family asset protection survival guide20 tough questions to ask a lawyer before you write a check 41...

How to plan your estate so you keepyour money, control your assets,

protect your family and never becomea burden to your children.

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FAMILY ASSET PROTECTIONSURVIVAL GUIDE

SEY LAW GROUP, P.C.o r n e y a n d C o u n s e l o r a t L a w

PREHENSIVE ESTATE PLANNING LAW FIRM

00 Hampden Lane, Suite 200, Bethesda, MD 20814

[email protected] • www.kinseylawgroup.com

P: (301) 968-1630 • F: (888) 559-8856

Questions? Concerns? Call N

© Copyright 2011 by Nicole K. White.

FAMILY ASSET PROTECTION

SURVIVAL GUIDE

How to plan your estate so you keep your money,control your assets, protect your family and

never become a burden to your children.

Written and Published as an Educational Service by

NICOLE K. WHITE, ESQ.Asset Protection & Estate Planning Attorney

Providing Legal Services for Businesses, Executives and Families.

Asset Protection Estate Planning Business Planning Charitable GivingWealth Management

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icole K. White at (301) 968-1630 of 47

All rights reserved.





P: (301) 968-1630 • F: (888) 559-8856

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Questions? Concerns? Call Nicole K. White at (301) 968-1630 of 47

© Copyright 2011 by Nicole K. White. All rights reserved.

Table of Contents

Title Page

Introduction 4

Estate Planning Basics 5I. What Is Estate Planning 5II. Why You Need an Estate Plan 5III. Wills 6IV. Trusts 8

23 Costly Misconceptions About Wills and Trusts 108 Potential Problems with Revocable Living Trusts 13

V. Other Estate Planning Tools 14Joint Tenancy 14

8 Dangers of Owning Property in Joint Tenancy 14Payable on Death (P.O.D.) 15Powers of Attorney 16Living Wills 16

VI. Estate Taxes 16Avoiding Estate Taxes 17

Guardianship Planning for Minors 19A True Story 19Child Protection Plan 204 Documents Every Parent with Minor Children Should Have 214 Mistakes to Avoid When Choosing a Guardian for Your Minor Children 22

Two Family Asset Protection and Estate Plans: Which Plan Do You Want for Your Family? 23

Getting Started is Easy 265 Tips for Getting Started with Your Estate Plan 265 Steps to a Competent Asset Protection and Estate Plan 2719 Smart Ways to Protect Your Assets 29

Estate Planning Pitfalls 3211 Estate Planning Mistakes That Tear Families Apart and Cause Children to Suffer 3212 Problems That Could Cost Your Family a Fortune -- and Their Solutions 33Your Estate Plan Needs Maintenance 3623 Red Flags That Signal When Your Will or Living Trust is Out of Date 37

Right Now, You Know More About Estate Planning Than Most Lawyers 39How to Choose a Qualified Lawyer 4020 Tough Questions to Ask a Lawyer Before You Write a Check 41

Nicole K. White Prepares Asset Protection and Estate Plans for These Challenging Situations 4212 Important Reasons Clients Ask Nicole K. White to Protect Their Assets and Family 43

Conclusion 45

Meet Nicole K. White, Esq. 46

My Personal Promise to You 47



Introduction

The purpose of this Guide is to introduce you to estate planning and the many ways it will help youand your family.

Without an estate plan, you face costly problems:

Problems that arise while you are alive, such as:

Who will care for you if you become physically or mentally incapacitated?

Who will manage your assets and handle your affairs?

Who will decide whether to put you into a nursing home?

Will the court end up making decisions that you yourself could have made in your estate plan?

Will a family member have to go to court to get a guardian or conservator named?

Will family members quarrel over who will manage your assets?

And many more.

Problems that arise after you are gone, such as:

Who will serve as guardians for your minor children?

Who will manage your assets?

Who will inherit your property?

At what ages will your family members inherit your estate?

How will your heirs safeguard your assets so they are not seized by creditors or stolen by conartists?

How much money will they have to pay in estate taxes?

Who will care for a loved one who is incapacitated?

Who will care for a person with special needs?

And many more.

This guide will tell you how to prevent these costly problems through a competent family estate plan.And, if it is too late to prevent problems, then you will discover how you could solve problems tominimize the hardship on you and your family.



Estate Planning Basics

I. What Is Estate Planning?

Estate planning involves both planning for the possibility of mental incapacity and planning for death.It is one of the most important steps you can take to make sure your wishes regarding your assets andhealthcare are honored, and that loved ones are provided for after you are gone. Though oftenoverlooked or even put off, a comprehensive estate plan can answer a number of legal questions thatoften arise whenever anyone dies. Estate planning is also a process where we analyze your financialand personal goals, develop new goals, if necessary, and prepare a plan to fulfill your goals.

Here are some issues that proper estate planning can address:

Who will get my assets after I’m gone?

Are my assets being properly managed during my lifetime?

Who should handle my finances if I become incapacitated?

Should my beneficiaries get their inheritance all at once, or should they receive incrementaldistributions over a period of time?

Is there enough money to provide for my family? Particularly for young people with children,life insurance should be considered.

Who will manage my estate after I’m gone? Who will be the Personal Representative? Trustee?

Can I save taxes by using a particular method of estate planning? After your estate planninggoals have been identified, we will design a plan to meet your goals. If you agree with ourrecommended course of action, we will draft the necessary documents to put the plan intoeffect.

II. Why You Need an Estate Plan

Regardless of how wealthy you are, if you are over the age of 18, you need an estate plan, even if it isjust a simple will. Your estate plan spells out how your assets will be distributed and how yourdependents will be cared for in your absence. The following are true stories to illustrate the need for anestate plan and the need to review your estate plan regularly. Names have been changed or left out toprotect privacy.

Situation #1: A couple had a taxable estate valued at over $5,500,000, but had no estate plan. Theywere advised by their attorney to draft an estate plan to protect their assets, but they never followedthrough. They were too busy. Months later, the husband was rushed to the hospital and his prognosis ofrecovery was grim. The wife was frantic and wondered what she could do now to get their affairs inorder. Unfortunately, it was simply too late. If they had listened to their attorney’s previous concernsand recommendations they would have had a solid foundational estate plan in place. Instead, the wifewill be left to deal with the mess that the complete lack of an estate plan tends to leave behind.



Lesson #1: Don’t let this happen to you. Plan now, while you are competent and can make decisions.Procrastination is your worst enemy.

Situation #2: Jason David never legally married his long-time partner, Cynthia Pace, and mother ofhis teenage daughter. In August 2006, Jason died in a car accident and his Last Will and Testament lefteverything to his four children from a prior marriage. Cynthia sued the estate, claiming to be David’scommon-law wife and therefore entitled to a share of his estate. Unfortunately for Cynthia, the probatejudge found that she and David were not common law spouses. This court’s decision left Cynthia andher teenage daughter out in the cold. Was this what Jason wanted? No one will ever really know.

Lesson #2: This sad story demonstrates not only the importance of basic foundational estate planning,but also the need to review your plan on a regular basis once it is in place to ensure it will work whenneeded.

III. Wills

Every adult age 18 or older should have a Will. Your Will is the keystone of your estate plan thatcontrols the passage of your probate property at death. Each state has formal requirements for a Will,and failure to strictly follow the legal mandates will mean that the document will be ineffective.

Basic Requirements for a Will

The Will maker must be eighteen years old.

The Will must be in writing,

The Will must be signed by the Will-maker.

The Will must be witnessed and signed by at least two people.

What Are the Advantages and Disadvantages of Wills?

Potential Advantages

1. A Will is good for individuals and families who do not have assets that would have to gothrough the court process called probate, or who are not concerned with avoiding probate.

2. A Will is traditionally less expensive to prepare than a trust-based estate plan.

3. A Will allows you to appoint a guardian to care for your minor children until they becomeadults.

Possible Disadvantages

1. A Will may not provide sufficient tax planning leaving your estate and/or beneficiaries to payhefty federal, and state estate taxes.

2. A Will may not sufficiently protect your assets from creditors.



3. A Will must go through probate, which can take anywhere from a few months to a couple ofyears; very expensive; and complex. Probate also lacks privacy, meaning your estate plan willbecome part of the public court records that anyone can read, including your Last Will andTestament, a list of your beneficiaries and assets, and a breakdown of who’s getting what andhow and when they get it.

4. A Will alone does not make any provisions if you should become incapacitated.

5. A Will generally addresses the distribution of the bulk of your assets, however, there are someassets that are not covered by the instructions in your Will such as community property, lifeinsurance payouts, retirement assets, investment accounts that are designated as “transfer ondeath,” and assets owned jointly by two or more people where the survivor automatically gainsownership (joint tenants with right of survivorship).

Don’t let the long list of possible disadvantages of a Will discourage you from estate planning. All ofthe possible disadvantages listed above can be addressed with other estate planning tools.

What You Should Consider When Making A Will?

Who should receive my property? In what proportions? If there are children, at what age(s)? If aperson you wish to name to receive a share of your estate dies before you, who should receivethat share?

Who should be named as guardian of my minor children? If you have minor children you shouldalso consider a Child Protection Plan which will name temporary and permanent guardians foryour children.

Should a Trust be created in my Will for my spouse, children or others?

Should insurance proceeds be payable to a Trustee named in my Will? Spouse? Children?

Who should I name as Personal Representative? Successor Personal Representative?

Do I expect to inherit property from a parent or others, thereby increasing the size of my estateand creating the need for more careful planning?

Can I lessen or avoid estate taxes?

Who Gets My Estate If There Is No Will?

If there is no Will, the Court distributes your property and assets to your legal heirs according to lawsof intestacy. How your property will be distributed depends on certain situations.

Under Maryland and the District of Columbia intestacy laws, if you die without a Will, your survivingspouse will inherit all of your property as long as you leave no children. If you die without a Will andleave children, some of whom are step-children to your surviving spouse, your surviving spouse willinherit a portion of your estate. The remaining portion of your estate will go to your children by yourprior marriage/relationship.

In all cases, the law makes no exception for those with special needs or for other circumstances such asthe inability to handle money. For example, minor children of a decedent who dies without a Will areentitled to receive their inheritance at age 18, whether or not they can handle the money.



Changing or Revoking a Will

You can always revoke or change your Will before you die. You can change your Will by executing anew Will or by an addition called a “Codicil.” Written changes, such as additions, deletions, commentsor marks, on the Will itself may invalidate the Will. Therefore, once signed, a Will should not bealtered in any way without the assistance of an estate planning attorney.

IV. Trusts

A Trust, generally, is an arrangement where one or more persons (the Trustees) hold and manageproperty for others (the Beneficiaries). If you create a Trust within your Will, it’s called aTestamentary Trust. If you create a Trust outside of a Will and while you’re alive, it’s called an intervivos or Living Trust. The “funded” Living Trust is a way to manage your property during yourlifetime and pass it on to your beneficiaries at death without formal probate proceedings.

You fund the trust by transferring assets into the Trust’s name. You can, if you wish, begin by puttingin a small amount and then add other assets later.

Normally, you will serve as trustee of your trust or you can have one or more responsible individuals, abank’s trust department, or an independent trust company serve as trustee. It’s totally up to you.

The Trust Agreement usually provides that you will automatically get all the income of the Trust andas much of the principal as you request. If you become disabled, the Trustee is usually directed to usethe income and principal to pay your necessary expenses. Upon your death, the Trust assets aredistributed to your Beneficiaries in accordance with your directions contained in the Trust Agreement,or it can continue for specified purposes for a period of time.

The Advantages and Disadvantages of a Trust

The Main Advantages of a Living Trust

1. If you want or need to have someone else manage your property and pay your bills in case ofillness or disability, the Living Trust is an ideal estate planning tool for you.

2. Avoiding probate which can save time and money, especially if you own real estate in differentstates.

3. Because a Living Trust is not filed in Court, its provisions are private. This differs from a Will,which must be filed with the Probate Court and becomes public.

4. Reduction of delays in distribution of your property after you pass away.

5. Continuity of management of your property after your death or incapacity/disability.

The Main Disadvantages of a Living Trust

1. There are usually more initial costs in setting up a Living Trust as compared to a Will because aLiving Trust generally requires more extensive, technical and complex drafting.



2. “Funding”, which is the process of re-titling your assets in the name of your Living Trust, takestime.

3. Administering the Trust can be expensive depending on who is acting as the Trustee.

Trust vs. Will: Which is Right for You?

