October 27, 2012
The Maryland legislature once again has tinkered with the law governing powers of attorney in Maryland. That law includes Power of Attorney Forms, which if used, or if one’s power of attorney is “in substantially the same form” as one of the form documents, then the law bestows certain rights on the holder of the power of attorney, namely, the right to obtain payment of one’s legal fees from the person or institution who refuses to honor the power of attorney where a legal action is taken to compel acceptance. This right to legal fees differs from the general “American rule” of jurisprudence which holds that each litigant in a legal action must pay his own legal fees.
Unfortunately, the forms in the statute are generally not sufficiently comprehensive and lack certain important provisions. Hence, many lawyers recommend using a hybrid power of attorney which incorporates the statutory form provisions, and which hybrid is designed to be “in substantially the same form” as the form of the document in the statute. That way, clients can have a sufficiently comprehensive power of attorney and retain the right to legal fees under the law while not using the precise form in the statute, which many lawyers have determined to be defective.
Within the past year, Maryland’s legislature, only a short time following the enactment of the original power of attorney legislation, has enacted legislation changing the language of the forms in the power of attorney statute. After the first such revision, a number of lawyers still were using the form documents from the statute before revision. I know this, having reviewed several such documents brought in by clients seeking a review of their estate plans. Generally in those circumstances I contact the lawyer who drafted the power of attorney to advise that the law has changed.
The problem is that, if a lawyer uses the statutory form from a prior version of the statute after the effective date of the statutory revision, then the client may not have a power of attorney to which the right to recover legal fees would apply. While this will not cause the power of attorney itself to be invalid, if the lawyer’s intention is to provide his client with a power of attorney that includes the right to recover legal fees, the use of the out of date form language may defeat that intended purpose.
Now, for the second time within a relatively short time, the legislature has tinkered with the statutory language in the power of attorney form set forth in Maryland’s power of attorney law. Such change deals with a technical issue relating to qualified retirement plan assets and is more in the way of notification to the person executing the power of attorney. Nevertheless, even if the power of attorney form under the prior version of the statute grants the same powers as the new revised version, using the prior form after October 1, 2012, the effective date of the new statutory revision, may be at the cost of losing the right to recover legal fees.
The Gatesman Law Office endeavors to remain on the cutting edge of the law in crafting estate planning solutions for our clients.
October 13, 2012
There are several new laws affecting probate in Maryland that became effective October 1, 2012. This article will address those statutory changes.
New Small Estate Limits
When someone dies owning property, unless such property passes to a beneficiary through a beneficiary designation, joint account designation, Pay on Death account designation, life estate deed, or by some other means, then a probate estate must be opened to administer that property and pass it to the appropriate beneficiaries. Maryland allows for a simplified Small Estate procedure if the assets are below a certain value. Effective October 1, 2012, the threshold for a Small Estate is $100,000 if the spouse is the sole beneficiary, and $50,000 if there are other beneficiaries besides the spouse.
As long as the deceased person’s assets subject to probate (not including any assets that pass outside of probate as discussed above) are equal to or less than the October 1 limits, one may utilize the simplified Small Estate procedure. If, however, the person died before October 1, then a Small Estate may be used only if the value of the assets are $30,000 or less ($50,000 or less if the spouse is the only beneficiary).
Birth by Artificial Insemination
In Maryland, creditors have 6 months from the date of death to make a claim against the deceased person’s assets (6 months from the date a Personal Representative is appointed for any state Medical Assistance claims). It is typical, but not always necessary, to wait for six months before distributing estate property to the beneficiaries of the estate. However, due to a new statutory change, effective October 1, some Personal Representatives (a Personal Representative is the person who administers the estate) may risk personal liability if they distribute property after 6 months but before 2 years following the decedent’s death.
The risk arises out of several statutory changes that allow for the use of a decedent’s genetic material (e.g. medically preserved sperm or eggs) after the death of the donor, and which statutory provisions deem that the individual who is born through the use of such genetic material after the donor’s death, in certain circumstances, be considered the deceased person’s “child” under the law governing probate estates, provided that such child is born within two years of the donor’s death.
For example, if you have a son or daughter who deploys to Afghanistan for military service, and that child of yours preserved his or her genetic material to be used by your child’s spouse to create a baby should your son or daughter be killed, the following possibility might arise. Your son or daughter may predecease you and you may not have been informed about the arrangement your child had with his or her spouse.
