Maryland Estate Planning Definitions
Because planning an estate can be a very long process that lasts years and goes through many changes, it is important to make sure you are familiar with vital terms in the Maryland estate planning vocabulary. For more information about the process and how these terms relate to each other, speak with a Maryland estate planning attorney today.
Last Will and Testament
This is a document which is created to express your wishes for burial and cremation. It will nominate a personal representative and it will also express your wishes for the distribution of your assets at your death.
A Last Will and Testament is an agreement written by an individual and in order to be valid in the state of Maryland, it is a written instrument that is generally compliant with Maryland Estate and Trust Code Annotated, Sections 4-102 through 4-104. The requirement is that the Last Will and Testament be attested to, and witnessed by two independent witnesses.
Generally, a Last Will and Testament is a document that is used to express a decedent’s wishes for the distribution of their assets at death. It often includes the appointment or nomination of a Personal Representative that may also address how taxes will be paid, and it is not uncommon for the document to include how an individual’s wishes to be buried or cremated, or any other disposition wishes.
If there is a last Will and Testament in place, that is the first place that an estate planning attorney will look to begin the estate administration. If there is not a last Will and Testament, the next step would be looking to the laws of intestacy for the State of Maryland to provide for the order of priority of who may serve as personal representative. Typically either process begins with filing the necessary probate pleadings with the appropriate court if probate is required.
Estate administration will involve marshaling assets, paying legally enforceable debts, and making distribution pursuant to the plan which is in place. It may involve the preparation and filing of estate taxes. It will involve the preparation and filing of the decedent’s final and/or any fiduciary income tax return. It may also involve a sale of real estate, funding trusts, or administering trusts. Basically, all the aspects of finalizing a decedent’s affairs.
Executor or Personal Representative in Maryland
In the State of Maryland, an executor is actually called a personal representative. This person is the fiduciary who often is named in the last Will and Testament and who was appointed by the Orphan’s Court to marshal the decedent’s assets, pay any legally enforceable debts, and make distribution either pursuant to the laws of intestacy or pursuant to the terms of a decedent’s last Will and Testament.
Advanced Medical Directive
An advanced medical directive and/or medical power of attorney are similar documents used to nominate a healthcare agent to make healthcare decisions for you when you are no longer able to do so for yourself. A medical power of attorney or advanced directive often waives privacy rights under HIPAA regulations and can express your wishes for life support, the administration of nutrition, hydration, medical procedures or medicine to alleviate pain. It can also express your wishes for organ donation as well as burial or cremation.
An advance medical directive is a document that is commonly used in planning for incapacity, it is a document that waives the Health Insurance Portability and Accountability Act (HIPPA) which would allow the named health care agent to retrieve the individual’s health care and medical records so that when the individual can no longer make or express decisions with regard to healthcare, the named agent can act and make those decisions on the individual’s behalf. Commonly, that document will express the individual’s desires or wishes for the administration of life support, nutrition, hydration, and medical procedures or medicine to alleviate pain as well as include provisions regarding organ donation.
Probate is a general term used to describe the court proceedings necessary to appoint a personal representative and administer a decedent’s last will and testament pursuant to the laws of Maryland.
Probate describes the court process of administering an individual’s estate. It typically means the actual proving of a Last Will and Testament. In Maryland, the probate process is relatively streamlined and before a Personal Representative can act on behalf of the estate, even if they are nominated in a decedent’s Last Will and Testament, they must petition the court for court approval to be appointed.
Power of Attorney
A power of attorney for financial and legal purposes is often called a durable power of attorney and it is part of a comprehensive estate plan that allows you to plan for incapacity or unavailability. It names an attorney-in-fact to stand in for you to handle your financial and legal affairs. It can also allow for gifting other roles and responsibilities to act for you during your lifetime to another person.
This document is created to allow another person or a third party to step into an individual’s shoes to make financial and legal decisions. Maryland enacted the Maryland Limited and General Power of Attorney Act in 2010 that provides for a statutory power of attorney form. If the form is properly executed then banking institutions and financial institutions that reject that form may be liable for any of the expenses or costs associated with the rejection of the form. Generally, powers of attorney can be broad in scope or restricted in scope and in some situations may address situations such as disclaiming and/or gifting of assets while an individual is alive but unavailable.
Guardianships in Maryland are relative to either guardianship of minor children or guardianship of an incapacitated self. Often, if an individual does not have a power of attorney for financial and legal purposes or one to address medical decisions, it may become necessary for a guardian or guardians to be appointed on behalf of the individual so that decisions can be made. Maryland takes a bifurcated approach and allows for guardianship of the person which is someone who can make health care decisions, living decisions, and guardian of the property, which is an individual that can make legal and financial decisions. An individual can serve as both guardian of the property and the person or one or the other depending on the needs of the incapacitated adult.
Guardianships require court appointments and they also provide for continued court oversight throughout the administration of the guardianship process until either the incapacitated ward is cured of incapacity or the guardianship has to terminate for some other reason such as death or a move of award to another jurisdiction.
Generally, the definition of a Personal Representative is defined in Maryland Estate and Trust Code Annotated Section 1-101; it is defined as a Personal Representative which “includes an executor or administrator but not a special administrator of an estate.” Generally, that individual is the person who is appointed by the court, tasked with marshaling all of the assets of the estate, reviewing and/or paying any legally enforceable debts, making sure that all required tax returns and taxes are filed and/or paid, and in making distribution of the estate either pursuant to the decedent’s Last Will and Testament or pursuant to the laws of intestacy.
The intestacy laws of the State of Maryland are laws that are provided for an individual who has died without a valid Last Will and Testament. Intestacy laws are the default laws in Maryland that provide for an order of priority for who may serve on behalf of the estate as Personal Representative, as well as determine how the assets will be distributed at death. While Maryland laws of intestacy with regard to inheritance often follow bloodlines, they do not always express what the grantor or the decedent may have left if a valid Last Will and Testament has been written.
If an individual dies, for instance, and they have been predeceased by their mother and has an estranged father who they have not spoken to or has an estranged relationship with, the laws of intestacy might require that the totality of the estate be distributed to the decedent’s estranged father. Such a distribution would have likely not been the wishes of the decedent they had prepared a Last Will and Testament prior to death.