How do you know if you need a Trust instead of a simple Will? Many people assume that RevocableLiving Trusts are only for the wealthy, but Revocable Living Trusts have benefits even for the averageperson. If your life or financial situation fits into one or more of these categories, then you shouldconsider a Revocable Living Trust.

Planning for DisabilityRegardless of your net worth, and particularly if any of your assets are titled solely in your name, thenyou should consider a Revocable Living Trust for disability planning to avoid court-supervisedguardianship or conservatorship.

Estate Planning for Minor BeneficiariesParents with minor children and who have life insurance policies or retirement plans with high valuesshould consider a Revocable Living Trust. In the event both parents die while the children are stillminors, the insurance or retirement funds will be placed in the Trust for the benefit of the childreninstead of in a court-supervised guardianship or conservatorship.

Estate Planning for SinglesAnyone who is single and has assets titled solely in their name should consider a Revocable LivingTrust to avoid court-supervised guardianship and the costs and hassles of probate.

Tax Planning for Married CouplesIf you are married and the combined estates of you and your spouse exceed the Federal exemption of$10,000,000 (2011) or your state’s exemption ($1,000,000 for Maryland the Washington, DC), thenyou should consider establishing a Revocable Living Trusts to eliminate or avoid estate taxes.

If You Own Real Estate in More Than One StateIf you own real estate in more than one state or outside of your home state, then you should consider aRevocable Living Trust to avoid multi-state probate.

Now you should have a fair understanding of Wills and Trusts and the advantages/disadvantages ofeach. Following are some costly misconceptions and problems involving Wills and Trusts.



23 Costly Misconceptions About Wills and Trusts

Misconception #1: A Will avoids probate. No. A Will is the primary tool of the probate system.Your Will is like a letter to the Court telling the Court how you want your property distributed. Thenyou must make sure that you prove to the Court that all your property is collected and appraised, andall your bills and taxes are paid, before your property can be distributed to your heirs.

Misconception #2: A Testamentary Trust avoids probate. No. A Testamentary Trust is a Trustcontained within a Will that holds property for a specific purpose. For example, one purpose would beto hold property until minor children turn 18, when they can legally own property -- or until childrenreach the age when you believe they are mature enough to responsibly handle the property. ATestamentary Trust is not a Revocable Living Trust. It is part of a Will and takes effect only when theWill is probated.

Misconception #3: Probate costs and the costs of administration of the estate are small. Notnecessarily. Such costs can be very substantial. The real problem is, no one can tell you how muchthe costs will be until the probate has been completed, which often can take several years. The biggestportion of the costs are the fees charged by attorneys and personal representatives for their services forthe estate, in addition to filing fees, costs of publication, fees for copies of death certificates, filing andrecording fees, bond premiums, appraisal and accounting fees, and more. Often the fees of personalrepresentatives are based on an hourly rate, and while they can tell you what their hourly rate is, theycannot tell you the number of hours their services will take, so they cannot tell you what their total feeswill be. Like surgery, probate can be simple and easy, but frequently probate can have drastic anddamaging results. Accordingly, like surgery, because of its uncertainty in terms of both the potentialfor problems and high costs and fees, probate is something best to avoid if you can.

Misconception #4: Property can be distributed according to the terms of your Will in only a fewweeks. The administration can take months (12 to 18) or years depending on the value and complexityof the estate, the existence of a Will and the location of real property owned by the estate. During thistime, the deceased person’s property must be inventoried and appraised. Heirs must be notified.Estate and inheritance taxes, if any, must be paid. Contested claims, if any, must be settled. Creditorsmust be notified and paid. If all of this is not done before the estate is distributed to the beneficiariesof the estate, the personal representative will be personally responsible for those claims. As a result,most personal representatives won’t distribute property until they are sure all claims have been settled.

Misconception #5: Your Will and your assets remain private. No. Because probate is a publiclegal proceeding, your estate may become a matter of public record. This means that anyone --including nosy neighbors and salespeople -- can go to Court to find out the balance in your savingsaccount, the value of your stocks, even the appraised value of your diamonds.

Misconception #6: A Will helps you avoid taxes. No. A simple Will does nothing to lower yourtaxes. A Will simply tells how you want your property distributed, and who you want to act asguardian for your minor children in case you and your spouse die at the same time. A skilled lawyercan use a Will to plan complicated estates that require tax planning, but the cost of the complex planwill be comparable to the cost of a Revocable Living Trust plan. Plus, the Will-based plan will stillhave to go through probate.



Misconception #7: Your permanent family home and your vacation home can be handledthrough the same probate and qualification. Yes, but only if they are in the same state. If you ownproperty in different states, a second probate, called an ancillary administration, will need to beopened, which means your estate may need to hire another attorney. This will increase the overallestate administration expense. And if you own real estate in other states, probates will need to beopened in those states as well.

Misconception #8: A Will prevents quarrels over assets. Wrong. Wills are among the mostcontested legal documents in the United States. Today, it is common for unhappy relatives tochallenge a Will. This results in higher attorneys’ fees and even more delays. Wills actuallyencourage challenges over assets because a petition must be filed in Court to probate them, which islike filing a lawsuit. As a result, since a lawsuit has already been filed to probate the Will, a contestingparty can simply file their claim in Court without instigating their own lawsuit.

Misconception #9: Estranged family members do not need to be notified of a probate if the Willexcludes them from an inheritance. In Maryland, the Court may require that all heirs be notified ofthe probate even if they are excluded from the Will. Certain aspects of the probate process can beavoided and financial responsibility can be mitigated through the use of various trusts and other typesof financial planning.

Misconception #10: A Will from one state is not legal in another state. Wrong. If the Will is legalin the state where it was prepared, it is legal in all 50 states. However, Wills do not travel well fromstate to state and should be reviewed by an attorney and very likely changed whenever you move to anew state. This is because the Will’s language may not mean the same in other states as it did in thestate where it was signed. In addition, many states require witnesses to the Will signing. If properprocedures are not followed, you may need to produce those witnesses in order to probate the Will.

Misconception #11: A Will helps you when you become physically or mentally incapacitated. No.A Will is totally ineffective until death, and, therefore, does nothing to help you through incapacity anddisability. Your family or friends may have to go to Court to start costly guardianship orconservatorship proceedings.

Misconception #12: You must name your attorney as your personal representative. No. Youmay name anyone you choose.

Misconception #13: The cost of your estate plan is only the cost of drawing up the documents.No. The cost of your estate plan is both the cost of drafting the documents and the cost of distributingproperty to your heirs. Simple Wills are less expensive to set up, but potentially expensive when theygo through probate and there is qualification on the estate and estate administration. Revocable LivingTrusts may initially cost more than a simple Will, but the overall cost of settling your estate is oftensubstantially less.

Misconception #14: Revocable Living Trusts are only for large estates. No. Revocable LivingTrusts are for anyone who wants to avoid costly conservatorship and probate proceedings. Inappropriate cases, people with small estates can benefit from a Revocable Living Trust. People withlarger estates can benefit even more.

Misconception #15: A Revocable Living Trust is a public document. No. Your Revocable LivingTrust can remain private because it does not have to be recorded or published in any way. The only



people who will know about your Trust are the people you choose to tell. However, someprofessionals may need to review your Trust to confirm that your trustee is authorized to take aparticular action. This review is for the protection of all beneficiaries of the Trust.

Misconception #16: A Revocable Living Trust cannot be changed. Wrong. You can change andeven revoke your Revocable Living Trust any time you wish. The decision is entirely up to you.

Misconception #17: A Revocable Living Trust must have a separate tax return. No. As long asyou are a trustee or co-trustee of your Revocable Living Trust, it does not need a tax return of its own.Your personal tax return, which uses your social security number, is sufficient for the IRS.

Misconception #18: When you set up a Revocable Living Trust, you lose control of your assets.No. When you set up your Revocable Living Trust, you simply name yourself and/or your spouse asTrust managers, called “trustees.” In this way, you never give up control.

Misconception #19: The best way to transfer assets to your Revocable Living Trust is through apour-over Will. No. A pour-over Will can be used to transfer any miscellaneous assets to yourRevocable Living Trust, but in order for that to take place, the Will must be probated for the assets tobe transferred to the Revocable Living Trust. A better course of action is to transfer the assets to yourTrust while you are still healthy and able. Not only will you get the peace of mind that comes fromknowing the transfer was made properly, you will also get an accurate inventory of your estate.

Misconception #20: There are no costs associated with administering a Trust at the death of theoriginal settlor of the Trust. Not true. While people commonly think that only the probate systemcosts money and takes time, they fail to understand that administering a Trust, distributing Trust assetsto beneficiaries named in the Trust, and terminating the Trust can result in substantial fees and costs.Trustees charge fees for their service, and many trustees hire attorneys and accountants. These costsare paid by the Trust before beneficiaries receive their inheritances.

Misconception #21: Naming a guardian for minor children in your Will ensures your childrenwill be protected if anything happens to you. No! While naming a permanent guardian for yourminor children in your Will is a good thing to do, it does not fully protect your children in the eventyou become temporarily disabled or incapacitated. Permanent guardians named in your Will only takeeffect if you pass away. To fully protect your minor children, you should name a temporary or short-term guardian (someone or a couple who will immediately be there for your children if anythinghappens to you) and a permanent or long-term guardian (someone or a couple who will care for yourchildren for the long term if you are unable to do so).

Misconception #22: Wills and Trusts are only for the wealthy and well-to-do. Absolutely not!This is another common estate planning misconception. More than 60% of all Americans die withoutan estate plan, leaving their state’s intestacy laws to determine who will inherit their property. Theselaws do not consider personal circumstances or personalities, so your property may be given to arelative who you never would have chosen. There are many other factors or objectives other thanwealth that you should consider. For example, if you desire to do any one of the following, then youneed a comprehensive estate plan: (1) providing for and caring for a minor or disabled child; (2)providing for or caring for a surviving spouse; (3) transferring ownership of property and assets inaccordance with your wishes; (4) avoiding probate; (5) transferring closely held business interests; (6)transferring ownership of property in another state; (7) charitable giving; and (8) avoiding estate taxes.



These are some of the reasons you should consider to plan your estate. Everyone has their ownobjectives, but the size or value of your estate is not the only reason to plan. Peace of mind comes inhaving a thoughtfully and professionally prepared estate plan, even if it is a simple will.

Misconception #23: A Revocable Trust Can Protect Your Assets from Lawsuits. Not true. Thereare a couple of reasons why a Revocable Living Trust will not protect your assets from lawsuits: (1)You have the ability to change the terms of the trust whenever you want and you have the ability toadd assets to the trust and to remove assets from the trust (i.e., you have total control over the assets),and (2) Although the assets in the trust are titled in the name of the trust, you still personally own theassets. Therefore, a Revocable Living Trust cannot shield your assets from lawsuits or the claims ofcreditors. If you are interested in Asset Protection Planning, you should seek the services of an estateplanning attorney to discuss creating a comprehensive asset protection plan.

8 Potential Problems with Revocable Living Trusts

Problem #1: Choosing the wrong trustee. Many people believe that you must name your bank asyour trustee, but this is not the case. I recommend you act as your own trustee (if you are married,your spouse can serve as a co-trustee) so you continue to manage and invest your assets, just as you donow. If you do not choose to serve as trustee, you may hire a professional fiduciary who is notaffiliated with a bank or trust company.

Problem #2: Leaving your Trust empty. A Revocable Living Trust is like a safe deposit box. It’s agood place to put your valuables, but it won’t do any good if you leave it empty. It’s not uncommonfor people to have a lawyer draw up their Trust and then, years later, still have to go through probate.Why? Because neither they nor their attorney ever put their assets into the Trust. Your property mustbe put into the Trust. But don’t worry. The process of retitling assets is easier than you think.

Problem #3: Initial cost. A Revocable Living Trust is more expensive to set up than a simple Will.But, in the long run, the cost will probably be much less because the Revocable Living Trust allowsyou to avoid probate, Court supervised estate administration, guardianships and conservatorships.

Problem #4: The potential for poor management. You could find that the person you selected tomanage your affairs is not a good manager. Your choices for successor trustee(s) should be familymembers or friends you can trust. Corporate trustees, such as banks, are also an option. But, if you donot put your assets into a trust, you could still have a problem with management of your assets.

