By: Chris Wehner, CPA, CFP – Gross, Mendelsohn & Associates

The SECURE 2.0 Act of 2022 (“Secure 2.0”) was passed on December 29, 2022, and focuses primarily on enhancing retirement plan incentives for individual taxpayers.

Let’s review some key provisions of the bill and how they could impact you and your business.

Automatic Enrollment in Employer Retirement Plans

Human psychology is fascinating, and the Secure 2.0 Act of 2022 plays into that by automatically enrolling employees in their employers’ retirement plan whenever the employee is first eligible to participate. This is not a new concept, but it hasn’t been legislatively mandated before now.

Employees may opt out of participation, but studies show that more employees participate (fewer opt-out) when automatically enrolled than when employees need to opt-in to participate. 

The default election term is that certain employers will withhold a minimum of 3% and a maximum of 10% of an employee’s compensation and contribute that to the plan. This withholding percentage will increase by 1% annually until it reaches a minimum of 10% and a maximum of 15%. All current 401(k) and 403(b) plans are grandfathered.

The following employers are not subject to this automatic enrollment provision:

• Employers with fewer than 10 employees
• Businesses that have not been in business for more than three years
• Churches
• Governments

This provision is effective for plan years beginning after December 31, 2024.

Retirement Savers Match

A nonrefundable credit is currently available for certain individuals who contribute to an IRA, employer plan, or ABLE account. This credit is repealed and replaced with a federal matching contribution that must be deposited into a taxpayer’s IRA or retirement plan. The match is equal to 50% of the individual’s contribution up to $2,000 per individual. The amount phases-out for taxpayers who file a joint return and have income between $41,000 and $71,000 ($20,500 and $35,500 for taxpayers who file single or married filing separate; $30,750 and $53,250 for head of household filers).

The Treasury Department will be advertising these changes in a marketing campaign to increase public awareness of this benefit.

This provision is effective for taxable years beginning after December 31, 2026.

Required Minimum Distribution Age Change

Secure 2.0 increases the maximum age for individuals to begin withdrawing retirement plan funds to 73 beginning on January 1, 2023 and increases it again on January 1, 2033 to 75. Previously, the SECURE Act of 2019 increased the age from 70 ½ to 72.

Retirement Plan Catch-Up Limits

For 2023, individuals 50 or older may contribute an additional $1,000 to their IRA accounts; the maximum allowed is $6,500 for those under 50. Individuals over 50 may also contribute an extra $7,500 to employer retirement plans for 2023; the maximum allowed is $22,500 for those under 50. Secure 2.0 indexes this catch-up contribution to inflation.

This indexing of the catch-up contribution amounts is effective for taxable years beginning after December 31, 2023.

Certain older employees who participate in their employer’s retirement plan are also allowed to make catch-up contributions. Secure 2.0 increases these catch-up contributions to the greater of 1) $10,000 or 2) 50% more than the regular catch-up amount in 2025 for individuals who have attained ages 60, 61, 62 and 63. The increased amounts are indexed for inflation after 2025.

These retirement plan catch-up contribution amounts are effective for taxable years beginning after December 31, 2024.

Student Loan Assistance

Student loan debt is hitting younger employees hard, hard enough that many aren’t saving for retirement and devoting whatever they can to paying down that debt. Secure 2.0 allows employers to make matching contributions to retirement plans with respect to qualified student loan payments. A qualified student loan payment is any debt incurred by the employee solely to pay qualified higher education expenses of the employee. 

This section is effective for contributions made for plan years beginning after December 31, 2023.

Military Spouses Retirement Plan Eligibility

Many times, spouses of members of the military aren’t able to satisfy the minimum eligibility requirements required to become participants in employer plans or vest in employer contributions. Secure 2.0 provides small employers with a tax credit with respect to defined contribution plans if they satisfy all of the following requirements:

• Make military spouses eligible for plan participation within two months of their hire date, 
• Make the military spouse eligible for any matching or non-elective contributions they would have been eligible for had they satisfied the vesting requirements of having two years of service and 
• Make the military spouse 100% immediately vested in all employer contributions.

