Maryland Trusts and Estate Glossary
A trust is an agreement between a settlor and a trustee that allows for a third party to manage assets. There are several different types of trusts. The broad categories of trusts include revocable trusts or irrevocable trusts. Revocable trusts can be changed, amended, and revoked throughout the settlor’s lifetime. An irrevocable trust cannot be modified in most cases.
An estate describes the assets in an individual’s sole name after death. The terms estate and estate administration are sometimes used interchangeably. Estate for probate purposes are just those assets in a decedent’s sole name, with no beneficiary designation or joint owner. While the probate estate may only include assets in the decedent’s sole name, all assets are often valued during the estate administration process to determine if any Maryland and/or Federal estate taxes are due.
Last Will & Testament
A last will and testament is a legal document that an individual signs pursuant to Maryland requirements that allows the person to describe how they would like their assets to be distributed at death. It can include the nomination of a Personal Representative to serve on behalf of the estate. Often, it may also include wishes for burial or cremation, trusts for spouses or minor children, and the nomination of guardians for minor children.
Probate is the court administration process described as administering an estate. It often requires a Personal Representative or the nominated Personal Representative to petition the court to be appointed to serve on behalf of the estate. The nature and the requirements of Bethesda probate depend on the case facts and the assets of the estate.
An estate administration is a broad term that is often meant to describe the required probate pleadings and the other administration procedures needed to conclude someone’s affair. This includes marshaling all of the assets of the estate, paying any legally enforceable debt, filing any income, estate, or other tax returns that may be due, and then making distribution pursuant to the last will and testament or to the laws of intestacy. This may also include assisting with the selling of a house or a real property, transferring stock into the name of the estate or into the name of the beneficiaries, and valuing all of the assets for estate tax purposes.
An executor of an estate in Bethesda or Maryland is called a Personal Representative. The Personal Representative is the person who is tasked with marshaling all of the assets of the estate, paying any legally enforceable debts, filing and paying any necessary income tax or estate tax returns, and making distribution pursuant to the terms of a last will and testament or to the terms of Maryland intestacy.
A trustee is a person who is selected, often a by the settlor in a trust document, to manage the settlor’s assets pursuant to the terms of a trust document. The trustee has a fiduciary obligation to the beneficiary of the trust to manage the asset pursuant to the terms of a trust.
Power of Attorney
A power of attorney is a document that an individual creates during their lifetime while they maintain the requisite capacity to name another individual to act on their behalf. Often a power of attorney can come into effect immediately which would allow a third person to step into another individual’s shoes to address legal and financial matters. Powers of attorney do typically expire at the death of the individual who granted the power.
Advance Medical Directive
An advance medical directive is a document that allows someone to name a health care agent to make medical decisions on their behalf when they are no longer capable of making or expressing those decisions. An advance medical directive waives the HIPAA Act which means a health a care agent can access the individual’s health care records and doctors’ records. In addition, an advance medical directive addresses the individual’s wishes for the administration of life support, nutrition, hydration, pain medication, and procedures to alleviate pain. It can also express someone’s wishes for organ donation.
A guardian is an individual appointed to be a guardian of a person’s property or of the person themselves. Often a guardian is needed when an individual begins to lose capacity or has lost capacity and did not previously created a durable power of attorney for financial and legal purposes and/or an advance medical directive or medical power of attorney. In Bethesda and the State of Maryland, the concept of guardian is bifurcated into (1) the individual who can serve on behalf of a person’s financial and legal affairs or the guardian of the property and (2) the guardian of the individual who would serve on behalf of making health care and living decisions for the ward. The guardian often acts in a fiduciary capacity to manage the assets of the ward for the ward’s benefit.