Problem #5: Refinancing real estate may be inconvenient. Some mortgage companies and banksrequire that you take real estate out of your Trust before they will place a new mortgage on yourproperty. Once the financing is complete, then you simply transfer the property back into your Trust.

Problem #6: Keeping a list of assets in your Trust. Some people don’t like to keep track of assetsthey put into their Trust. Others don’t mind this small amount of extra work. When you want to addsomething to your Trust, you simply title it in the name of the trustees and add it to your list. I assureyou the benefits of having a Revocable Living Trust far outweigh these minor inconveniences.

Problem #7: Opening a new bank account. Some banks will require you to close your current bankaccount and open a new bank account if you transfer the account into a Trust. This is a matter of the



bank being uninformed. If you have substantial direct deposits or automatic debits, it will be necessaryto see that the new account is functioning properly before closing the old account.

Problem #8: Imprinting on your checks. Some banks will require that you put the name of yourTrust and trustees on the checks. You can respond to this in one of three ways. (1) The name of yourTrust and trustees can very closely match your own name and be abbreviated in many respects. (2)You can order checks from a printing company with anything on them that you choose. Or (3) you canprint your own checks with very simple and inexpensive computer software packages.

V. Other Estate Planning Tools

In addition to a Will or a Trust, other estate planning tools include Joint Tenancy, Payable on Death (orTransfer on Death) agreements, Powers of Attorney and Living Wills. Each one is discussed below.

1. Joint Tenancy

Joint tenancy with right of survivorship is sometimes a useful tool for holding title to property and forplanning the transfer of such property after your death. Joint tenancy is probably the most commonform of ownership for homes and bank accounts between you and your spouse.

Joint tenancy has significant legal effects not only during the lifetimes of the joint tenants but alsowhen one of them dies. Each joint tenant, regardless of which one purchased or originally owned theproperty, has the right to use and share in the income from the jointly owned property. A joint tenant’sinterest in the property terminates upon his or her death and the surviving joint tenant then owns theproperty free of any claim by the beneficiaries of the joint tenant who dies. This may not be the intentof the original joint tenants because it prevents the beneficiaries of all but the survivor of the jointtenants from inheriting any interest in the property.

When a provision of your Will (or the laws of intestacy) conflicts with a joint tenancy designation, thejoint tenancy arrangement prevails. For example, if A and B hold title to a particular property as jointtenants and A dies and A’s Will gives the property to C, because B is the joint tenant, B will take theproperty, not C.

Joint tenancy should not be relied upon as a substitute for a Will. It does not provide a comprehensiveplan for the management and distribution of your entire estate. Most importantly, it makes your assetsavailable to the joint tenant’s creditors – which means that you could lose jointly owned property inthat person’s divorce or bankruptcy proceedings. For a full explanation of the advantages anddisadvantages of joint tenancy in your particular situation, you should consult an estate planningattorney.

8 Dangers of Owning Property in Joint Tenancy

“Joint Tenancy with Right of Survivorship” means that each person has equal access to the property.When one owner dies, that person’s share immediately passes to the other owner(s) in equal shares,without going through probate. We’ve all been told that Joint Tenancy is a simple and inexpensiveway to avoid probate, and this is sometimes true. But the tax and legal problems of Joint Tenancyownership can be mind-boggling. The dangers of Joint Tenancy include the following:



Danger #1: Only Delays Probate. When either joint tenant dies, the survivor -- usually a spouse or achild -- immediately becomes the owner of the entire property. But when the survivor dies, theproperty still must go through probate. Joint Tenancy doesn’t avoid probate; it simply delays it.

Danger #2: Two Probates When Joint Tenants Die Together. If both of the joint tenants die at thesame time, such as in a car accident, there will be two probate administrations, one for the share ofeach joint tenant in the Joint Tenancy property as well as any other property they each may own.

Danger #3: Unintentional Disinheriting. When blended families are involved, with children fromprevious marriages, here’s what could happen: the husband dies and the wife becomes the owner of theproperty. When the wife dies, the property goes to her children, leaving nothing for the husband’schildren from the previous marriage.

Danger #4: Gift Taxes. When you place a non-spouse on your property as a joint tenant, you make agift of property every time that joint tenant takes property out of the account. For example, when amother retitles her $50,000 bank account in Joint Tenancy with her son, she makes a gift to her sonevery time he withdraws money from this account. This may not be the most efficient use of her$13,000 annual exclusion. The main point is that the gift is unintentional and not carefully planned.

Danger #5: Right to Sell or Encumber. Joint Tenancy makes it more difficult to sell or mortgageproperty because it requires the agreement of both parties, which may not be easy to get.

Danger #6: Financial Problems. If either owner of Joint Tenancy property fails to pay income taxes,the IRS can place a tax lien on the property. If either owner files for bankruptcy, the trustee can sellthe property even though the other joint tenant is not otherwise involved in the bankruptcy.

Danger #7: Court Judgments. If either joint tenant has a judgment entered against them, such asfrom a car accident or business dealings, the holder of the judgment can execute the judgment againstthe Joint Tenancy property.

Danger #8: Incapacity. If either joint owner becomes physically or mentally incapacitated and can nolonger sign his name, the Court must give its approval before any jointly owned property can be soldor refinanced -- even if the co-owner is the spouse.

Because of the tremendous risks, you should consider all the possibilities of both joint tenancy andtenants in common and carefully review the possible consequences with an attorney.

2. Payable on Death (P.O.D.)

If an account is held “A – P.O.D. – B,” the account will be payable to B on A’s death, but B has norights during A’s lifetime to the account. As with joint tenancy, P.O.D. designations take precedenceover Will directions. A further problem is created on disability of the owner A. Until A dies, B has noright to the account, which prevents B from accessing the funds to pay A’s bills during A’s disability.



3. Powers of Attorney

The Living Trust is usually the best way to provide for someone to manage a person’s property and thepayment of bills during disability. For some people, particularly those with very small estates, thePower of Attorney is a simpler device that may serve that same limited purpose.

A Power of Attorney names an “agent” who has the power to act on your behalf for whatever purposesspecified in the document.

Some Powers of Attorney are limited in scope. For example, a Limited Power of Attorney couldauthorize your agent to write checks on your bank account or to authorize access to your safe depositbox. A General Power of Attorney, on the other hand, gives your agent the broad power to manageyour property and pay your bills. It may even allow your agent to sell your property, to make gifts or totransfer your property to a Living Trust, if these powers are specified in the Power of Attorney.

Powers of Attorney that continue to be effective during periods of disability are commonly referred toas “Durable Powers of Attorney.” You may designate your doctor to determine if the disability exists,at which point your agent steps in to take over your finances.

In a long illness, a Durable Power of Attorney does not work as smoothly as a Living Trust. For thisreason, many attorneys recommend Living Trusts for clients who are ill or elderly and use the DurablePower of Attorney for clients who are younger and healthy.

4. Living Wills

You may feel that if you were in a terminal condition or in a coma you would not want “heroicmeasures” taken to extend your life that had become meaningless or painful and a burden on others.With a Living Will you can inform medical personnel that you do not want extraordinary measurestaken to sustain your life if such measures will only serve to delay the moment of your death.

Your attorney can counsel you about a Living Will and provide a form if you are interested.

VI. Estate Taxes

Estate taxes are imposed by a state or the federal government on the transfer of a person’s assets to hisor her heirs after death.

Federal Estate Taxes

If your estate has a gross value equal to or less than the statutory exemption (currently $5 million for2011), there will be no federal estate tax to pay regardless of who receives your assets, unless youmade large gifts during your lifetime. In addition, all property passing to your spouse is free from anyfederal estate tax, regardless of the amount.



Gift Taxes

In addition to the federal estate tax, there is also a federal gift tax on certain gifts made during yourlifetime. For 2011 and 2012, the lifetime gift tax exemption is $5,000,000. Outright gifts to anyindividual in one calendar year exceeding $13,000 are subject to tax reporting. If your spouse joins inthe gift, the annual exemption amount per recipient is increased to $26,000. Gifts between you andyour spouse are not restricted as to amount.

Generation Skipping Transfer Tax

Transfers by Will or gifts to relatives who are two or more generations below you may trigger anadditional tax. Because of the so-called “generation skipping transfer” tax, any Will or Trustcontaining such a provision should be reviewed.

If your estate will be subject to the federal estate tax, a plan can be put in place to lessen or completelydefeat estate taxes. These techniques are allowable under the U.S. Internal Revenue Code and statelaw. Details of these techniques, however, are beyond the scope of this document. I would be happy toprovide you with free information on tax saving tools.

District of Columbia Tax

If you are a resident of the District of Columbia and the value of your estate is $1,000,000 or more, orif you are a nonresident who owns real estate and/or tangible personal property located in the Districtof Columbia and your estate is valued at $1,000,000 or more, then your Personal Representative orSuccessor Trustee will be required to file a the District of Columbia estate tax return and your estatemay owe the District of Columbia estate tax.

Maryland State Tax

The Maryland estate tax is imposed on the transfer of property in your estate. Currently, a Marylandestate tax return must be filed if your federal gross estate, plus adjusted taxable gifts, is $1,000,000 orgreater, and you were either a resident of Maryland at the time of death or a nonresident who ownedreal or tangible personal property in Maryland. The tax rate is currently limited to 16 percent of theamount that the estate value exceeds $1,000,000.

Maryland Inheritance Tax

If you are a Maryland resident and your estate is passing to someone other than your immediate family,or if you are a nonresident who owns real estate and/or tangible personal property located in Marylandand it is not passing to your immediate family, then your beneficiaries may owe a Marylandinheritance tax.

Avoiding Estate Taxes

Proper estate planning with an attorney can help you avoid paying some or all estate taxes.

Problem: Jack and Mary have assets of exactly $10 million. Jack passes away, and all assets passalong to Mary with no estate taxes owed because of the spousal exemption. Several years later, Mary



passes away. The unified credit is used, and so $5 million passes along to the children, estate tax free.Estate tax is owed on the remaining $5 million, resulting in a $1,750,000 estate tax bill ($5,000,000 x35%). With proper estate planning, this estate also could have paid $0 estate taxes.

Solution: All estate taxes could easily have been avoided by setting up a Revocable Living Trust thathad a Marital and Family Trust provision, also known as an A/B trust. Here’s how it would work forJack and Mary: When Jack dies, half of the assets are placed in the Family Trust, or B Trust. Jack’sunified credit would be applied to these assets, and no estate tax would be due. Mary is allowed todraw income from assets in the B Trust, and allowed to access principal if necessary. The other half ofthe assets are placed into the Marital Trust, or A Trust. Mary retains full control and unlimited accessto assets in the A trust. Upon Mary’s death, her unified credit is applied to the estate tax assessed uponher assets in the A Trust, and her $2 million passes along, estate tax free. Using this type of estateplanning, Jack and Mary were able to avoid paying $1,750,000 in estate taxes.

An additional benefit of the B Trust. Since the estate tax calculation was applied upon the funding ofthe trust, the assets in the B trust will never have another estate tax assessment, no matter what theymay grow to in the future.

Without this type of estate planning, beneficiaries who inherit an estate valued at $5,000,000 wouldpay $1,750,000 in federal estate taxes. Most couples don’t realize that the value of their estate forpurposes of determining estate taxes includes their life insurance death benefit proceeds. Now thegood news: In this example, a well-designed estate plan will save a $5,000,000 estate $1,750,000 infederal estate taxes. Other ways you can avoid or reduce estate taxes include setting up (1) anIrrevocable Trust for your children, grandchildren or other heirs, (2) an Irrevocable Life InsuranceTrust, (which detaches your life insurance benefits from your estate), (3) a Charitable RemainderTrust, and (4) Second-to-die Life Insurance so you can pay estate taxes for pennies on the dollar.

Proper estate planning pays off. Attorney’s fees can pale in comparison to the amount of estate tax thatyour estate may owe someday.



Guardianship Planning for Minors

Your children are your greatest treasure. Think of all the precautions you have taken to safeguard yourchildren -- from the purchase of an infant car seat to swimming lessons and even driver’s safetycourses. Yet, most parents leave their children completely unprotected from one of life’s mostcrushing blows -- being orphaned upon the loss of their parents.

Every parent expects to raise their minor children to adulthood, but life may throw an unexpectedcurve ball in the form of a fatal injury or illness. Are you and your children prepared for that curveball? Who would you legally appoint to serve as their back-up parents to fulfill your parentalresponsibilities?

