There are several new laws affecting probate in Maryland that became effective October 1, 2012. This article will address those statutory changes.
Several lawyers have been pondering whether it is illegal for a Personal Representative to bring a legal action without a lawyer because doing so would be considered the unauthorized practice of law.
This office was involved in a case a few years ago in which the Maryland Court of Special Appeals ruled that a Personal Representative (who was not also an estate beneficiary) may not pursue a legal action in Circuit Court without a lawyer. The Appellate Court ruled that doing so constitutes the unauthorized practice of law. The Court ruled also that an estate is not a person who can pursue a legal action “pro se”.
When an individual goes to court without a lawyer, such person is said to be acting “pro se”. Only individuals are allowed to pursue legal actions in court on a pro se basis. Parties who are not individuals, such as corporations, may not do this, but rather, must be represented by a lawyer.
According to the Court of Special Appeals in this unpublished opinion, an estate likewise must have a lawyer to pursue a legal action in Circuit Court.
You may click here to read the case.
William M. Gatesman and the Michael G. Day Law Office recently assisted a client in the following situation. During her husband’s lifetime, the client and her husband transferred their real estate to various trusts using deeds that identified the trust as the recipient or grantee of the property, specifically using the name of the trust without including the name of the trustee.
Deed to Trust Must Name Trustee
Under current Maryland law, such a deed would be effective to convey the property to the trust. However, at the time the deed was signed, Maryland law required that the trustee of the trust (i.e. an actual person) be listed as the grantee in order for the deed to be effective. Listing the trust itself as grantee without also listing the trustee by name was ineffectual. Consequently the client’s deeds were not effective and there was a “cloud on title”, meaning that the property could not be sold until the problem was resolved.
In this case, because the original deeds to the trusts were not effective, we needed husband and wife to sign confirmatory deeds that included the name of the trustee as grantee. However, because husband had died, he could no longer sign a confirmatory deed. And even though his wife held his power of attorney, a power of attorney is no longer effective when the principal dies.
To complicate matters further, while the real property is located in Maryland, the couple had since moved to another state. Since all of their other property had effectively been conveyed to the trusts, no probate proceeding was necessary in such other state even though their wills were on file with the court in that state.
Typically, in cases were an individual is domiciled in another state and dies owning real property in Maryland, one first opens an estate in the state of residence and then undertakes a streamlined “ancillary administration” in the Maryland probate court.
No Clear Procedure
While our office resolved this matter some time ago, it is evident from inquiries by other probate lawyers in an email discussion forum that some lawyers wonder whether a Maryland probate can be opened to address such an issue if there is no probate in the state of domicile.
In fact, Maryland’s rules of procedure and the statutes addressing the jurisdiction of Maryland’s probate court do allow a family member to open a probate estate in Maryland in such circumstance. On that basis, we were able to have a Personal Representative appointed in Maryland for husband’s estate for the sole purpose of executing the confirmatory deed which wife also signed. In this way, we were able to remove the cloud on title that affected the marketability of the properties.
This is one example of the type of complex situation we are called upon to resolve on behalf of our clients on a day to day basis.
In January, 2008, I wrote an article on the Maryland Court of Special Appeals Case, Battley v. Banks (Md. App. December 20, 2007). In that case, the Court ruled that, upon the death of the disabled person (a disabled person under a guardianship is called the “ward”), the ward’s assets become the property of the personal representative of the ward’s probate estate, or if none is appointed immediately, then the guardian must hold the property to be transferred to such personal representative when appointed. Moreover, the Court ruled that the guardian may not pay himself compensation for services or pay any legal fees even after the guardianship court approves such compensation and fees. Instead, the guardian and the lawyer, once the guardianship court approves such fees, must file a claim in the ward’s probate estate to be paid by the Personal Representative of such estate.
That rule, however has been changed by the Maryland legislature, such change to be effective October 1, 2010. The new legislation changes the Annotated Code of Maryland, Estates and Trusts Section 13–214(c)(3).
After October 1, 2010, the relevant statutory provision will read as follows:
When a minor or disabled person dies, the guardian shall deliver to the appropriate probate court for safekeeping any will of the deceased person in his possession, pay from the [guardianship] estate all commissions, fees, and expenses shown on the court-approved final guardianship account, inform the personal representative or a beneficiary named in [the will] that he has done so, and retain the balance of the estate for delivery to an appointed personal representative of the decedent or other person entitled to it.
In the meantime, the strictures of Battley v. Banks shall apply.
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.
I strive to push the evolution of Medicaid asset preservation techniques. One example of this is the following recent exchange on the Maryland Bar Association Elder Law Section’s list serv, an online discussion forum for Maryland lawyers who practice elder law.
A technical Article for Maryland Elder Law Practitioners
Soon after the opinion was issued, this writer posted an article discussing the case, Schoukroun v. Karsenty (Md. App. December 11, 2007), which article you may access by clicking on the case name in this sentence. That article suggests that the court-created augmented estate rule set forth in that opinion might have implications in the Medicaid planning context.
There are other rules that are important for Elder Law Practitioners to bear in mind when considering the implications of Schoukroun.
Battley v. Banks (Md. App. December 20, 2007)
The Gatesman Law Office assists clients in the appointment of a guardian for persons who become incapacitated and cannot make personal or financial decisions for themselves. Guardians are entitled to be compensated for their services, but they must petition the guardianship court for approval of such compensation.
When the disabled person, called the “ward” of the court, dies, the guardian must prepare a final account of the ward’s assets. That account should include the guardian’s final request for compensation.
Whether the guardian may pay such compensation to himself out of the guardianship assets before the ward’s assets are turned over the personal representative of the ward’s probate estate depended on the county in which the ward resided. The courts in different counties applied different rules.
Now, however, the rule is clear. Continue reading “Can a guardian be paid for services after the ward has died?”
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.
A technical notice for Maryland elder law professionals.
When a homeowner executes a deed retaining for himself a life estate, such action will be considered a transfer of resources for Medicaid eligibility purposes. However, the homeowner has not given away the entire property. What the homeowner has given away is a remainder interest, that is, the right to own the property after the homeowner dies.
The value of the transferred remainder interest depends on the age of the homeowner who retains the life estate. Maryland uses a table, Schedule MA-7, to assign value both to the transferred remainder interest and to the retained life estate. You may view that table by clicking here: Life Estate and Remainder Interest Table.