The credit is equal to the sum of $200 per military spouse and 100% of employer contributions up to $300 for a maximum credit of $500. The credit applies for three years with respect to each military spouse that is also not classified as a highly compensated employee. 

This section is effective for plan years beginning after December 29, 2022.

Retirement Plan Participation Incentives

Many employer-sponsored retirement plans are subject to nondiscrimination testing which, if employee participation is low, can affect how much other employees may contribute to the plan. Employers are now allowed to provide de minimis financial incentives to employees for participating in employer-sponsored retirement plans. These incentives must be paid with non-plan funds.

This section is effective after December 29, 2022.

Early Distribution Penalty Waiver

Normally, if an individual withdraws funds from a qualified plan or IRA and they are younger than 59 1/2, the IRS would assess a 10% penalty on the amount of that distribution unless it was for certain qualified transactions like a first-time home purchase or medical expenses. Secure 2.0 allows an exception for certain distributions used for emergency expenses, which are unforeseeable or immediate financial need relating to personal or family emergency expenses and have the following terms:

• The early distribution may be taken only once per year,
• The distribution can be no more than $1,000 and
• The taxpayer may repay the distribution within three years. 

If a taxpayer chooses to repay the distribution, no other distributions for emergency expenses may be taken during the repayment period unless full repayment has occurred.

This section is effective for distributions made after December 31, 2023.

Automatic Portability of Participant Accounts

Many participants of employer-sponsored retirement plans who have terminated employment with the sponsor leave their accounts with their former employer’s plan without rolling over the funds. Employers have had the option, depending on the balance in the plan, to either distribute those funds to participants immediately or roll the balance out of the plan and into an IRA for the participant after the participant’s termination of employment. Third-party administrators may now offer these services to automatically transfer accounts that satisfy the account balance requirements. 

This section is effective for transactions on or after December 29, 2023.

Starter 401(k) Plan

Secure 2.0 allows employers that do not sponsor a retirement plan to create a plan that would generally require that all employees be automatically enrolled and contribute at a rate of between 3-15% of compensation. 

This section is effective for plan years beginning after December 31, 2023.

Qualified Distribution of 529 Funds to Roth IRAs

Parents and caregivers of children may face uncertainty about whether to contribute to a 529 plan because, previously, those funds could only be used to fund qualified educational expenses. Secure 2.0 now allows beneficiaries of 529 college savings accounts to roll over a maximum of $35,000 over their lifetime from their 529 account to a Roth IRA.

These rollovers would be subject to Roth IRA annual contribution limits and the 529 account must have been open for more than 15 years. This provision may eliminate some of the hesitancy surrounding contributing to an account that may ultimately never be utilized if the child doesn’t go to college or have other qualified educational expenses or if the child secures scholarships that substantially pay for their higher education.

This section is effective with respect to distributions after December 31, 2023.

Resolution to Erroneous Excess Distributions from Retirement Plans

Many individuals receive more than they anticipated from a qualified plan like a 401(k) or IRA. The process for correcting these mistakes can be cumbersome and fiduciaries may require the individual to repay the plan for the excess amounts distributed, which could be a substantial amount if the error isn’t caught for several years.

Secure 2.0 allows plan fiduciaries to decide whether to recoup overpayments made to retirees. If plan fiduciaries decide to recoup overpayments, limitations and protections apply to protect innocent retirees. 

This section is effective after December 29, 2022.

Penalty on Shortfall in Required Minimum Distributions

The penalty for failing to take the required minimum distribution amount from retirement plans has been reduced from 50% of the shortfall to 25%. If the failure is corrected timely, the penalty is reduced to 10%. 

This section is effective for taxable years beginning after December 29, 2022.

There are a number of other provisions in the bill that are not summarized above, but most are aimed at making saving for retirement and withdrawing from tax-favored plans easier for individuals and participants. 

Need Help?

Contact us here or call 800.899.4623.

Chris Wehner, CPA, CFP, of Gross Mendelsohn & Associates helps families and businesses develop and execute tax strategies that help them meet their financial goals.