A True Story

The facts below were taken from public court documents. Names and locations have been changed toprotect the privacy of the family.

July 2007, the Smith family of Maryland was in a car accident. Janice and Tom, the parents of threechildren, ages 4, 7 and 10, died.

Janice and Tom had nothing in place to name guardians for their children or to take care of their assets,though family members and friends say they had talked about doing it.

Janice and Tom appeared to be a typical loving family, and you would think that the remainingmembers of their families would have been able to work out who would care for the children and theirmoney. But, that’s not what happened.

After the accident, the children were in the foster care system for a short time until family memberscould be located.

Then the court battles began. Hundreds of pages of court documents have been filed, there have been9 lawyers involved, tens of thousands of dollars spent, and many, many tears shed.

After a court ordered mediation, the family agreed that the children’s money will be managed by aprofessional financial guardian who charges $100/hour, and a lawyer was appointed on behalf of thechildren at a cost of thousands of dollars. Whatever’s left will be distributed to the children when theyturn 18, even if they do not have the financial insight and good judgment to handle the money. Untilthen, the three children will live with their aunt.

Is that what Janice and Tom would have wanted? No one will ever know if the Judge made the rightchoice because Tom’s and Janice’s wishes were never known.



Child Protection Plan

If Tom and Janice had known what would happen to their children, I’m sure they would have taken thesimple steps to ensure their children were raised the way they want by the people they want.

To avoid what happened to the Smith family, make sure your estate plan has some sort of ChildProtection Plan which will allow you to choose temporary and/or permanent guardians to provide carefor your minor children. The plan should also include instructions to your caregivers and guardians sothey will always know what to do if something happens to you.

A Child Protection Plan is a set of instructions and legal documents so that if you are ever in anaccident or if you become incapacitated, your children will not be taken into the custody of ChildProtective Services or a stranger until the State appoints a guardian to care for your minor children.

Many parents think naming guardians in their Will is sufficient protection for their minor children.However, a guardian named in your Will only takes effect after you die.

A Child Protection Plan provides:

Legal documents to name short-term/temporary guardians who live nearby and who can be therequickly for your children.

Letters to your short-term/temporary guardians notifying them that they have been selected as aguardian and letting them know what to do if anything happens.

Legal documents to name long-term guardians who will raise your children.

Letters to your long-term guardians notifying them that they have been selected as a guardian andletting them know what to do if anything happens.

Instructions for people who take care of your children so they will always know what to do ifanything happens to you.

Guidelines for your long-term guardians stating how you want your children to be raised.

Medical powers of attorney for your minor children so when they travel without you or you travelwithout them, they will get the medical care they need.

Following are two informational guides to help you ensure your minor children are protected shouldanything happen to you.



4 Documents Every Parentwith Minor Children Should Have

If you have minor children, then you need a comprehensive guardianship plan or child protection planto ensure your children will always be taken care of if something happens to you and your spouse, ifyou are married.

A common misconception is that some people believe it is sufficient to tell family members who theywant to take care of their children if something happens. This is called the “momma said” misconception(e.g., “well, momma said I should take care of little Billy, not you”). “Momma said . . . .” will not holdup in court. That is why you need legal documents to name guardians for your minor children.

A comprehensive guardianship plan allows you to choose guardians to provide temporary and/orpermanent care for your children and provide instructions to your caregivers and guardians so they willalways know what to do if something happens. Some people think naming a permanent guardian intheir Will is sufficient. However, a guardian named in your Will only takes effect after you die.

At the very least you should have the following four documents:

Document #1: A legal document to name short-term/temporary guardian(s). In this document youwill name someone (or a couple) who lives nearby and who can immediately be there for yourchildren. The temporary guardian(s) should have a copy of this document to establish to lawenforcement or a court that he/she has the legal authority to care for your minor children.

Document #2: A legal document to name long-term/permanent guardian(s). In this document youwill name someone (or a couple) to provide long-term or permanent care for your children. Again, thepermanent guardian(s) should have a copy of this document to establish to law enforcement or a courtthat he/she has the legal authority to care for your minor children.

Document #3: Instructions and Guidelines. You should also have a set of instructions for anyonewho takes care of your children so they will always know what to do if anything happens to you. Forexample, if you use a babysitter, provide him/her with detailed instructions including who to call andall necessary contact information. In addition, you should prepare guidelines for your long-term/permanent guardian(s) stating how you would like your children to be raised.

Document #4: A Medical Authorization and Power of Attorney for your minor children. Thisdocument is especially important when your children travel without you or when you travel withoutthem. A Medical Authorization and Power of Attorney will allow your children’s caretaker to makemedical decisions for your children so they will receive medical care when they need it.



4 Mistakes to Avoid When Choosing a Guardianfor Your Minor Children

When you have minor children, you should always name temporary (short-term) and permanent (long-term) guardians.

A temporary or short-term guardian is someone (or a couple) who will immediately be there for yourchildren if anything happens to you. For example, if you are in a car accident, your temporary guardianwill care for your children until you are able to do so. Your temporary guardian should be someonewho lives nearby, within 20 minutes or so.

A permanent or long-term guardian is someone (or a couple) who will care for your children for thelong term if you are unable to do so. For example, if you become permanently disabled or if you passaway, your temporary guardian will first step in to care for your minor children until the permanentguardian can take over.

Here are four mistakes to avoid when you choose temporary and permanent guardians for your minorchildren.

Mistake #1: Naming only permanent guardians. Usually parents name permanent guardians fortheir minor children in their Wills. While this is a good thing to do, it does not fully protect yourchildren in the event you become temporarily disabled or incapacitated. Permanent guardians named inyour Will only take effect if you pass away.

Mistake #2: Choosing enough alternates. You should always choose at least two alternates for yourtemporary and permanent guardians. You never know if a named guardian will be unavailable whenneeded. Having alternates will prevent any delays.

Mistake #3: Choosing a couple. If you are thinking about selecting a couple as guardian for yourminor children, ask yourself if you really want to name the couple as guardian or just one member ofthe couple as guardian. For example, you name your sister and her husband “jointly or the survivor.”This means that if anything happens to your sister, your brother-in-law, who you may not like, will beguardian of your children.

By using phrases such as “jointly or the survivor,” “jointly only,” or “alone” when naming a couple asguardian, you can clearly define exactly who you want acting as guardian for you minor children.

Mistake #4: Not excluding individuals who you don’t want as guardian. If you are absolutely sureyou do not want certain people acting as a guardian for your minor children, then formally excludethem in writing. It’s simple to create a document naming individuals that you do not want to care foryour minor children. Don’t forget to get it notarized!



Two Family Asset Protection and Estate Plans:Which Plan Do You Want for Your Family?

Henry and Nancy Adrift: A Typical Estate Plan

Henry and Nancy Adrift have been married for 41 years. They have two adult children, Scott Well-Grounded and Sally Flighty-and-Shiftless. Thirty years ago, when their children were young, Henryand Nancy hired Larry Lawyer to prepare simple Wills and standard Powers of Attorney.

Every so often they received a letter from Larry Lawyer suggesting that they have their estate planningdocuments reviewed and updated. Of course, they knew this was good advice, but they were busy andnever got around to it. Over time they moved, changed investments, and bought new cars. And, notsurprisingly, they forgot the instructions Larry Lawyer had given them about how to title their assets sotheir Will would be effective.

When Henry became ill, he could no longer manage his affairs. Immediately his family felt theburden. They wanted to follow Henry’s wishes, but family members discovered that Henry left manyquestions unanswered. His needs increased, particularly his medical needs. But his family did notknow how he wanted to be cared for, so discussions about his medical care resulted in one argumentafter another. They argued about whether to put Henry into a nursing home. They even argued aboutwhether to shut off his life support. Henry could have prevented this stress and tension among familymembers if he had simply made his wishes clear in his estate plan.

Fortunately, Nancy could sign checks on their joint bank accounts so she continued to receive Henry’spension by direct deposit. But then a problem arose: Henry turned 70 while he was disabled, andNancy had a hard time getting the custodian of Henry’s 401(k) account to accept the 30-year-oldPower of Attorney. What’s worse, that Power of Attorney was all she had.

Henry then passed away. Nancy and her son, Scott, met with Larry Lawyer to find out what to donext. Luckily, Larry Lawyer was still in town and still practicing law, although he was certainly olderand grayer than he was 30 years earlier. This was the first time Scott met him. Also, Nancy broughtBetty Bookkeeper, CPA, who is a long-time friend and advisor, to meet Larry Lawyer.

Larry Lawyer came into the conference room holding Henry and Nancy’s old file. He controlled themeeting because Nancy and son Scott were confused and unsure what would happen next. LarryLawyer talked with them about probate and the federal estate tax return that had to be filed ninemonths after Henry’s death. He told them what information they needed to gather, what documentsthey needed to file with the Court, and what creditors they needed to notify. The Adrift family paid$250 per hour for this one-on-one education, at a traumatic time that made the information hard tounderstand and nearly impossible to remember.

Because 30 years had passed, Nancy and Henry’s estate plan developed a few complications. First,when Henry and Nancy signed their Wills, they had a small estate, so Larry Lawyer did not doanything to reduce estate taxes. Now, at Henry’s death, their combined estate is worth more than$2,000,000 and Henry’s lopsided portion exceeds $1,000,000. Henry owned stock and a modest homein Indiana, which he inherited from his parents. He owned them alone, as separate property, whichmeant they must go through probate. The rest of Henry’s assets were owned jointly with his wife,



except for his life insurance and 401(k), which named Nancy as primary beneficiary. So even if LarryLawyer had done tax planning in their Wills, that planning would not have worked.

Then followed the probate and estate administration. Nancy and her children waited 22 months for theCourt to finalize the probate. One factor that delayed the probate was the need to file an “ancillaryadministration”, a second probate, in Indiana where Henry’s real estate is located.

The only big winner here was Larry Lawyer. He got paid for writing the Wills 30 years earlier. Thenhe got paid to meet with Nancy and her family after Henry’s death. Naturally, since Larry Lawyerwrote the Wills, they hired him to take the Wills through probate and estate administration. When theestate administration finally ended, Larry Lawyer felt as though he had won the lottery because Nancyand her family had paid him $21,150 in legal fees. Plus, Nancy paid another $6,000 to the attorney inIndiana for the second probate.

Another factor that delayed things was the squabble that developed between their children, SallyFlighty-and-Shiftless and Scott Well-Grounded. When Sally turned 21, Henry said that when he died,Sally could have the grandfather clock in their living room. But Henry never added this instruction tohis Will. Scott thought he was entitled to the grandfather clock because Sally was supposed to inheritthe expensive china service when Nancy died. The argument between Scott and Sally grew so heatedthat, at one point, they each threatened to hire their own lawyers. Fortunately, Nancy was able to calmthem down and negotiate an agreement. But Sally and Scott were so bitter they never spoke to eachother again.

Nancy’s and Henry’s boiler-plate Wills contained no tax planning, so all the probate and non-probateassets went directly to Nancy. At Henry’s death, she was not liable for any estate taxes. But whenNancy died, just three months later, Larry Lawyer wrote a check for $400,000 to the IRS to pay estatetaxes.

After the remaining bills were paid, Larry Lawyer gave Sally and Scott their inheritances. But most ofSally’s share went straight to the IRS to pay old tax bills. Sally was always too embarrassed to tell herparents about her financial problems. And, naturally, Henry and Nancy assumed she was financiallysuccessful because of her lifestyle. But things were not as they appeared.

Sadly, one of Henry and Nancy’s life-long dreams was for their children to use their inheritances tomake sure each of their grandchildren would go to college. That won’t happen now.

Henry and Nancy never realized the many ways they could safeguard their assets while they werealive. Nor did they realize they could design a plan to pass their assets responsibly to their children,until they reached the age when they could handle their inheritance wisely.

Henry and Nancy didn’t know the loving things they could have done for their family. Now it’s toolate.

Joe and Rose Kennedy: A Custom Estate Plan That Works

Joe Kennedy was a good businessman. Many would call him an outstanding businessman. Part of hisknowledge and experience included knowing the best ways to protect, preserve, and transfer his wealthto his family. Here’s how he did it.



Joe and his wife Rose were concerned about four major attacks on the Kennedy wealth: lawsuits,divorce, non-descendants, and estate taxes. In addition, they wanted to keep their personal affairsprivate and protect the family’s wealth from errors in judgment.

