of two separate colossal proposals in early 2019 – one by the House of Representatives and one by the Senate – the then-proposed SECURE Act would change the length of time that non-exempt persons could defer income taxation upon their receipt of an inherited IRA from a plan participant. Now the mere prospect of the SECURE Act has become a reality with broad-reaching implications. The SECURE Act, signed into law on December 20, 2019 and effective January 1, 2020, now incentivizes employers to establish retirement plans for employees through small business tax credits, and eases the time limitations for employers to implement retirement plans; it removes age limitations for contributions to an IRA (beyond age 70-1/2), changes the required beginning date for minimum distributions from age 70-1/2 to 72, allows for the continuation of Qualified Charitable Contributions with certain adjustments, allows limited penalty-free withdrawals from IRAs ($5,000) for childbirth or adoption (Qualified Childbirth or Adoption Distribution), allows certain annuities to be investments in a 401(k) plan, and many more similar or related changes. And yes, the now-effective SECURE Act exempts certain persons from the effects of the acceleration of income tax on retirement plan assets. But SECURE is largely not favorable for estate planning clients who diligently saved retirement plan dollars throughout their lives and anticipated that the minimum distribution rules for beneficiary IRAs would continue to provide long-term tax deferral for children, grandchildren, nieces and nephews, and other beneficiaries. So after much speculation, what was formerly described by me as a “ballistic missile red alert” but hopeful “false alarm” has now materialized as a full-fledged strike, a direct hit where the damage is similar to that of a neutron bomb – trillions of dollars of retirement plan assets will now be taxed on an accelerated basis, but with a remaining infrastructure, some old, some new, still standing in the aftermath.
The SECURE Act affects most estate planning clients by eliminating the “stretch IRA,” the ability for retirement plan participants to leave an IRA or Qualified Plan to their “designated beneficiary” (an individual or certain trusts) over a period of many years during which the beneficiary could, if desired, annually remove only the required minimum distribution from the inherited IRA and leave the balance of funds invested in a tax deferred status over a calculated life expectancy. That is, SECURE affects most, but not all, plans. Specifically, the SECURE Act affects any person who is a participant in a retirement plan and whose goal it is to provide for the lifetime stretch out of required minimum distribution payments to beneficiaries; and also persons who have beneficiary designated their retirement plans to a “conduit” trust for a beneficiary (a conduit trust is a trust for a retirement plan beneficiary that is designed to immediately pay out any required minimum distribution to the beneficiary). Persons who are specifically not affected by the SECURE Act are those persons who do not have a retirement plan, and/or persons who plan to leave their retirement plan assets directly to charity at their deaths.
Under the old regime, there were two classes of beneficiaries for inherited IRAs: (I) designated beneficiaries (hereinafter referred to as (“DBs”) (those persons or certain trusts that qualified for life expectancy treatment for required minimum distribution purposes); and (II) non-designated beneficiaries (hereinafter referred to as (“NDBs”) (those persons, trusts, or entities such as an estate, that did not qualify for life expectancy treatment for required minimum distribution purposes). Now under the new regime we have three (not two) classes of beneficiaries of inherited IRA assets: (a) Eligible Designated Beneficiaries (hereinafter referred to as (“EDBs”) – this is the new “preferred case” of retirement plan beneficiaries – persons who are eligible to continue stretching inherited IRAs – and then the old original classes of (b) DBs, and (c) NDBs. Probably the most confusing thing about SECURE is that much of the old law continues to be effective (notwithstanding several unanswered questions that will be clarified when the complete Treasury Regulations are eventually promulgated). In any event, the following EDBs are exempt: (1) spouses; (2) minor children; (3) disabled persons as defined by IRC Section 72(m)(7); (4) chronically ill persons as defined by IRC Section 7702B(c) (2); and (5) persons who are not more than ten (10) years younger than the plan participant. For all persons who are not EDBs (non-EDBs), the ability to stretch out the inherited IRA is now limited to ten (10) years. So to reiterate, DBs, or ordinary “designated beneficiaries”, will no longer have preferred status and will have to take 100% of their inherited IRA funds no later than ten (10) years after the death of the plan participant; while EDBs, the new preferred class of beneficiaries so to speak, will be able to continue the lifetime stretch out of retirement plan assets – that is, so long as beneficiary designations are correct, and in the case of beneficiary designation to a trust, so long as the trust is drafted properly in accordance with the IRS Code and the Regulations. The non-designated beneficiary class of beneficiaries (NDBs) remains part of the law and it is extremely important to consider that NDB treatment can still be triggered, even for EDBs. One important point that is of concern to many clients and families with loved ones who are disabled or chronically ill – although we are still early in the SECURE environment, it is clear that properly drafted special needs trusts will qualify for treatment as EDBs for the protection of these individuals.
