There were dramatic changes for everyone last year, but the certainty of death and taxes remained constant. These inevitabilities and the events of 2020 reminded many clients that they failed to follow up on exploratory estate planning discussions they once had with their attorneys, or make changes to existing plans that they once contemplated but never implemented. Now that the time has come for drafting new documents and revising some old ones, the MSBA’s newly revised publication, Will Drafting in Maryland (MSBA, Revised Ed. 2021), will ensure that Maryland attorneys are prepared with up-to-date explanations of both the legal and practical considerations necessary to perform effectively in this ever-changing practice area. The MSBA is pleased to announce that a February 2021 webinar that bears the same title, Will Drafting in Maryland, is now available for on-demand viewing.
The program brings together several experts in the field to address many topics relevant to developing and implementing an estate plan, including initial client discussions, drafting considerations, personal representatives, guardianships, trusts, and trustees. The speakers use the forms, legal references, and explanations found in Will Drafting in Maryland (MSBA, Revised Ed. 2021) as their primary materials for the online course, supplemented with their commentary and new PowerPoint presentations. All of the presenters focus their remarks on practical considerations for those who give estate planning advice and provide practice tips for those who draft the documents. Each speaker also answers questions from the audience that watched the webinar in real time.
Michael P. Donnelly (Adelberg Rudow) opens the program with a general discussion of estate planning, malpractice concerns, and ethical considerations. He suggests that estate planning requires two issues to be addressed at the outset: (1) a client’s goals for the distribution of property at death, and (2) the tax consequences of carrying out those goals. Noting that the client’s goals often conflict, the “art” of estate planning is helping the client to understand the conflicts and prioritize their goals. Once the client’s goals and priorities are understood, documenting them becomes simply a matter of “going into your will drafting toolbox for the provisions that will implement that plan.”
Mr. Donnelly offers advice as to how best to go about obtaining a complete picture of a client’s assets and includes a reminder to fully account for retirement assets (which are becoming a larger portion of the client’s assets than in years past), assets that do not show up on a net worth statement (such as a future inheritance), the special circumstances of potential legatees (and when to bring them into the planning process), and digital assets.
Frederick R. Franke (Franke Beckett, LLC) and Danielle Cruttenden (McNamee Hosea) speak generally about the structure of the will and some of the nuts and bolts issues that arise during the drafting process. Mr. Franke reminds listeners of Maryland’s “plain meaning rule” when documenting a client’s wishes, and provides some examples of the perils of imprecise drafting. He also discusses some of the issues that come up when using terms that have multiple meanings, whether or not defined by statute (e.g., child, decedent, issue, and heir), and cautions everyone to be as specific as possible in describing who the testator intends to include and what the testator means with respect to each and every will provision.
Ms. Cruttenden builds on the specificity theme as she discusses drafting specific and residuary bequests. She suggests that when identifying legatees, for example, draftspeople include as much detail as possible (full name, middle initial, relationship, and city and state for non-family members). The attorney should also be certain to get the client to focus on and then document other important details, such as who is to pay insurance, delivery, and storage costs for tangible personal property, whether the client intends that real property is to pass free of or subject to mortgages or other encumbrances, or what the client wants to happen with charitable bequests if the designated charity is no longer in existence. Ms. Cruttenden suggests options for resolving these and other dilemmas, such as how best to document bequests of specific items of personal property, the form that gifts to minors might take, whether to include spendthrift clauses, the selection of appropriate administrative provisions, and the like.
Christine W. Hubbard (Law Offices of Christine W. Hubbard, LLC) addresses issues surrounding the appointment and role of guardians, personal representatives, and trustees. She reminds everyone that the judicial process for appointing and maintaining guardianships can be difficult and expensive and discusses several ways to avoid judicial guardianship by the use of wills, powers of attorney, and advance directives. Ms. Hubbard also discusses the different processes and standards for appointing guardians over persons and property and considerations for determining who might best serve in those capacities.
Ms. Hubbard reviews the statutory provisions covering personal representatives and trustees, their appointment, when and how to renounce, and their powers, duties, and responsibilities. She also takes time to discuss the use of directed trusts to bifurcate investment responsibility and traditional trust administrative functions, and when and why this might be an appropriate way to shift investment risk away from the trustee.
The program concludes with a review of various types of trusts, trust distributions, and the taxation of trusts. Matthew A. Mace (Baker Donelson) discusses the use of revocable trusts as substitutes for wills and powers of attorney. By putting title to an asset into a trust, for example, the asset can pass to the trust beneficiary in accordance with the terms of the trust rather than by will. At the same time, if the grantor wants someone else to exercise control over the asset for the grantor’s benefit during the grantor’s lifetime, that person can be named as trustee, eliminating the need for a power of attorney, at least with respect to that asset. Mr. Mace also addresses the use of such trusts to avoid probate, particularly on behalf of a client who has property in several jurisdictions.
Mr. Mace describes several different types of trusts, including special needs trusts and trusts for the benefit of minors (along with some considerations that go into the decision whether to use separate trusts or a “pot” trust, and equalization, lifestyle incentives, and other distribution provisions). He also touches on the taxation of trusts, the distinction between simple and complex trusts under the Internal Revenue Code, and the importance of drafting provisions that account for trust expenses and costs when determining amounts available for distribution to beneficiaries. Mr. Mace ends with a reminder that trust assets may now be part of the augmented estate under the 2020 revisions to Maryland’s spousal elective share statute and offered some advice as to where to look for guidance in this regard.
The on-demand program qualifies for 6.0 hours of CLE credit (including 0.5 ethics hours) for surrounding MCLE states. Review a sampling of the program here.