As a result, Joe and Rose never gave or left anything outright to their children or free from a trust.And to make their children judgment proof, they gave and left their wealth in separate share trusts. Aseach child reached a designated age, he or she could serve as co-trustee over his or her own respectiveshare. When the child reached an older age, each child could choose his or her own co-trustees toserve with him or her. The minimum requirement was always at least two trustees.

Here are examples of how this asset protection plan safeguarded the Kennedy’s wealth.

In 1969, Ted Kennedy was sued for the wrongful death of Mary Jo Koepechne. Ted has homes inseveral states -- Massachusetts, Virginia, and Florida. The homestead exemptions in Massachusettsand Virginia are very low, so the plaintiffs thought they could seize at least part of his assets. But theywere wrong because Ted does not own his homes. Instead, they are owned by his Trust, which meansthe plaintiffs could not touch his homes. Likewise, all his wealth was protected in Spendthrift Trusts.This means the Estate of Mary Jo Koepechne could not seize any of his money. As a result, the Estatesettled for his liability insurance coverage, a relatively small $300,000.

Joe and Rose set up their Asset Protection Trusts so assets held in trust could not end up in the handsof ex-sons-in-law or ex-daughters-in-law. When Ted and Joan divorced, Joan did not get any of theKennedy wealth that was held in trust for Ted.

Joe and Rose set up their Asset Protection Trusts so assets held in trust could not go to anyone who isnot a direct Kennedy descendant. Under ordinary circumstances, if a Kennedy child was the firstperson to die in his or her marriage, the surviving spouse would receive part of the Kennedy wealth.Then that spouse could remarry and leave the Kennedy wealth to a new spouse. By keeping the wealthin Asset Protection Trusts, they guaranteed that their money stayed in the hands of direct blooddescendants. When John and Robert Kennedy died, neither of their wives received any Kennedywealth. Instead, it stayed in trust for their children.

Joe and Rose set up their Asset Protection Trusts so they would remain private by avoiding probate.With-out Living Trusts, their estates and their children’s estates would go through probate, whichwould expose their personal finances to public scrutiny. When John and Robert died, while theirdeaths were public matters, their estates were completely private.

President Kennedy once said, “Good judgment comes from experience and experience comes from badjudgment.” He probably learned this from his father. Joe Kennedy knew that all people makemistakes, especially young people, due to their lack of experience. So he set up Living Trusts for hischildren and chose experienced money managers and trustees. This reduced the possibility forfinancial losses due to bad judgment.

Most of us don’t have the assets or money that the Kennedys have. Likewise, most of us aren’t nearlyas famous. But you and the Kennedys do have something in common: You can protect your assets --preserve your estate -- transfer property to your heirs -- and maintain a high level of financial privacyusing the same sophisticated methods they use. Best of all, these estate planning and asset protectiontools are available to you for a small fraction of what the Kennedys paid.



Getting Started is Easy

As you can see, your estate plan must address many complicated areas of the law. At the same time,making decisions about your asset protection and estate plan is not as hard as you might think. Ipromise that I will make the estate planning process as easy, convenient and affordable as possible.

After all, if you don’t create a competent estate plan, the risks to you and your family are substantial.That’s why I have dedicated my law practice to making sure families are well-protected with custom-designed asset protection and estate plans.

The following three guides describe the steps and decisions you will make as we move forward. And Iwill gladly help you every step of the way.

5 Tips for Getting Started with Your Estate Plan

To create a comprehensive estate plan, you will need to gather information and make some importantdecisions.

Tip #1: Make a list of your current assets and liabilities.

To start the estate planning process, you should have an understanding of your current financialsituation. You can do this by listing all of your assets and liabilities to help your estate planningattorney (or tax attorney) determine your net worth and any potential tax liability. It is also necessaryto gather all of your important financial papers such as recent tax returns, bank statements, investmentand retirement account statements, loan documentation, and copies of your insurance policies.

Tip #2: Determine your estate planning objectives.

The next step in the estate planning process is to determine your objectives (what you want toaccomplish). Some objectives include providing security for the surviving spouse; providing for anincapacitated family member; providing educational opportunities for a beneficiary; minimizingfederal and state estate or inheritance taxes; naming guardians or trustees for minor children; ortransferring specific property to specific people. Your objectives will guide you through each step ofthe estate planning process.

Tip #3: Determine who will receive your assets.

In Maryland and the District of Columbia you can disinherit anyone except your spouse (unless yourspouse waived his or her rights in a premarital or post-marital agreement). First determine yourbeneficiaries (those who will inherit your estate) and what you want to distribute to your beneficiaries.Then determine what happens to your estate if a beneficiary predeceases you (dies before you) or if acharity you choose no longer exists at the time of your death. In this case, you will need to name whatare called contingent beneficiaries who will inherit your estate if a beneficiary predeceases you.

Depending on the beneficiary’s age, health, and family and financial situation, you may need to delaydistributing your estate to that beneficiary or create a trust to manage the assets for that beneficiary.



Your estate planning attorney will walk you through the needs of each beneficiary and then help youdecide what to do for each one.

Tip #4: Choose someone to be in charge.

This is probably the most important step in the estate planning process. You need to carefully considerwho will act in your best interests if you become disabled or who will act in your beneficiaries’ bestinterests after you die. Your estate plan will also include forms for you to name specific fiduciaries toact on your behalf either during your lifetime or after your death.

Your estate planning attorney will help you decide who to choose and explain the function and role ofeach fiduciary.

Tip #5: Find an experienced Estate Planning Attorney.

The final step is to choose a competent and experienced estate planning attorney who will walk youthrough each step of the estate planning process so you fully understand why and how you should takeaction to protect your family and assets. We do not recommend drafting your own estate plan. Veryfew laypersons are experienced in addressing the questions outlined above and even fewer are skilledin drafting a precise and clear document that will put the estate plan into effect. An estate attorneyshould be involved in the preparation of your estate plan. In addition, your advisors such as CertifiedPublic Accountants, Insurance Professionals and Financial Planners should also be involved.

Any attorney you consult should be willing to discuss in advance not only the nature of the work, butalso the basis on which fees will be charged. Be an informed consumer.

5 Steps to a Competent Asset Protection and Estate Plan

Step #1: Learn how to deal with your incapacity.

Court Supervision. Our system of laws allows two methods for people to care for you. One method,Court supervision, has already been chosen for you. If you make no decisions, the Court will step inand appoint a conservator to handle your financial matters and a guardian for your personal affairs.Your guardian and conservator carry out the judge’s orders. It is not likely they will handle things theway you would have handled them. When the Court steps in, you and your family lose control.

Setting up a guardianship and conservatorship is like other matters involving the Court. Lawyersrepresent all parties, including you. Accountants manage your finances. Doctors confirm that youneed some-one to care for you. The law requires periodic reports to make sure everyone is looking outfor your interests. What’s more, all these people must be paid for their services. You bear thisexpense.

Private Supervision. Revocable Living Trusts do not require Court supervision. In your Trust, youdecide whom you want to care for you in the event of your mental or physical incapacity. This usuallyincludes family members or friends. When you design your plan, you control the outcome because theplan is set up exactly the way you want it. By setting up a plan that allows for private supervision --with no Court interference -- you save a great deal of money and make sure that your wishes arecarried out.



Step #2: Choose the method for dealing with your incapacity that is right for you.

Court Supervision.Advantages: If you want the Court to dictate the care you receive, dictate how to use your

assets, and make decisions for you, then you should use a guardianship and conservatorship.Disadvantages: You lose control because the judge makes decisions about your care. Long

delays are common. You pay a high price because guardianships are expensive to set up and maintain.You lose your privacy because your personal and financial affairs are open to public view. Theemotional strain of reporting everything to the Court takes a toll on you and your family.

Private Supervision (through a Revocable Living Trust).Advantages: You and the people you select make all the decisions. You maintain control.

You can make decisions quickly. You save money because a Revocable Living Trust is less expensivethan a guardianship. You don’t have to involve a variety of lawyers, doctors and accountants. Youmaintain your privacy because your documents are not open to the public. And you reduce stress onyour family.

Disadvantages: Generally, none.

Step #3: Learn how you can distribute property during your lifetime and after your death.

Court Supervision. The laws of all states are written so if you do nothing to plan your estate, theCourt will distribute your property according to the laws of the state where you live. If you write aWill, and the Court is satisfied that the Will is valid, under the supervision of the Court your propertywill be distributed according to the terms of your Will. This process is called probate.

Private Supervision. You can distribute your property privately, without Court involvement. Yourchoices consist of the following:

Joint Tenancy With Right of Survivorship: You should own property in Joint Tenancy only in veryrare circumstances. Review my “8 Dangers of Owning Property in Joint Tenancy” in this handout.

Gifts: Gifting is a good way to get property out of your estate so it avoids probate and reduces estatetaxes. In 2011, the IRS limits the value of assets you can give without paying a gift tax to $13,000 perperson per year. The downside of gifting is that you lose control of the asset. If you give property toyour children, they might sell it against your wishes. And if you outlive your child, your gift may notbe returned to you.

Revocable Living Trust: A Revocable Living Trust is a separate legal entity that holds title toproperty. After you set up a Trust, you put property into your Trust, called “funding the Trust.” At thetime of the funding, you change the title on real estate deeds to the name of the trustee and trust, suchas the “John Jones, Trustee of the Jones Revocable Living Trust u/a/d July 1, 20##.” When youtransfer personal property and real estate into your Trust, you no longer own these assets in your ownname. This means these assets don’t have to go through probate.



Step #4: Choose the method for distributing your property that is right for you.

Court Supervision. Will or no estate plan: Either is easy to maintain during your lifetime, and yourdistribution plan is supervised by the Court through probate. In the worst case situation, probate cancost thousands of dollars and take months or even years to complete. You lose all privacy becauseyour file is a matter of public record. Small estates can transfer title without the need for qualification,but this method is not available to most estates.

Private Supervision. Revocable Living Trusts allow you to control your property without Courtinvolvement. Revocable Living Trusts completely avoid probate if properly funded before death.They avoid the dangers of Joint Tenancy. They keep your affairs private. Upon your death, subject topayment of debts and taxes, your estate is able to transfer to your heirs within a few days. Plus, yourRevocable Living Trust eliminates the need for a guardianship or conservatorship.

Step #5: Act now, while you are competent to make your own decisions.

None of us likes to think that we may become incapacitated or die. Yet it happens every day. We allhave friends who have been injured in car accidents. We all know people who have had heart attacks,even when they were in “excellent health.”

If you want to see how dramatically people’s lives change every day, just watch the news. You’ll seecar accidents, plane crashes, shootings, heart attacks, drownings... the list seems endless. And yetevery one of those people thought their day would end just as safely as it began. Will you be next?The greatest gift you can give your spouse and your children is an asset protection, elder law, andestate plan -- a plan that you have designed to carry out your wishes when something happens to you.This is how you can insure that you won’t become a burden to your children.

I sincerely hope you live a long, happy life in excellent health. I also hope you have your assetprotection, elder law, and estate plan ready to protect your family from probate and the other problemswe all face every day.

19 Smart Ways to Protect Your Assets

Smart Way #1: Make a promise to yourself -- now. Make a personal commitment to yourself andyour family that you will do everything possible to protect your family and your assets.

Smart Way #2: Identify your personal and financial goals. If you could have anything you want,personally and financially, what would it be? What are your dreams? How do you and your spousewant to spend your retirement years?

Smart Way #3: Discover which tools you can use to achieve those goals. You have many legaltools at your disposal that, when used correctly, will create exactly the plan you want for yourself andyour family. Ask your estate planning attorney to explain the tools that will achieve your personal andfinancial goals.

Smart Way #4: Avoid probate and the Court system, as appropriate. Create a family estate planthat, upon your death, distributes your assets to your heirs without going through the Court-supervisedprocess called probate. Most often a Revocable Living Trust is used for this purpose.



Smart Way #5: Reduce income taxes whenever possible. Create a family asset protection plan thateliminates unnecessary income taxes and capital gains taxes and minimizes all other taxes. Withoutproper planning, much of your estate can be lost to various types of taxes.

Smart Way #6: Protect yourself with insurance. Lawsuits can quickly tie up your assets. And if theother party wins the lawsuit, the judgment against you could quickly deplete your funds. If you drivefrequently, own rental property, or operate a business, buy an umbrella liability policy that protectsyour assets from lawsuits.

