Legal Insights

Legal Insights

This column presents general information regarding estate and disability
planning and probate. It is not intended to create an attorney-client
relationship or constitute legal advice to its readers. Individuals with
legal concerns should consult with an attorney for advice regarding their
specific circumstances.

My siblings and I would like to give our mother a Last Will and Testament
as a holiday gift. Should we include a gift of any other document?

Dear Concerned Daughter:

          This would be a very thoughtful gift, which will likely give your mother
peace of mind, and ease the concerns of you and your siblings.

          Before proceeding with plans to have just a Will prepared however, it is
important for an estate planning attorney to meet with her to ascertain
what her goals are, what assets she has and how they are titled and
whether beneficiary designations are in place. The attorney will also need to know whether she has a taxable estate and will be able to handle her financial affairs or pay for her long-term care, as well as other considerations.

          The reason for such an in-depth analysis is that in all likelihood, your
mother will need more than just a Will prepared for her. For example,
everyone should have a power of attorney, wherein they appoint an
attorney-in-fact to transact legal and financial matters for them. With
such a document in place, a court guardianship or conservatorship action, which are time consuming and expensive, can most likely be avoided.

          If it is determined that your mother’s assets require continual monitoring, (e.g., stock accounts), and her incapacity in the foreseeable future is imminent, a Revocable Living Trust may be more appropriate for her. Such a Trust would provide for management of her assets at such time that she is no longer able or willing to manage her assets. Such a document can be a useful asset management tool. If a Revocable Living Trust is prepared for your mother, her Will would not contain the usual Will provisions, as her property would be distributed
according to the terms of her Trust.

          Another document which is commonly prepared for individuals is an Advance
(medical) Directive, which contains a medical power of attorney and Living
Will.

          In summary, further consideration is needed to properly ascertain what
documents should be prepared for your mother in order to address the
handling of her financial and personal affairs during her lifetime and
the distribution of her assets upon her death.

I would like to leave a portion of my estate in trust for my
grandchildren. At what age should trust funds be distributed to them?


Dear Concerned Grandmother:

          That depends upon how mature your grandchildren are at the time of
distribution, how much money will be distributed to each of them and
whether they can appropriately manage their finances.
        �
          If your grandchildren are older at the time you create the Trust for them
in your Will or Revocable Living Trust, you may be better equipped to
evaluate whether they can appropriately manage money and can determine
at what age or ages trust funds should be distributed to them. To ensure
that each grandchild is distributed an equal amount of your assets, if
that is your intent, the Trust could provide that upon your death, your
assets are divided into a sufficient number of equal shares so that each
grandchild gets one equal share that will be held for them in trust for
them.

          A Trust usually grants the Trustee the sole and absolute discretion to
distribute trust assets to pay for a beneficiary’s health, education,
maintenance and support. Additional provisions may be added to give each
beneficiary the absolute right to receive portions of their Trust assets,
at a certain age or ages. For example, a Trust could provide that a
beneficiary is entitled to receive one-third of their Trust assets when they
reach the age of 21, and one-half of the Trust assets when they reach 25 years of age and the remaining assets at age 30. The foregoing distribution timetable, however, is not fixed in stone and varies based upon the maturity level of beneficiaries and their individual circumstances. For example, a Trust may provide that trust assets are not distributed to the beneficiaries at the ages designated unless they
request that such distribution be made to them, so that if distribution
to them as directed would be detrimental given their circumstances at that
time, the beneficiary could decide not to request that the distribution be
made to them at the age designated.

          Other options would be to create a Trust whereby the beneficiary is not
given any right to receive distributions of Trust assets, except for those
distributions within the Trustee’s discretion, and instead provide that
all assets are to remain in trust and distributed to the beneficiary when
they reach a certain age. A Trust could also contain incentives, for
example, provisions stating that Trust assets will only be distributed to
a beneficiary when he or she graduates from college.

          As you can see, a number of factors need to be considered when choosing
the appropriate age for trust assets to be distributed. I hope the above
considerations will assist you in determining what age is appropriate for
distribution to your grandchildren.

Valerie A. Rocco, P.C., is an estate planning, probate and elder law attorney with more than 30 years experience. Her responses to questions are based upon Maryland law. Ms. Rocco may be contacted at 410 266-1009 (Annapolis) or 410 997-4228 (Columbia), or visit her website at www.SeniorsAdviser.com

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