Wills, Trusts & Estates
Law Office of Steven M Berger, LLC

FAQ

Frequently Asked Questions

 

Trusts are appropriate for many people, but not for everyone. Here is a sample list of situations where you might want a revocable living trust.

Probate is a process where your will is proved and the Court assures your assets are distributed according to your wishes after all your creditors are paid. More Information ›

Our firm is committed to providing estate planning and administration services to middle class families in Maryland. We focus on you and your family's needs at a reasonable cost.

State law creates a plan to pass your assets to your heirs. The most typical scenario is to split your assets between your spouse and your children. They will designate someone close to you to serve as your Personal Representative or Executor. The Court will name a guardian for your children.

A trust is a document that outlines what you want done in situations such as incapacitation or death. The person you designate as trustee has legal title to your assets and is charged with ensuring compliance with your wishes as outlined in the trust. In the case of disability, the trustee will take care of your assets while you are incapacitated. Your trust also lays out how to distribute your money and assets to your designated beneficiaries upon death. Creating a trust limits probate court involvement in settling your affairs.

There are more upfront costs for trust planning as you are paying for many of the costs that could be deferred until later. Those deferred costs could be considerably larger if a guardianship is required, a will dispute arises or avoidable taxes have to be paid. Our firm will help you evaluate those costs and provide you a fixed fee estimate for the cost of a trust.

Your first priority is to deal with your grief; there is no rush to make decisions and take action. The joint accounts become your accounts and are not affected by a will. A jointly owned house becomes your house. A home appraisal now could save on income taxes should you decide to sell the house in the future. If your joint accounts include stocks or mutual funds, the assets are entitled to a step-up in tax basis, explained below.

Cost basis is the original value of an asset for tax purposes, usually the purchase price, adjusted for stock splits, dividends and return of capital distributions. In order to simplify taxes when property passes upon death, the assets receive a step-up in cost basis. This simply means the new cost basis is the market value at the date of death. Half of the shares considered owned by your spouse in a joint stock or mutual fund account are not subject to any capital gains tax on any amount gained until the date of death. For example, if you sell half of your stocks one year after your spouse passes, you would only pay capital gains on any gain in the one year between the date of death and selling. (Occasionally, there is an additional six month grace period to the date the step-up takes effect.)

Creating a revocable trust to save on estate taxes is not necessary for most families today. However, trusts are effective in protecting a family’s wealth in the event of a second marriage by the surviving spouse, protecting assets from creditors after one of the spouses has passed away, and protecting a child’s inheritance from mismanagement or divorce. More Information ›

There is no easy answer to this question other than there will not be immediate qualification for the spouse going to a nursing home. If your desire is to preserve your estate, you will need to come up with a plan to deal with the probability of needing skilled nursing care in your later years. The Medicaid Rules recognize that a healthy spouse should not be impoverished by the cost of care for the spouse in the nursing home. However, there are planning and tax costs to these strategies which can limit the choice of care. Almost all dollars spent on medical assistance for the elderly in Maryland are for nursing home care which limits the options of in-home care and assisted living.