Is the SECURE Act the monster it has been described to be, or more of a friendly dragon, one that forces us to take a much closer look at retirement plan assets (savings) and how they are actually taxed (and remember, they all (retirement plan assets) are eventually taxed in some form, even for the person who contributes after-tax dollars to a Roth IRA or Roth 401(k))? Doesn’t the SECURE Act potentially have a silver lining (maybe the government should have called it the Silver Act for all the older Americans it will impact), in that it will cause estate planning clients to examine the real outcomes of what happens to inherited IRAs after their deaths, and how they may be able to get ahead of the effects of SECURE by being proactive, thereby making a winning play in the end? The answers may be “yes.” After all, for example, it is generally better to die with a Roth IRA or Roth 401(k), and it is better to provide charities with the full benefit of tax-free contributions from retirement plan assets where the plan participant has genuine charitable intent, and other planning positives that can result after closer scrutiny. So I will leave you to think about and answer these questions for yourself. But to properly do so, it will be necessary for most clients to consult with their advisory team – CPA, financial advisor, estate planning attorney, and in some cases, insurance broker. Do this within the next 12 to 24 months, and you will be doing everything you can to address the estate planning and income tax ramifications of the SECURE Act. Along these lines, there are several potential strategies available to address and deal with the effects of SECURE on your estate planning. I will be available to address your questions and concerns, along with our estate planning team of attorneys, in coordination and collaboration with your Advisors. Remember that any SECURE-related adjustments to your estate planning documents will be relatively straightforward, and Elville and Associates is currently reaching out to all clients to schedule update meetings. We are also doing everything possible to keep you updated, provide action-related advice, educate you and your advisors, and collaborate in the solution process. If you have not yet made an appointment for your SECURE Act update meeting, please contact Mary Guay Kramer via telephone at 443-741-3635 or via email at mary@elvilleassociates.com.
By: Stephen R. Elville, J.D., LL.M. – President and Principal Attorney of Elville and Associates, P.C.
Over the past several days many people have asked “what is important right now regarding estate planning/elder law and the coronavirus?” Although there are many responses to this question, and I am releasing a new article on this subject in the next few days, my first reaction is always “incapacity planning.” Going further, because there are several aspects of incapacity planning, let me be clearer and share my second reaction which is always “healthcare, health care decision making, and the advance medical directive.” I’ll also add MOLST (the Medical Order For Life-Sustaining Treatment” to this list as a third reaction. At this time of health care crisis, perhaps the most important and practical thing any person can do is to ensure that they have an advance medical directive and an understanding of MOLST (some states call this POLST). An advance medical directive may be easily implemented in writing, orally, or in electronic form, and there is no requirement that it be notarized. Access to information is easy and straightforward – for a comprehensive overview of Maryland Advance Medical Directives, alternative forms, health care decision making policy in Maryland, and MOLST, please follow these links:
https://mhcc.maryland.gov/mhcc/pages/hit/hit_advancedirectives/hit_advancedirectives.aspx
https://mhcc.maryland.gov/consumerinfo/longtermcare/AdvanceDirectiveInformation.aspx
http://www.marylandattorneygeneral.gov/Pages/HealthPolicy/AdvanceDirectives.aspx
Are you taking the time to think about this issue?
Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation
By: Stephen R. Elville, J.D., LL.M. – President and Principal Attorney of Elville and Associates, P.C.
What’s important right now for your estate planning? In short, three (3) things: locate all original documents – wills, trusts, powers of attorney, advance medical directives, memorandums – and review them for accuracy and any needed changes; revise and update all documents that require changes or updating, and check/verify all asset alignment and beneficiary designations to ensure continuity of the plan; and lastly organize all your estate planning documents, financial documents and information, digital asset information, letter of wishes, memorandums or instructions, and any other information you deem pertinent to your plan and legacy. Locate, revise/update, and organize.
Are you taking the time to think about your estate planning?
Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation
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