December 2024
Q: I have established 529 plans for my grandchildren and have purchased life insurance policies on their lives. Is there anything else I need to do?
A: Yes! You should do two things. First, since you’re the custodian of the 529 plans and owner of the life insurance policies, be sure to name a successor custodian and owner. It’s a nightmare to get someone appointed after your demise. If there is no named successor owner or custodian, the only solution is an expensive and time-consuming probate process. And be sure to name contingent beneficiaries, in case (God forbid!) your named grandchild predeceases you. Make sure you keep copies of the nomination of successor owner and custodian, and of the contingent beneficiaries. Companies are staffed by humans who operate computers, and between human error and machine failure things sometimes get lost.
Q: My car is just in my name. Is there anything I need to do?
A: If you die owning the car and your name is the only name on the title, even if you’ve signed the back of the title, your loved ones will need to initiate probate proceedings to secure title, even if the car is old and essentially valueless. They can’t even junk it after you’re dead until the Register of Wills appoints someone Personal Representative of your estate. You could name a joint owner, but we usually discourage that because your joint owner would be potentially liable for any accidents you have. You would do better to apply for a new title and name someone as “transfer-on-death beneficiary” or “TOD” on the title. They would have no liability for accidents you might have and would own the car on the date of your death, without probate.
Q: I live in Maryland, and I have real estate outside Maryland. How does that affect my estate plan?
A: You have two choices, just like with Maryland real estate. First, you can create a living trust and transfer the property, both in and out of Maryland, to the trust by deed. Second, you can create a “life estate deed,” sometimes also called a “Ladybird deed” because this kind of deed was used by President Johnson to transfer property to his wife, or, in some states, a “transfer on death” or “TOD” deed. If you have property in Delaware, the second option really doesn’t work due to local custom, so you’d have to use a living trust. We’d use the services of an attorney in the other state to create the deed for that property. The living trust is much more expensive, but if you’re concerned about multi-generational planning, it’s probably the best choice. If any of the property is rental or investment property, consider setting up an LLC to own that property, for a liability shield and to centralize management down the generations or among family members.
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Attorney Tim Barkley
The Tim Barkley Law Offices
One Park Avenue
P.O. Box 1136
Mount Airy
Maryland 21771
(301) 829-3778
Wills & Trusts | Estate Planning | Probates & Estates
Elder Law | Real Estate | Business Planning