You also may have prepared a Will that divides your property among your children, but if one of your children predeceases you, then that child’s share would be distributed to his offspring. If such predeceased child had no offspring, however, then your estate would be divided among your surviving children.
In that event, under the example set forth above, suppose that you die, and your child who deployed overseas had predeceased leaving no living children. Suppose also that you have no living spouse and only one other son, who is the Personal Representative under your will.
The usual practice would be for your Personal Representative to wait out the 6 month creditor’s claims period before distributing the estate to the beneficiaries. In this instance, by all appearances, your Personal Representative ascertains that he is the only beneficiary of your estate because your other child died with no offspring.
Suppose also that your surviving child had lost his job and is in arrears on his mortgage. So, after 6 months following your death, he, as Personal Representative distributes the entire estate to himself as sole beneficiary and uses the funds to bring his mortgage current. By doing so, he has none of the inherited funds left over.
For a death prior to October 1, 2012, this would not have been a problem for your surviving son. Now, however, there is a risk. Suppose, in the example above, that the spouse of your predeceased child decides to use the medically preserved genetic material to become pregnant and give birth. If such event occurred more than six months following your death, your Personal Representative would not have known about the situation when he distributed the estate to himself. But if such birth occurs within two years following your death, then, under your will, and through the application of the new statutory provisions, there now exists a grandchild who is entitled to share in your estate.
Unfortunately, because your surviving son distributed the entire estate to himself (as was proper and prudent under pre-October 1 law), he now stands personally liable to pay the share of your estate that your new grandchild is entitled to receive. In the example above, however, your surviving son used the entire inheritance to bring his mortgage current and has insufficient assets to pay the bequest to the new grandchild. This is a problem.
This new statute injects uncertainty into the process of closing out a probate estate in a timely manner. William M. Gatesman has been working with other Maryland lawyers to urge the state legislature to revise this new law to require that any person who might use such genetic material provide notice to the Personal Representative of an estate within 6 months of the date of death, and in the absence of such notice, any child born from such genetic material after such 6 month period would not be an eligible beneficiary of the estate.
It is likely that such revision of the law will be made within the coming year. In the meantime, however, estate planning lawyers must consider whether to add a clause to the Wills they draft for clients specifically excluding those persons born of a deceased person’s genetic material more than 6 months after death as beneficiaries in the estate. And probate lawyers must exercise caution when advising Personal Representatives about making distributions to beneficiaries within the two years following the decedent’s death.
William M. Gatesman stands ready to assist clients as they attempt to navigate the potential minefield imposed by the new genetic materials law.
October 6, 2010
As of October 1, 2010, there is a new law governing Powers of Attorney in Maryland. In order to be effective, any power of attorney executed in Maryland after October 1, 2010, must be signed by two witnesses and notarized. The notary may be one of the witnesses.
Moreover, if one uses one of the form powers of attorney set forth in the statute and a financial institution refuses to accept the power of attorney, one could sue the bank and, contrary to the usual rules of court, get a court order commanding the bank to pay your legal fees.
However, the form documents provided by the statute are woefully inadequate for some purposes, particularly for those people who wish to ensure that appropriate asset protection planning can be accomplished should they ever require long term care in a nursing home.
While the statute allows for powers of attorney with added provisions to be considered statutory forms with the same benefits as the bare-bones form set forth in the law, Maryland estate planning lawyers have been struggling for months with how to devise powers of attorney with significant additional provisions that nevertheless comply with the new law.
The Gatesman Law Office has developed just such a Power of Attorney. For a limited time, we will offer to our existing clients a special discount to obtain the new power of attorney plus get a complimentary review of their estate plan in light of their current situations.
I am pleased to offer the same discount to readers of this website who contact us by October 31, 2010. Be sure to mention this offer when you call or email us. To reach us, simply click Contact Us for further instructions.
November 11, 2009
You’ve heard the old saw: “There is more than one way to skin a cat.” Such folk wisdom can inspire estate planners to dream up creative solutions to thorny legal problems.
Recently, the Gatesman Law Office had been assisting a family in revising the distribution pattern under their estate plan. Husband and wife each had a revocable trust, which trusts held property in further trust for one of their children after both husband and wife died. The share for their other child was to be given to him outright, free of trust.
However, as time passed, the conditions that prompted the desire to hold property in trust for the couple’s now adult child no longer existed and they were in the process of revising their revocable trusts to eliminate the trust for such adult child.