Smart Way #7: Provide for future health care and financial decisions. Your family estate planshould protect you and your spouse if the time comes when either of you cannot make decisions. Yourestate planning attorney can make sure you have the legal documents in place so a competent, trustedperson can make these important decisions according to your wishes.

Smart Way #8: Plan now to fund nursing home care. Sadly, many people think the only way theycan pay for their nursing home care is by spending down their estate. But, in fact, you can fund yourlong-term care in ways that do not require that you spend down your estate. One common way is withlong-term care insurance. Don’t wait until it’s too late to decide how to fund your nursing home care.Do it now, long before you need it.

Smart Way #9: Pay close attention to Alzheimer’s disease and its associated costs -- even if youhave no reason to worry about it. Many people who never expect Alzheimer’s disease to strikehave had to face its problems with no advance planning. So plan for Alzheimer’s disease now, whileyou have time. This includes the need to address issues of backup decision-makers, assisted living,and nursing home care. If your children can care for you later in life, that’s fine. If they cannot, youradvance planning will pay big dividends. Plan for the worst -- and hope for the best. Then, in eithercase, you will have all your bases covered.

Smart Way #10: Keep all control within your family. If you don’t plan properly, you could findthat a friend or relative has petitioned the Court to intervene on your behalf. Once a judge getsinvolved, you have ongoing legal and accounting expenses, plus more problems and hassles than youwould ever want to endure. The smart way to plan for your later years is to keep total control withinyour family.

Smart Way #11: Create your plan now, while everyone involved is competent to make decisions.Seniors often come to our office seeking help only to learn that they are too late to correct a terriblesituation. We feel awful when we must tell them that the much-needed planning should have beendone two, five or ten years earlier. Don’t wait until you need help to create your plan. By then, it’s toolate.

Smart Way #12: Review your plan at least once a year. Every time your circumstances change oryour goals change, you should change your estate plan. If your plan is not up to date, the unintendedconsequences to you and your family could be disastrous. Make an appointment at least every year tomeet with your estate planning attorney. Then you can go over your plan and discuss any changes inyour life circumstances.

Smart Way #13: Make proper decisions concerning your retirement benefit distributions. Makesure your estate plan maximizes income-tax-free deferrals and minimizes income and estate taxes.



Smart Way #14: Work closely with your physician about your Medicare coverage. Often skillednursing services and home health coverage are terminated or denied with little or no input from yourtreating physician. Before you go without health care that could be covered by Medicare, talk withyour physician about your concerns so that he or she can help you get the Medicare coverage youdeserve.

Smart Way #15: Think about future housing options. Start from the perspective of where youwould like to live. Then determine if you could afford this option by comparing your monthly incomealong with your life savings to the initial cost and the ongoing financial commitment you would haveto make. Make sure you consider (1) your healthcare needs that will not be covered by insurance, (2)financial security for your surviving spouse, and (3) your desire to pass on a legacy to your children.

Smart Way #16: If you are in a second marriage, decide how you will handle the high cost ofnursing home care. If you are not able to pay $5,000 per month to a nursing home and want yourchildren from an earlier marriage to receive your property, a Marital Agreement alone will not do thetrick. Medicaid ignores these contracts and considers all of the couple’s assets, whether owned jointlyor individually, in determining Medicaid eligibility. A better choice is to include in your MaritalAgreement a provision that requires each spouse to obtain and maintain long-term care insurance.Also, you can include additional provisions that clearly state that the healthy spouse is able to take allnecessary steps to protect his or her separate property from a Medicaid “spend-down.”

Smart Way #17: Keep the lines of communication open within your family. If one of yourchildren will be managing your finances, you should take specific steps to help him or her avoidconflict within your family. Insist that your child disclose to other family members what has beendone on your behalf. You can do this by adding this instruction to your Trust or General DurablePower of Attorney. By doing this you accomplish two things: One, you keep everyone in the loop sofeelings of distrust are eliminated. And two, you reduce the risks of financial abuse because otherfamily members will know how your finances are being managed.

Smart Way #18: Don’t let incapacity put your family at risk for criminal or social workerinvestigations. Many professionals are responsible for protecting frail and elderly people frompredators. If your legal documents don’t provide clear legal authority and guidance on how to manageyour assets, the police or adult protective services could step in and question your children’s actionsand motives. If authorities investigate your children’s actions, at worst, they could file criminalcharges. At best, an investigation by adult protective services could return a “finding” of no currentfinancial abuse. You can eliminate these risks to your children -- and avoid becoming a burden to yourchildren -- with a competent estate plan.

Smart Way #19: Hire a competent, experienced estate planning attorney to create an estate plan.The areas of estate planning and elder law are far too complex to hire just any attorney. Often,strategies used in estate planning to minimize taxes directly conflict with strategies used in elder lawplanning to protect assets and achieve Medicaid eligibility for nursing home care. In situations whereboth goals are important, you and your family need a lawyer who has in-depth knowledge andexperience with both sets of rules and strategies. Most attorneys are not qualified to provide theseservices. Make sure the estate planning attorney you hire has the knowledge, skill, judgment, andexperience to create a competent plan for you and your family.



Estate Planning Pitfalls

In addition to the numerous estate planning pitfalls and mistakes already discussed above, there aremany more. The following two sections explain specific problem areas that cause families to risk --and even lose -- their assets, as well as costing the family a substantial portion of their estate.

The good news? You can avoid all these problems with the custom asset protection and estate plan.

11 Estate Planning Mistakes That Tear FamiliesApart and Cause Children to Suffer

Mistake #1: Relying on your state’s estate plan. If you do not set up an estate plan, upon your deathyour property will be distributed according to the laws of your last state of residence. Often, the lawwill require the probate judge to give your property to someone other than the person(s) you wouldhave chosen.

Mistake #2: Relying on a Will. If your estate plan consists only of a Will, your heirs may face manycostly problems, such as probate and/or conservatorship proceedings. True, a Will is the mostcommon estate planning tool, but it may not be the best tool to use.

Mistake #3: Relying on Joint Tenancy. Almost everybody owns their bank accounts in JointTenancy. Yet Joint Tenancy often causes families horrible legal nightmares. You have many optionsthat are better and safer than owning property in Joint Tenancy, and they come with much less risk.

Mistake #4: Relying on Community Property laws. Relying on the Community Property laws is aposition many clients take. However, as in Joint Tenancy, your property will still have to go throughprobate on the death of the spouse. Also, as in Joint Tenancy, Community Property ownershiprequires a conservatorship if a spouse is incapacitated and the home needs a mortgage, home equityline, or to be sold. Relying on the Community Property laws is not a good estate plan.

Mistake #5: Relying on Court-Supervised Guardianships. These Court-supervised proceedings foraddressing your physical or mental incapacity are costly, time-consuming and horribly burdensome.When you set up a Living Trust and transfer your assets into it, you avoid the need for a Court-supervised guardianship. You also need to put into place up to date Powers of Attorney, Health CarePowers of Attorney and Directives to Physicians.

Mistake #6: Relying on the small estate affidavit procedure as your way of avoiding probate.Most people assume they have fewer assets than they actually have. The streamlined probateprocedure in Maryland is permitted only where the net estate is $30,000 or less or $50,000 or less if thespouse is the only beneficiary.

Mistake #7: Relying on a gifting program as your way of avoiding probate. The law allows you togive away your property at a rate of $13,000 per person per year (for 2011). A married couple cangive $26,000 per year to anyone they choose without gift tax consequences. While this is an effectiveway to reduce the size of your estate, it has two downsides: First, you lose control of the assets youhave given away. Second, minor beneficiaries get total control over everything that has been given to



them when they turn 21, if the gift is to a uniform transfer to minors act account (UTMA Account). Toavoid that problem certain Trusts would need to be established to receive gifts to minors.

Mistake #8: Relying on the Courts to take care of your child’s finances. If you die intestate (withno Will) or with only a Will, and your property passes to your minor child, the Court will put yourchild’s money into a Court-supervised guardianship involving annual accountings to the Court.Naturally, this requires CPAs to prepare accountings, lawyers to file those accountings with the Court,plus filing fees. In addition, since some state’s probate laws imposes the most conservative investmentstandards, this might significantly lower the return on your child’s investment. It also means that theCourt determines who will serve as guardian of the property, and this may be someone you wouldnever have chosen.

Mistake #9: Relying on a form kit for your Will or Living Trust. One size does not fit all becauseno two people or families are alike. Do you know even one family whose concerns are the same asyours? From your family’s needs and dynamics -- to personalities and values -- can you imagine anyform kit ever being suitable for any family? If you use a form kit, you’re asking for problems. Theonly estate plan you can rely on is one that is customized to meet your needs and prepared by aqualified estate planning lawyer.

Mistake #10: Relying on an attorney who uses boiler-plate Living Trust documents to providefor your spouse and children. When you create your Living Trust, you and your lawyer have theopportunity to write specific instructions about how you want to provide for your surviving spouse andchildren. If you overlook this opportunity, your family will receive whatever care the one-size-fits-allform documents provide. That care is almost never as good as the care you would want your family toreceive.

Mistake #11: Relying on the wrong attorney. Most attorneys know very little about estate planning.What’s more, even estate planning attorneys often don’t put much time or energy into a Minor’s Trust.Responsible parents realize a Minor’s Trust is the most important part of their family estate plan.That’s why I urge you to choose an estate planning attorney who has the primary focus, mission andpurpose to help you achieve your family’s estate planning goals: putting your children first.

12 Problems That Could CostYour Family a Fortune -- and Their Solutions

Problem #1: Probate. Probate is the Court-supervised process of passing title and ownership of adeceased person’s property to his or her heirs. The process consists of assembling assets, giving noticeto creditors, paying bills and taxes, and passing title to property when the judge signs the order.Probate can cost your loved ones a sizeable portion of your estate. The biggest portion of the costs arethe fees charged by attorneys and personal representatives for their services for the estate, in additionto filing fees, costs of publication, fees for copies of death certificates, filing and recording fees, bondpremiums, appraisal and accounting fees, and so on. Often the fees of attorneys and personalrepresentatives are based on an hourly rate, and while they can tell you what their hourly rate is, theycannot tell you the number of hours their services will take, so they cannot tell you what their total feeswill be. Like surgery, probate can be simple and easy, but frequently probate can have very drastic anddamaging results. Accordingly, like surgery, because of its uncertainty in terms of both the potentialfor problems and high costs and fees, probate is something best to prepare for if you can. You can



avoid a substantially larger probate process by having an estate planning lawyer set up and fund aRevocable Living Trust. Since the Trust actually owns your assets, no significant probate of the estatewill be required, saving your family many thousands of dollars.

Problem #2: Lawsuits and Creditors. Protect the property you leave to your spouse and childrenfrom the claims of their creditors, ex-spouses, and the IRS. This can best be done with proper creditorprotection provisions in a Revocable Living Trust.

Problem #3: Estate Taxes. For married couples, protect your assets from state and federal estatetaxes by setting up and funding a tax-saving Credit Shelter Trust. Under current law, a Credit ShelterTrust will completely protect your assets from estate taxes for estates valued up to $10,000,000 for amarried couple. The following example will illustrate how proper estate planning can avoid federalestate taxes.

Problem: Jack and Mary have assets of exactly $10 million. Jack passes away, and all assets pass alongto Mary with no estate taxes owed because of the spousal exemption. Several years later, Mary passesaway. The unified credit is used, and so $5 million passes along to the children, estate tax free. Estatetax is owed on the remaining $5 million, resulting in a $1,750,000 estate tax bill ($5,000,000 x 35%).With proper estate planning, this estate also could have paid nothing.

Solution: All estate taxes could easily have been avoided by setting up a Revocable Living Trust thathad a Marital and Family Trust provision, also known as an A/B trust. Here’s how it would work forJack and Mary: When Jack dies, half of the assets are placed in the Family Trust, or B Trust. Jack’sunified credit would be applied to these assets, and no estate tax would be due. Mary is allowed todraw income from assets in the B Trust, and allowed to access principal if necessary. The other half ofthe assets are placed into the Marital Trust, or A Trust. Mary retains full control and unlimited accessto assets in the A trust. Upon Mary’s death, her unified credit is applied to the estate tax assessed uponher assets in the A Trust, and her $2 million passes along, estate tax free. Using this type of estateplanning, Jack and Mary were able to avoid paying $1,750,000 in estate taxes.