Posted in Blog | Comments Off on Significant Retirement and Tax Changes in the SECURE 2.0 Act of 2022

By: Rebecca Timonen – Paralegal and Asset Alignment Coordinator – Elville and Associates, P.C.

If you recently purchased a home or transferred real estate into your trust, beware of scammers!

Scammers will often mail an official looking letter that will try and fool you into paying $83 -$109. The letters are typically labeled in bold as a “Recorded Deed Notice.” Sometimes they may look like a bill because there is a record ID number, along with a service fee and a “respond by” date. Often the letter/bill states that the homeowner should obtain a copy of their property assessment profile that includes a copy of their deed or recorded title. There are usually details about the property, including address, parcel number, and date of purchase or transfer, making it appear official. There might even be a payment slip and envelope to mail a payment.

YOU DO NOT NEED to pay an exuberant amount of money for documentation of your home. 

Whenever a real estate transaction takes place, a deed will be recorded in the Maryland Land Records. It is important to record your deed to establish a clear title – if this is not done, then it could result in high legal fees to perform title search. 

While recording a deed is necessary, the potential downside is that information then becomes public record through the Maryland Land Records. In particular, your name, address, price, and a description of the property is available online at https://mdlandrec.net/main/index.cfm. Scammers use it to try and convince you that you need to pay top dollar for certain documents.

To combat this problem, it is important to educate yourself, so that you will recognize the scam when you see it.

A solicitation will come to you in the mail.  If you get a solicitation with the above information, do not pay any money. The deed to the property is mailed to you free of charge after the deed gets recorded. If at any time you need a copy of your deed, you can contact the County Clerk who will issue a copy for much less than what the scammers are asking. In general, any solicitation asking you to pay money after you purchase property or transfer it into your trust is a scam. If you have any questions about a deed prepared by our office, please contact us at (443) 393-7696. If you still feel uncertain, you can also contact the County Clerk for further guidance.

Rebecca Timonen is an experienced paralegal here at Elville and Associates whose primary focus is on deed preparation and estate planning document drafting. As it relates to deeds, she drafts, reviews deeds drafted by others, and is a liaison between the firm and the title attorney. She also coordinates out of state deed preparation requests. Once deeds are signed she records them with the various counties, saves them for the firm’s records and returns recorded deeds to clients. 

Recently, Rebecca was promoted to the very important position of Asset Alignment Coordinator for the firm as well.

Posted in Blog | Comments Off on Deed Recording Scam – Beware!

[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.21.0″ custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.21.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_video src=”https://www.youtube.com/watch?v=jqbvDi7zXhY” _builder_version=”4.21.2″ _module_preset=”default” global_colors_info=”{}”][/et_pb_video][et_pb_text _builder_version=”4.21.2″ _module_preset=”default” global_colors_info=”{}”]

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Posted in Videos & Webinar Recordings | Comments Off on Webinar — The Essentials of Estate Planning and Elder Law

[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.21.0″ custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.21.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_video src=”https://www.youtube.com/watch?v=UICHxBX7EFk” _builder_version=”4.21.2″ _module_preset=”default” global_colors_info=”{}”][/et_pb_video][et_pb_text _builder_version=”4.21.2″ _module_preset=”default” global_colors_info=”{}”]

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Posted in Videos & Webinar Recordings | Comments Off on Webinar – What Families Need to Know About Planning for a Loved One with Special Needs

What Is a Spendthrift Trust?

A spendthrift trust protects beneficiaries who may need help managing their finances responsibly. The trust preserves the beneficiary’s inheritance for use over an extended period.

Spendthrift trusts work by giving a trustee, rather than the beneficiary, the power to make financial decisions. The trustee manages the trust assets and distributes funds to the beneficiary for their needs and support.

The trust’s terms outline the trustee’s discretion in making distributions, which can be limited or flexible. The creator of the trust, or grantor, may leave the timing and amount of distributions up to the trustee. Or, they may opt to establish a fixed schedule.