Then, suddenly and unexpectedly, husband died. As a consequence, husband could no longer amend his revocable trust. While wife, who survived her husband, was now the trustee and beneficiary of husband’s trust, she did not have the power to amend the trust to change how trust assets would be distributed after her death.
Read the rest…
September 23, 2009
For our younger readers, this time of year is heralded by the hustle-bustle of back to school activities. It is the time for parents of young children to double check that the kids have shoes that fit for gym class, warm clothes for the winter months, and pens, pencils, and rulers to stock the kids’ backpacks for the first day of school.
For all adults, now is a good time to review your estate plan to make sure that your plan is in order to meet your changing needs. Have you executed a Power of Attorney to ensure that a trusted agent can manage your financial affairs should you become incapacitated? Do you have an advance health care directive to ensure that appropriate medical choices are made even if you cannot communicate those choices to your health care providers?
Are the individuals you have chosen to serve as your agents in those documents still the best choices, or have your or their circumstances changed significantly so that choosing other agents is appropriate?
Do you have a Will? Does your will impose limits because your children were minors when you wrote it, limits that are no longer appropriate?
By asking yourself these and other questions, you will discover whether it is time to review your estate plan with your legal counsel. This type of periodic review of your estate plan will ensure that your plan continues to meet your needs even as your needs change over the years.
Happy autumn from the Gatesman Law Office.
August 14, 2008
Many people are in the habit of visiting their doctors for an annual physical or other regular check-up. Still more visit their accountants each year to assist them with their income taxes. And most people regularly visit their auto mechanics to change the oil in their cars every three months or so.
The practice with lawyers is different, however, and people may put themselves in peril if they do not periodically review their affairs with their attorney.
Read the rest…
April 15, 2008
This office has recommended, and most estate planners will agree, that one should consider appointing a trusted individual to make health care decisions for you in the event you are unable to do so. I wrote a comprehensive article on that topic on October 7, 2007.
Maryland law not only allows one to appoint a Health Care Agent, the statute provides forms one may use to do so. While I have always recommended that one seek experienced legal counsel when appointing a Health Care Agent – one of the statutory forms curiously omits a significant provision – such advice is even more compelling in light of a new ruling by Maryland’s Attorney General.
Read the rest…
December 22, 2007
Schoukroun v. Karsenty (Md. App. December 11, 2007). A Technical Article for Maryland Elder Law and Estate Planning Attorneys
The Maryland Court of Special Appeals, in a seismic shift to the estates and trusts law of Maryland, issued an opinion on December 11, 2007, imposing augmented estate rules on the State of Maryland. This decision has significant consequences affecting Medicaid asset preservation planners, estate planners, family law practitioners and CPAs.
Prior to this decision, the Maryland legislature, despite years long advocacy by some members of the Estates and Trusts section of the Maryland State Bar Association, refused to add augmented estate rules to the estates and trusts law of Maryland.
Read the rest…
November 2, 2007
“Whereas, Wherefore, Where art thou?” Did you ever wonder why lawyers use such archaic language in their legal documents? One reason is that lawyers like to stick with tried and true methods. Another reason legal documents tend to be so complex is that lawyers want to be sure to cover all the bases, so they write paragraphs full of synonyms for the same descriptive term just in case one of the synonyms has a slightly different shade of meaning to ensure that the legal document will be effective in all relevant circumstances. But is this really necessary?
The Gatesman Law Office has undertaken the task of simplifying our legal documents. However, we must exercise great care to ensure that our more simple language does not result in a document that fails to cover all the bases. After careful review, we have created a five page, easy to understand Will to accomplish sophisticated estate tax planning that replaces our more archaic fifteen page document.
While there has been a movement in the legal profession that supports the use of “plain language” documents, it does not appear to have caught on with most lawyers. We are doing our best to promote the plain language ideal to simplify matters for our clients.
October 30, 2007
Many of you have heard the clarion call – “You need a revocable trust!” This cry emanates from the full page newspaper ads touting the one-day seminars on revocable trusts. This cry emanates from the 60-second spots on the radio informing you that your estate plan is not complete without a living trust. Such marketing tactics might lead one to believe that everyone should use a revocable trust. But is it a good idea for you?
While revocable trusts can be good estate planning tools, they are not for everyone. Any advertisement that implies this is misleading. Indeed, by using a revocable trust, seniors can lock themselves out of a powerful asset preservation strategy. Before reviewing that strategy, however, lets take a closer look at revocable trusts.
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