Without this type of estate planning, beneficiaries who inherit an estate valued at $5,000,000 wouldpay $1,750,000 in federal estate taxes. Most couples don’t realize that the value of their estate forpurposes of determining estate taxes includes their life insurance death benefit proceeds. Now thegood news: In this example, a well-designed estate plan costing between $3,000 and $6,000 will savea $5,000,000 estate $1,750,000 in federal estate taxes. Other ways you can avoid or reduce estate taxesinclude setting up (1) an Irrevocable Trust for your children, grandchildren or other heirs, (2) anIrrevocable Life Insurance Trust, (which detaches your life insurance benefits from your estate), (3) aCharitable Remainder Trust, and (4) Second-to-die Life Insurance so you can pay estate taxes forpennies on the dollar.

Proper estate planning pays off. Attorney’s fees can pale in comparison to the amount of estate tax thatyour estate may owe someday.

Problem #4: Income Taxes. A family can lower its overall income taxes by setting up a FamilyLimited Partnership to own income-producing property. A parent can do this by setting up a FamilyLimited Partnership and making gifts of limited partnership interests to the other limited partners,normally their children or grandchildren who pay income tax at lower tax rates. A Family LimitedPartnership is an excellent tool to shift income to partners who pay taxes at lower rates. It is also aneffective way to make gifts and still keep total control of the property owned by the partnership.



Problem #5: Lawsuits. Protect your assets from lawsuits by doing any or all of the following, asappropriate: (1) purchasing an umbrella liability insurance policy, (2) setting up a Family LimitedPartnership, (3) setting up a program for lifetime gifting, (4) setting up a Limited Liability Company,and (5) incorporating. Further, you can protect your children from lawsuits by putting theirinheritances into a Discretionary Trust. This is especially important if your children are likely tobecome professionals subject to potential malpractice actions or, on the other hand, are spendthrifts!

Problem #6: Inexperienced Beneficiaries. Protect your assets from being wasted by young orinexperienced family members. Most beneficiaries spend their entire inheritances in less than twoyears, regardless of the size of the estate or the heir’s socio-economic background. Your lawyer canset up your Family Trust with protective provisions that provide guidance and safeguard your lifesavings.

Problem #7: Guardianships. Protect your assets from the high costs of incapacity by (1) setting up aLiving Trust so you avoid the need for a guardianship, (2) drawing up an Advance HealthcareDirective, and (3) drawing up a Health Care Power of Attorney.

Problem #8: Nursing Home Care. Protect joint assets from the high costs of nursing home care.Buy insurance that covers nursing home care and provides a death benefit that returns the money spenton nursing home care to your heirs.

Problem #9: Unwanted Medical Care. Protect your assets from unwanted and costly medical careby having an Advance Healthcare Directive and Health Care Powers of Attorney that spell out yourinstructions, including which medical care, treatment and procedures you want -- and which you don’twant.

Problem #10: Unwanted Emergency Care. Protect your assets from unwanted emergency care. Ifyou have a terminal illness, you can draw up and sign a Pre-hospital Medical Directive that will tellemergency personnel not to resuscitate you in the event of a medical emergency. This directive isoften referred to as a “Do Not Resuscitate Order”.

Problem #11: Ineffective Estate Plans. Protect your assets from an ineffective estate plan. Don’tdepend on pre-printed “cookie cutter” form kits or document preparation services for your estate plan.Contrary to what you may have heard or read, one size does not fit all! You may think you haveprecisely what you need. But you will never know -- because your family members will have to cleanup the mess. You see, after you die, your family members will try to use your documents to settle yourestate. And if the documents weren’t drafted correctly, they will cause additional expense and longdelays because a probate will have to be done to convey title to your assets.

Problem #12: Unqualified Lawyers. Many attorneys are getting into estate planning because it’s lessstressful than other areas of law. Not surprisingly, most of these newcomers focus on the needs ofsenior citizens and almost never deal with issues affecting young families. If you have young children,make sure you choose an independent attorney who focuses their law practice on asset protection andestate planning for young families. This will help insure that the lawyer you choose has theknowledge, skill, experience and judgment necessary to fully protect your family and your assets, andto give you advice and counsel that is in your best interests.



Your Estate Plan Needs Maintenance

When you buy a new car, everything works perfectly. (At least, you hope it does.) But then in 3,000miles, it’s time for an oil change. Also, you must keep your eye on the level of coolant in the radiator,your transmission fluid, and your power steering fluid. You must make sure your alternator works tokeep the battery charged.

What happens if you don’t maintain your car? Your engine could burn up. Your transmission couldfail. Your car could overheat. Your battery could go dead. All of which mean you’re stuck on theside of the road trying to hitchhike to the nearest town.

Your estate plan is like your car. When you set it up, everything is current and accurate. But you needto keep your eye on your assets, insurance, Powers of Attorney, gifting program, distribution plan,successor trustees, beneficiaries, and so much more. That’s why it’s important that you meet with yourestate planning attorney every year.

You wouldn’t think of going on a long trip without making sure that your car was in tip-top shape. Yetevery day, people embark on the long trip we call life. And the problem with our “life trip” is thatwe’re never sure when that trip might end. It’s a good idea to review your estate plan with your lawyerevery year or two to see if changes in your family’s circumstances need to be reflected in your estateplan.

For example: You should review your estate plan with your estate planning attorney any time (1) youget married, (2) you and your spouse divorce, (3) your spouse dies or becomes incapacitated, (4) yourhealth changes, (5) you have or adopt a child, (6) your children marry or divorce, (7) a potentialproblem arises with a beneficiary, (8) the value of your assets changes, (9) your employment changes,(10) your business interests change, (11) you retire, (12) you acquire property in another state, (13) youmove to a different state, or (14) something happens to a person named in your estate plan that couldaffect your relationship or the duties they are to perform on your behalf.

But wait. Is your estate plan really like your car? It’s more accurate to say it’s like a fire engine --ready to handle any emergency at a moment’s notice. When your spouse has a heart attack, you wantthe paramedics – right now! You don’t want to call 9-1-1 and have the dispatcher explain to you thatthe fire truck has a dead battery. Or a flat tire.

It would be ridiculous to buy a new fire engine, back it into the fire station where it waits for the nextemergency, and then not have a mechanic check under the hood for a year. Do you know how manythings can go wrong with a fire truck’s engine if it goes without service for a year?

Yet that’s exactly what people do with their estate plans. They invest hard-earned money to set uptheir plans. Then they put their plans in a drawer or safe deposit box where they gather dust for 2years, 5 years, even 10 years -- often without updating the plan even once!

And then, when these people have an emergency, do you know what happens? They dig out theirpaper-work only to learn that their plan no longer works. You see, it was custom designed to fit theirspecific needs 5 years ago. But now their needs, and often the law, have changed -- and no oneupdated the plan. What a tragedy!



Your estate plan must be fully operational, ready to handle any emergency at a moment’s notice. Ifyour spouse has a heart attack and cannot make medical decisions, you don’t want the nurse at thehospital to explain that the legislature changed the law and now your Powers of Attorney are no longervalid. Or, if your spouse dies, you don’t want the judge to tell you that your estate must go throughprobate because your Revocable Living Trust has not been properly maintained and updated.

You need your estate plan to be ready for any emergency -- 24 hours a day -- because you never knowwhen you might need it.

An out-of-date estate plan isn’t worth the paper it’s written on. But a current estate plan that worksprecisely the way it should -- protecting your family and safeguarding your assets -- is the greatest giftof love you can give to your family, your spouse, and yourself. Your custom designed estate plan,created specifically for you -- combined with yearly maintenance meetings to keep your estate plan intip-top shape -- are the best investment you’ll ever make. I guarantee it.

23 Red Flags That Signal WhenYour Will or Living Trust is Out of Date

I offer clients the opportunity to sit down with me and review their estate plans at least once each year.However, this doesn’t mean you should wait until your next review if your circumstances change. ThisEstate Planning Checklist identifies events that could make a significant impact on your estate. If any ofthese events occurs, please call me. For your protection, we may need to amend or revise one or more ofyour estate planning documents.

Changes Involving You or Your Spouse

1. You get married.2. You and your spouse divorce.3. Your spouse dies or becomes incapacitated.4. Your health changes.

Changes Involving Your Children, Grandchildren or Other Beneficiaries

5. You have a child.6. You adopt a child.7. Your child marries.8. Your child divorces.9. Your child becomes ill.10. One of your beneficiaries experiences an economic change, good or bad.11. One of your beneficiaries proves to be financially irresponsible.12. One of your beneficiaries has a change in attitude toward you.13. One of your beneficiaries dies.

Changes in Your Economic Condition

14. The value of your assets increases or decreases.15. Your insurability for life insurance changes.



16. Your employment changes.17. Your business interests change, such as becoming involved in a new partnership or corporation.18. You retire from your business or profession.19. You acquire property in a different state.20. You move to a different state.21. Changes in tax laws.22. You inherit assets from family or friends.

Changes to a Person Named in Your Estate Plan

23. Something happens to a person named in your estate plan, such as the death or incapacity of yourpersonal representative, executor, trustee, guardian or conservator.

You’re Invited to Call or E-mail: “If you have experienced a change in circumstances, includingany of the above, please send an e-mail to [email protected] or call me at (301) 968-1630.For your protection, we may need to amend or revise your estate planning documents.” – Nicole

Phone (3

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NICOLE K. WHITE, ESQ.

01) 968-1630 E-mail [email protected]





P: (301) 968-1630 • F: (888) 559-8856



Right Now, After Reading This Guide, You Know MoreAbout Estate Planning Than Most Lawyers

This is because law has become specialized, much like medicine. When you need a doctor, you canfind specialists in foot care, eye care, and everything in between. Law is much the same. You can findlawyers who practice corporate law, family law, criminal law and every other kind of law. Andbecause they work in other areas of law, most of these lawyers don’t know the first thing about estateplanning.

If you hear a lawyer say: “Probate isn’t bad. Just come to me and I’ll write a new Will for you.”This lawyer has not educated you about your options and probably earns a good part of his living fromcon-ducting probates. No doubt, he will write your Will and then keep it in his or her safe for you.But will you have the right documents that meet your needs?

If you hear a lawyer say: “It’s easy to avoid probate. Just put all of your property into JointTenancy.” This lawyer doesn’t know the many financial dangers of owning property in Joint Tenancywith Right of Survivorship. Fortunately, after reading this guide, you do.

If you hear a lawyer say: “I’ll introduce you to the lawyers in our estate planning department. Theywill create an estate plan for you for only $30,000.” You can bet that this lawyer works at a large lawfirm that charges fees higher than you can imagine -- higher than anyone should pay.

If you hear a lawyer say: “Just go to a bookstore and buy a Living Trust form kit. You can createyour own trust for $29.95 and it’s perfectly legal.” Any lawyer who recommends that you prepareyour own estate plan should not be practicing law.



How to Choose a Qualified Lawyer

Tip #1: Choose an attorney who specializes in estate planning. Other attorneys simply don’t havethe knowledge, skill, judgment or experience to plan your estate properly.

Tip #2: Choose an attorney you trust. Nothing is more important in a lawyer/client relationship thanhaving a lawyer you trust.

Tip #3: Choose an attorney who creates your estate plan herself. If the attorney has an assistantcreate your estate plan, then why hire the attorney? Note, it’s not uncommon for lawyers in solopractice to ask a funding coordinator to transfer property into your trust. Even so, funding is a fairlyroutine function and you are well protected as long as the lawyer supervises the process.

Tip #4: Choose an attorney who provides excellent service. Anything less is not acceptable.

Tip #5: Choose an attorney who welcomes your questions -- and structures meetings by allowingenough time to answer questions. High-volume practices have short appointments so they can moveclients quickly through the process. I don’t know about you, but this is not the level of service I expectwhen I hire a lawyer.

Tip #6: Choose an attorney who will return your phone calls quickly. You should never hire alawyer who won’t respond promptly to your needs.

Tip #7: Choose an attorney who has roots in the community. This attorney cares about hisreputation and is more likely to be available in the future when you need help.

Tip #8: Choose an attorney who is a respected source of information -- one who has dedicated herpractice to helping people understand their estate planning alternatives.

Tip #9: Choose an attorney who charges reasonable flat fees. At best, you get what you pay for.Most people do not shop for the cheapest doctor. Instead, they focus on the doctor’s qualifications andexperience. You should apply the same principle when selecting an estate planning attorney. If the fee istoo low, the lawyer may be leaving something out. Make sure the fee you pay and the services youreceive are of equal value.