These restrictions prevent the beneficiary from squandering the assets.

According to the Survey of Consumer Finances, the median inheritance is $69,000; the median for trust fund wealth transfers is $285,000.

Many individuals planning their legacies wish to provide for their families and loved ones. Yet an Ohio State University study determined that those who receive an inheritance spend half. One-third of those who received an inheritance spent it all within two years and had negative savings. That said, a typical inheritance may not provide sustained financial security to beneficiaries.

Creating a spendthrift trust for your loved one can limit their spending and protect your wealth. While this type of trust may come at the expense of their autonomy, it can provide them with greater financial security.

The Spendthrift Clause

An essential feature of a spendthrift trust is the spendthrift clause, which protects the contents of the trust. Under the clause, the beneficiary cannot satisfy debts with their interest in the trust. Should the beneficiary have debts or a civil judgment against them, the creditors cannot obtain the trust assets.

Why Would Someone Create a Spendthrift Trust?

You may want to provide for a loved one but have concerns about who they will use the money. This is where a spendthrift trust can serve as a suitable option.

Spendthrift trusts can benefit the following individuals:

• Children – Parents often have concerns about how their minor and young adult children will use an inheritance. Minors typically need more life experience to make independent financial decisions. Some parents want to provide for college-age adult children but worry about giving them full access to the funds.Parents can determine when their children receive the funds (for instance, when the child reaches a certain age).
• People who are not good with money – Some adults struggle with financial planning and impulse control. For these individuals, a spendthrift trust can ensure a steady source of support.
• Vulnerable individuals – People who are susceptible to external influences that threaten their financial well-being can benefit from the security and structure of a spendthrift trust. If your loved one has been taken advantage of before, you may worry that they will be exposed to improper influence again.
• Those with addiction disorders – A spendthrift trust could prevent a beneficiary from exhausting the trust fund to support an addiction to gambling, illicit substances, or compulsive spending.

What Are the Benefits of Spendthrift Trusts?

Spendthrift trusts have several benefits:

• Shielding assets from creditors and lawsuits.
• Providing your loved one steady income stream without allowing them to exhaust the trust through overspending. This can be particularly helpful if you have concerns about your loved one’s ability to make money independently.
• Preserving generational wealth and preventing your loved one from blowing a significant portion of their inheritance.

Encouraging responsible money habits. Providing a younger person with full access to the trust only after they turn 21 can help them develop budgeting skills. Likewise, you may choose to limit them to a certain amount of monthly income.

Consult With Your Attorney

If you want to learn more about creating a spendthrift trust to provide for your loved ones, consult the estate planning attorneys at Elville and Associates. They can help you decide whether a spendthrift trust is right for your unique situation, answer your specific questions, and help create a path forward for your planning needs.  Please contact Community Relations Director Jeff Stauffer at jeff@elvilleassociates.com, 443-393-7696 x117 or Managing Principal and Lead Attorney Stephen Elville at steve@elvilleassociates.com, 443-393-7696 x108 to arrange for your free initial consultation.   

Posted in Blog | Comments Off on What Is a Spendthrift Trust?

By: Stephen R. Elville, J.D, LL.M., Managing Principal and Lead Attorney – Elville and Associates, P.C.

Runners are told to “run tall” to have the best technique; swimmers are instructed to “swim tall” so that they stretch out in the water for optimal performance; meditators are advised to “sit tall” for the best composure and results; actors and public speakers are trained to “be tall” in their posture, and in their thinking and imagination.  Are you “tall” in your estate planning?  Do you have a “tall” estate plan and a “tall” collaborative advisory team for your planning, or is your planning in need of physical therapy, training, and a fitness test?  Whether you are tall or less than tall physically is of no consequence – anyone can have a tall estate plan with the proper commitment, counseling, and continuing legal education, along with continued diligence and updating throughout your lifetime.  As this glorious latter part of the summer begins, consider the possibility of growing to new heights in your estate planning for planning that works, both for your lifetime and for your legacy.

#elvilleeducation

Posted in Blog | Comments Off on “Tall” Estate Planning

By: Shannon F. Werbeck – Associate Attorney – Elville and Associates, P.C.

