Our families change over time. Children and grandchildren are born. People get married, divorced and even remarry. During this time, bank accounts, IRAs, and real estate are bought and sold. For all of these reasons, it is important to establish an estate plan so the family’s assets are protected during life and passed on to the heirs they choose, at death.
This is particularly true in blended families. When there are spouses, ex-spouses and children from different parents, the situation becomes complicated. When a person becomes a dependent of the family, or when someone passes away, the laws of the state come into play. Those laws may affect which family members inherit assets and which ones don’t, even when the deceased intended otherwise.
Some people think they don’t need a will because they think that when they die, their assets will pass automatically to their surviving spouse. But that’s not necessarily true. In Maryland, if a person dies without a will and has minor children, the surviving spouse receives 50% of the residual estate and the minor children receive the other 50%. If there are no minor children but there are adult children, then the surviving spouse receives the first $40,000 plus 50% of the
balance of the estate and the adult children receive the other 50% of the estate divided among them. If there is no surviving children but a surviving parent, and the surviving spouse and the decedent had been married for less than 5 years, the spousal share shall be the first $40,000 plus one-half of the residue and the parents receive the other 50% divided between them. The problem can be compounded if the decedent has a minor child by a prior marriage. In that case, a court appointed guardian (who will probably be the parent of the minor – in other words, the ex-spouse) will be in charge of the minor child’s share of the decedent’s estate. Imagine owning your home with your deceased spouse’s minor child whose share is controlled by your spouse’s ex. This is not a situation anyone wants and can be avoided with thorough estate planning.
Theirs and Ours – Children from a Prior Marriage
It may be hard to include or exclude children from a prior marriage, simply with a will. This is where an estate plan allows you to take time and consider exactly what you intend and execute the legal instruments to ensure your wishes are carried out.
Former NFL quarterback, Steve McNair, did not have a will or a trust when he passed away. He left behind a wife and four children, two of whom were from a previous relationship. There was no estate plan, will, or trust to provide guidance for how his relatives were to receive their in- heritance. This may have caused conflict among the surviving relatives at a time when they were surely grieving. Without a trust, the children may not receive all the money their father intended for them. However, if McNair had a living trust, and properly funded it during his life, he could have seen the wisdom of keeping his affairs private, an important factor for people in the public eye. Instead, his estate had to go through probate, a public process. If he had planned properly, he could have dictated what, when, and how much inheritance his surviving spouse and each of his children and other family members were to receive.
It may also be important for you to designate what happens when your spouse dies. Does all of her inheritance then go to her children, or will your children be able to receive their fair portion? Another recent example was a man who remarried and 3 years later, died suddenly. He had a will which stated that, upon his death, his assets would go to his current wife. However, three years later, the wife and his only daughter were not on the best of terms. So, without an estate plan in place, his daughter was excluded from her inheritance and the wife created a new will leaving all the remaining assets to her own children, in the event of her death. These sad situations can be avoided with proper guidance and planning.
Keeping Your Will Updated is as Important as Creating It
Life changes every day! Babies are born, people get married and divorced, new relationships are developed, old relationships may sour. If your will is not updated, your wishes may be a far cry from a document you drafted years ago.
It’s important to update your will whenever your lifestyle, family members, relationships, and circumstances change. Far too often, a will is created but not updated. Although family members may be aware of your intentions, it serves no purpose because the legal document must guide all decisions.
Contact an Experienced Maryland Asset Protection Attorney About Your Situation
Meeting with a Maryland asset protection attorney can help you to plan for the future. Contact Frame & Frame today to learn more about how we can help with your situation.