Tip #10: Choose an attorney who offers free initial consultations. Shouldn’t you be able to talkwith the lawyer for free before you decide whether to hire her?

Also, ask specific questions about your estate and your objectives, such as: “How do I protect mychildren from abusive relatives if something happens to me?” “Can I keep my kids from controllingtheir entire inheritance at age 18?” “Can I protect my children’s money from creditors?” “How can Ileave money for my child’s education?”



20 Tough Questions to Ask a LawyerBefore You Write a Check

1. What percentage of your law practice is asset protection and estate planning?

2. How long have you been practicing law in asset protection and estate planning?

3. What’s your opinion of the probate process?

4. Under what conditions do you recommend a Living Trust?

5. How do I protect my children from abusive relatives if something happens to me?

6. Can I keep my kids from controlling their entire inheritance at 18?

7. How can I protect my children’s inheritance from creditors?

8. How can I protect my children’s inheritance from divorce settlements?

9. How can I leave money for my child’s education?

10. How long will it take to set up my Trust?

11. How many times do I meet with you during the process of preparing my Trust?

12. What do you charge to set up my Living Trust and what does that fee include?

13. What do I need to bring with me to our first conference?

14. If I have more questions after you set up my Trust, may I call you?

15. Can you send me information about Wills, Living Trusts and probate?

16. Can you practice law in both state and federal courts?

17. If I can’t come to your office, will you come to my home or office?

18. How important is it for me to have a Child Protection Plan that names a guardian for my minorchildren?

19. Will you quote your services in terms of a flat fee rather than billing by the hour?

20. Will you back up your services with a money-back guarantee that assures I will be satisfied withthe estate plan you create?



Nicole K. White Prepares Asset Protection and Estate PlansFor Families Facing These Challenging Situations

Situation #1: Avoid Probate. The married couple (or single parent) wants their estate to avoidprobate. They have heard the horrors about how long probate takes and the fights that erupt overassets. Often, they have family or friends who have been involved in the probate process.

Situation #2: Disabled Spouse. Most people think a power of attorney allows them to act on behalfof a disabled spouse. But in Maryland and Washington, D.C., this isn’t true. These jurisdictionsrequire a court-ordered conservator before anyone can act for a disabled adult. Nicole often sets upliving trusts because they avoid the need for a conservatorship.

Situation #3: Avoid Disputes. Parents want a living trust because they want things to go smoothlyamong their children. If they think one child might cause a dispute, setting up a living trust usuallyavoids that problem -- and keeps the children from ending up in court before a judge.

Situation #4: Estranged Child. The parents have an estranged child, a child on drugs, or a child theyhave not kept in touch with. They want either to give money to the child slowly over a period of years-- or to not give any money to the child.

Situation #5: Spendthrift Child. The parents are worried about a child spending his inheritance all atonce. They want to delay the distribution of his inheritance over a period of 5 or 10 years.

Situation #6: Disabled Child. The parents have a disabled child on Medicaid. Medicaid won’t allowthe child to have any assets, so the parents want a Special Needs Trust that permits the child to getmoney only in certain situations. This is usually one of many reasons the parents want an estate plan.

Situation #7: High Estate Value. The value of the estate is greater than the amount of the federalestate tax exemption, meaning the beneficiaries will have to pay IRS the federal estate tax when theyinherit the estate.

Situation #8: Creditor and Lawsuit Protection. The married couple wants to protect their assetsfrom all types of lawsuits. Owning assets in an entity, such as a limited liability company or familylimited partnership, is often the answer.

Situation #9: New Residents. People move to Maryland or Washington, D.C. from another state andwant a local trust. Nicole sets up a Maryland or Washington, D.C. trust and, if they want help fundingthe trust, helps them transfer assets to the new trust.

Situation #10: New Powers of Attorney. If new residents move from another state, they need to havepowers of attorney that conform to Maryland or Washington, D.C. law.

Situation #11: Kept Alive by Artificial Means. Many people are worried about being kept alive bymachines. Nicole prepares living wills in which the person spells out his wishes in the case of a life-threatening injury or illness.



12 Important Reasons Clients AskNicole K. White to Protect Their Assets and Family-- and

Why We Hope You Will, Too!

Reason #1: Affordable Flat Fees. All of Nicole’s estate planning services are billed on a flat-fee basisso there are never any surprises and you know your fee up front.

Reason #2: Client Communication. Nicole encourages communication with her clients. Your callsand e-mails are answered promptly, and you never have to worry that a quick call will result in a bill.

Reason #3: Customized Work Product. Nicole drafts customized estate plans tailored to your needsand wishes instead of the fill-in-the-blank documents that produce poor estate plans and cause majorproblems for your family. She also drafts guardianship plans for your minor children to ensure theyare protected if anything ever happens to you. Nicole provides all the legal services in her office. Shedoes not depend on junior lawyers or paralegals to do the work you want done by a competentattorney.

Reason #4: Guarantee. You can be sure that the service and legal work Nicole performs will be of thehighest quality. If she fails to live up to this guarantee, she will return some or all of the fee you paiddepending on the circumstances of your case. Many attorneys do not guarantee their services.

Reason #5: Client Communication. The key to Nicole’s successful career has been the quality of herrelationships with clients. Effective communication helps clients understand their problems and thelegal solutions Nicole can provide. Nicole’s primary focus is to listen to clients and evaluate theirindividual needs so she can offer the most effective, efficient solutions for protecting their assets.

Reason #6: Ongoing Communication. Nicole views the signing of your estate planning documents asthe beginning of her relationship with you and your family. She regularly follows up with you so anylife changing events (e.g., birth of a child or buying a house) are incorporated into your estate plan soyour estate plan will work for you during your lifetime and when it’s needed the most.

Reason #7: Bar Association Memberships. Nicole is a member of the American Bar Association(Estate Planning, Probate & Trust Committee), the Maryland State Bar Association (Section of Estate& Trust Law), and the District of Columbia Bar (Estates, Trusts and Probate Law Section).

Reason #8: Education and Training. Nicole holds a J.D. from the George Washington UniversityLaw School, and has obtained advanced training in various aspects of Estate Planning. In addition, sheholds a Ph.D. in Molecular Biology and Genetics from Johns Hopkins University School of Medicineand a Bachelor of Arts degree in Biology and Chemistry with a specialization in Biochemistry from theUniversity of Virginia.

Reason #9: Referrals from Professional Colleagues and Clients. Most of Nicole’s new clients cometo her by referrals from clients Nicole has served and from professional colleagues, including respectedlawyers, accountants, life insurance agents, trust officers and financial advisors.



Reason #10: Seminars and Workshops. Nicole presents educational seminars and workshops forchurches, civic and professional groups, and private groups throughout the Washington, D.C. metroarea and throughout Maryland.

Reason #11: Free Telephone Consultation. Nicole invites your questions about subjects in any of herpractice areas. Also, if you need a lawyer in another area of law and you don’t know whom to call,you’re invited to contact Nicole. She will gladly refer you to a competent lawyer who can help you.

Reason #12: Free Initial Consultation. Nicole gladly offers a free Family Planning Session.

YOU’RE INVITED TO CALL OR E-MAIL TODAY.“If you have questions about any aspect of Assisted Reproduction or Surrogacy, please don’t

hesitate to call. I am the proud mother of a daughter via Gestational Surrogacy and I willgladly answer your questions and share my personal experiences as an Intended Parent.

Also, if you have questions or concerns in the areas of Asset Protection, EstatePlanning, Business Planning, Charitable Giving or Wealth Management,

you’re invited to call or send an e-mail any time, without cost orobligation. I’ll be happy to help you in every way.” -- Nicole

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P: (301) 968-1630 • F: (888) 559-8856



Conclusion

Proper estate planning means that you must understand the basic rules outlined in this document andwork with your attorney in the preparation of an overall plan that is uniquely developed for you.Acting early will probably result in a savings of money and provide a more understandable andcomprehensive plan for you and your family.

You will be doing yourself a disservice if you simply sign a Will without considering all of the mattersdiscussed in this document, including taxes, the significance of the proper ownership of assets and howyour affairs will be conducted in the event of your disability.

To learn more about estate planning and to discuss your personal circumstances, please feel free to callKinsey Law Group, P.C. to set up a free Family Planning Session. All of our estate planning servicesare charged on a flat-fee basis.

DISCLAIMERTHIS GUIDE DOES NOT OFFER LEGAL ADVICE. RATHER, IT PROVIDES GENERAL

INFORMATION. THE INFORMATION IN THIS GUIDE IS BASED ON THE LAW INEFFECT AT THE TIME OF PREPARATION OF THIS GUIDE.



MEET NICOLE K. WHITE, ESQ.

Nicole K. White is a knowledgeable and experienced attorney based inBethesda, Maryland. She is the founder of Kinsey Law Group, P.C., andshe has dedicated her law practice to building and protecting families.When working with her clients, Nicole takes an educational approach soher clients fully understand their options and the steps they should take toachieve their goals. She takes the time to listen to her client’s concerns andanswer any questions. As a result, she has a better understanding of herclient’s situation and can respond effectively with practical and sensiblesolutions.

Areas of Practice: Nicole devotes her law practice equally to representingclients in matters relating to Asset Protection, Estate Planning, BusinessPlanning, Charitable Giving, Wealth Management, Assisted Reproductionand Surrogacy.

Education: In 1992, Nicole graduated from the University of Virginia(Charlottesville, Virginia) with a Bachelor of Arts Degree in Biology andChemistry, with a specialization in Biochemistry. In 1998, Nicole

graduated from The Johns Hopkins University (School of Medicine affiliate; Baltimore, Maryland) where sheearned a Ph.D. in Molecular Biology and Genetics. Then, in 2003, Nicole graduated from George WashingtonUniversity Law School (Washington, D.C.) where she earned her Juris Doctor Degree.

Court Admissions: Nicole is admitted to practice in all state courts of the State of Maryland and the Court ofAppeals of Maryland. In addition, she is admitted to practice in the Superior Court of the District of Columbiaand the District of Columbia Court of Appeals.

Bar Memberships: Nicole is a member of the American Bar Association (ABA) and its Section of GeneralPractice, Solo & Small Firm Division, and the following committees: Estate Planning Committee, Probate &Trust Committee; and the Family Law Committee. Also, Nicole is a member of the ABA’s Section of FamilyLaw and the following committees: Adoption Committee; Alternative Families Committee; and AssistedReproductive Technologies Committee.

Nicole is a member of the Maryland State Bar Association and its Sections of Estate Planning & Trust Law, andSolo & Small Firm Practice. She is a member of the District of Columbia Bar and its Estate, Trusts and ProbateLaw Section.

Professional Memberships: Nicole is a member of the American Society for Reproductive Medicine (LegalProfessional Group), and RESOLVE: The National Infertility Association.

Family & Interests: Nicole is married and has one daughter via Gestational Surrogacy. She enjoys collectingstamps, reading, bike riding, and astronomy (star gazing).

You’re Invited to Call or E-mail.

“If you have questions about any aspect of Assisted Reproduction or Surrogacy, please don’t hesitate to call. Iam the proud mother of a daughter via Gestational Surrogacy and I will happily answer your questions and sharemy personal experiences as an Intended Parent. Also, if you have questions or concerns in the areas of AssetProtection, Estate Planning, Business Planning, Charitable Giving or Wealth Management, you’re invited to callor send an e-mail any time, without cost or obligation. I’ll be happy to help you in every way.” -- Nicole

Phone (301) 968-1630 or E-mail [email protected]



MY PERSONAL PROMISE TO YOU

“I am dedicated to helping you with AssistedReproduction and Estate Planning. So whetheryou want to start or expand your family -- orprotect your family’s assets -- I will work

with you and help you navigate theseconfusing, complex areas of the law.”

-- Nicole

YOU’RE INVITED TO CALL OR E-MAIL TODAY.“If you have questions about any aspect of Assisted Reproduction or Surrogacy, please don’t

hesitate to call. I am the proud mother of a daughter via Gestational Surrogacy and I willgladly answer your questions and share my personal experiences as an Intended Parent.

Also, if you have questions or concerns in the areas of Asset Protection, EstatePlanning, Business Planning, Charitable Giving or Wealth Management,

you’re invited to call or send an e-mail any time, without cost orobligation. I’ll be happy to help you in every way.” -- Nicole

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P: (301) 968-1630 • F: (888) 559-8856