Choosing a successor to manage your affairs after your death and in the event that you are incapacitated is a crucial step in the estate and trust planning process. Listed below are the roles in estate and trust planning that an individual must assign in their estate plan. 

Health Care Agent 

A health care agent is named in the Advance Medical Directive. They are appointed by an individual (the principal) to make health care decisions on their behalf in the event the principal is incapacitated and unable to make these decisions on their own. The designated agent should be someone the principal trusts and who is willing and able to make difficult medical decisions on their behalf.  A back-up agent should also be named in the event the primary health care agent is unable to act. A health care agent is also referred to as a health care proxy, health care surrogate, or medical power of attorney. 

A health care agent is responsible for making decisions about the principal’s medical treatment, based on the principal’s previously expressed wishes laid out in their Advance Medical Directive or, if those wishes are not known, based on what the agent believes is in the principal’s best interest. The agent should makes these decisions based on the principal’s personality, religious beliefs, values and how the principal has handled other important medical decisions in the past. 

The role of a health care agent may include the following:

1. Making Medical Decisions: The agent makes decisions about the principal’s medical treatment, including treatment options, medication, and end-of-life care.
2. Consulting with Healthcare Providers: The agent may consult with the principal’s healthcare providers to understand the principal’s medical condition and treatment options.
3. Communicating with Family and Friends: The agent may communicate with family members and friends to keep them informed of the principal’s medical condition and to get input on medical decisions.
4. Accessing Medical Records: The agent may access the principal’s medical records to understand the principal’s medical history and treatment preferences.
5. Advocating for the Principal: The agent advocates for the principal’s medical wishes and ensures that the principal receives the best possible medical care.

Financial Agent 

A financial agent is designated in the General Durable and Maryland Statutory Power of Attorney documents which authorizes an agent to act on behalf of an individual (the principal) regarding financial matters. The agent has a fiduciary duty to act in the best interest of the principal, following their wishes and instructions as outlined in the power of attorney documents. A back-up agent should also be named in the event the primary financial agent is unable to act. The agent may be given broad or limited authority, depending on the terms of the power of attorney documents.

Some of the responsibilities and tasks that a financial agent may be authorized to perform include:

1. Managing Finances: A financial power of attorney allows the agent to manage the principal’s finances, including paying bills, managing bank accounts, investing assets, and filing tax returns.
2. Making Financial Decisions: The agent is authorized to make financial decisions on behalf of the principal, such as buying or selling assets, managing investments, and making donations to charities.
3. Accessing Financial Information: The agent can access the principal’s financial information, such as bank statements, tax returns, and investment accounts.
4. Managing Real Estate: The agent may have the authority to manage the principal’s real estate holdings, such as buying, selling, or leasing property.
5. Representing the Principal: The agent may represent the principal in legal and financial matters, such as signing contracts, negotiating deals, and communicating with financial institutions.

The agent may be given the authority to act immediately, or the principal may specify in the power of attorney documents that their power only becomes effective in the event of the principal’s incapacitation. It is important for the principal to choose an agent who is trustworthy, reliable, and capable of managing their affairs in accordance with their wishes. The agent should be someone who is familiar with the principal’s values and preferences, and who is willing and able to act in their best interest. It is also important for the principal to communicate clearly with the agent about their wishes and expectations, as outlined in the power of attorney documents, and to regularly review and update the power of attorney as needed. 

Personal Representative 

The Personal Representative is an individual or entity designated in a Last Will and Testament by an individual creating a Will (the Testator). It is important that the testator choose a responsible and trustworthy individual or entity to serve as the personal representative. The testator should also designate a back-up personal representative in the event the primary personal representative is unable or unwilling to act in their role. The responsibilities of a personal representative can vary depending on the specifics of the estate and the instructions provided in the Last Will and Testament.  Their main responsibility is to administer the decedent’s estate and to ensure that the estate administration process is carried out correctly, efficiently, and in accordance with the wishes of the decedent. 

The administration process that the personal representative is responsible for consists of: 

1. Opening an estate with the Register of Wills Office
2. Identifying and gathering all of the descendants’ assets, including real estate, bank accounts, investment accounts, personal property, and any other assets.
3. Filing of an inventory outlining what assets are part of the probate estate and allowing for time for claims from any possible creditors who the decedent may have owned money.
4. Filing of an accounting to display to the Register of Wills what is taking place inside of the estate. 
5. Paying any outstanding debts and taxes owed by the estate, including filing any necessary tax returns.
6. Distributing the assets of the estate to the beneficiaries named in the Last Will and Testament.
7. Closing the estate and filing any final reports or tax returns required by Maryland law.

Guardian 

If there are minor children involved, you will want to designate an individual to be appointment guardian, or co-guardians, of your minor children in the event of your death. You should name back-up Guardians in the event the named Guardian is unable or unwilling to take on this responsibility. Naming a guardian for your children in a Last Will and Testament is an important step in ensuring that your children are taken care of in case the worst happens. A guardian is someone who will take legal responsibility for your children and make decisions about their care, upbringing, and education.

The following are important factors to take into account when designating a guardian for your children in your Last Will and Testament: 

1. Choose someone you trust. It is important to choose a guardian who you trust to provide a safe and stable home for your children, and who share your same values and beliefs. 
2. Consider the guardian’s ability to provide for your children. The guardian should be able to provide financially for your children and should have the time and resources to care for them properly.
3. Speak to the potential guardian. A guardian assumes a great deal of responsibility. Before naming an individual as a guardian in your Last Will and Testament, it is important to discuss with them whether they are willing and able to take on the responsibility.
4. Name alternate guardians. It is a good idea to name alternate guardians in case your first choice is unable to take on the responsibility.
5. Review and update your will regularly. Your choice of guardian may change over time as your circumstances and relationships evolve, so it is important to review and update your will regularly to ensure that your wishes are accurately reflected.

If you fail to designate a guardian for your minor children, the court may decide who will be responsible for raising and taking care of them. By naming a guardian in your Last Will and Testament, you can provide peace of mind and security for your children in the event of your death. 

Trustee  

You will choose a trustee, or co-trustees, to oversee your assets if you establish a Revocable Living Trust. A trustee is responsible for managing the assets held in trust in accordance with the terms of the trust agreement and the wishes of the person who created the trust (the grantor). It is important to name successor trustees in the event the named trustee is unable or unwilling to act. The role of the trustee is an important one, as they are responsible for managing assets that are intended to provide financial security and support for the beneficiaries of the trust. It is important to choose a trustee who is responsible, trustworthy, and knowledgeable about financial matters and the legal requirements of managing a trust.

The trustee is typically responsible for a range of duties, including:

1. Managing the assets held in the trust, including investing, and distributing them as appropriate.
2. Keeping accurate records of all financial transactions and activities related to the trust.
3. Communicating regularly with the beneficiaries of the trust and providing them with updates on the status of the trust.
4. Resolving any disputes or legal issues that may arise related to the trust.
5. Ensuring that the trust is administered in accordance with Maryland law and the terms of the trust agreement.

Designating an individual for each of these fundamental roles is very important when creating your estate and trust plan. This is the core group of individuals who will help ensure you are cared for in the event you are incapacitated as well as continue your legacy after your death. Although selecting the correct person for each critical position may be challenging, the attorneys at Elville and Associates are dedicated to counseling you towards choosing the right individual for each role in case the worst happens.

Shannon F. Werbeck is an Associate Attorney with Elville and Associates and an integral member of the firm’s busy Estate Planning Department. She educates and counsels clients through the entire estate planning process – beginning with the initial consultation, followed by the design and implementation of their plans, as well as the necessary maintenance and updating of their planning as changes occur in the laws and their lives.  Shannon may be reached at shannon@elvilleassociates.com, or by phone at 443-393-7696 x148.

Posted in Blog | Comments Off on Fundamental Roles and Responsibilities Assigned in Estate and Trust Planning

By: Shannon Goodwin – Senior Associate Attorney

When you think about your estate and what you are going to leave behind for your loved ones, your mind most likely jumps directly to money or real property – your home, investments, retirement assets, vacation homes, life insurance, and so on. These are all important assets to think about when doing your estate planning, but what about those priceless items that hold more sentimental value than monetary value? That old rolling pin used to bake pies with your grandchildren, that broken fishing rod that went on one too many fishing trips, or that tchotchke that triggers a funny memory from that one family vacation fifteen years ago? Even those items that may hold great monetary value, but hold an even greater sentimental value – your engagement ring or that autographed baseball from the game you went to with your dad? These are often the assets that mean the most to your loved ones, regardless of their monetary value. These items are your tangible personal property – your “stuff.”

There are a few different ways to dictate how your tangible personal property is distributed upon your death. A memorandum or schedule is a separate document attached to your will or trust that allows you to list individual items of tangible personal property and assign each item to a specific person. This supplemental document is referenced in the will or trust but may be filled out after the execution of the will/trust. It can be handwritten or typed, but must be signed and dated to be valid. This allows you to update it or make changes as often as you like without having to update or restate your entire will or trust. Not all states allow these supplemental documents, but Maryland is one of the states that does recognize personal property memorandums as valid estate planning documents.

Any items that are not specifically addressed by the personal property memorandum can be collectively referred to and divided equally amongst multiple beneficiaries. This allows the beneficiaries to choose and divide the items amongst themselves. If there are multiple beneficiaries concerned with ensuring the property is divided as equally as possible based on monetary value, then the property can be appraised and divided based upon each item’s individual cash value. An appraisal is a great tool to help avoid any potential fights amongst beneficiaries. However, most appraisers will not appraise insignificant items such as clothing – unless of course we are dealing with expensive furs or an autographed basketball jersey that holds significant monetary value. 

It’s important to keep in mind that inheritance tax does not just apply to cash distributions, but to distributions of tangible personal property as well. Any valuable items of tangible personal property that are bequeathed to an individual not exempt from inheritance tax – such as a niece, nephew, cousin, or friend – will be subject to inheritance tax. The item(s) would first need to be appraised so that the tax could be assessed on its appraisal value at the time of death. Inheritance tax even applies to items of tangible personal property gifted to a non-exempt individual within two years prior to death. 

The next time you revisit your estate planning, be sure to consider those items of tangible personal property stuffed away in your closet or attic – whether it holds monetary value or not, the sentimental value grows with each generation it’s passed to until it eventually becomes a family heirloom.

Shannon K. Goodwin is a Senior Associates with Elville and Associates and the leader of the firm’s busy Estate and Trust Administration Department. Through her guidance, she partners with clients as they address the sometimes complex matters of the administration of loved ones’ estates from start to finish, including helping navigate the probate process, inventory and information reports, accountings, and much more. Shannon may be reached at sgoodwin@elvilleassociates.com, or by phone at 443-393-7696 x116.

Posted in Blog | Comments Off on Tangible Personal Property – What Happens to Your “Stuff” After You Die?

[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.21.0″ custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.21.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_video src=”https://www.youtube.com/watch?v=V9YBsnCD_ds” _builder_version=”4.21.0″ _module_preset=”default” global_colors_info=”{}”][/et_pb_video][et_pb_text _builder_version=”4.21.0″ _module_preset=”default” global_colors_info=”{}”]

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Posted in Videos & Webinar Recordings | Comments Off on Webinar – Understanding Estate and Trust Administration

[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.21.0″ custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_row admin_label=”row” _builder_version=”4.21.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_video src=”https://www.youtube.com/watch?v=AXoIwOeBPT0″ _builder_version=”4.21.0″ _module_preset=”default” global_colors_info=”{}”][/et_pb_video][et_pb_text _builder_version=”4.21.0″ _module_preset=”default” global_colors_info=”{}”]

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Posted in Videos & Webinar Recordings | Comments Off on Putting It All Together – A Diagnosis to Adulthood Guide of Navigating the Disability World