Planning tips - Estate,Trust & Fiduciary matters
Our litigation experience has shown that many estate, trust and fiduciary disputes can be avoided by careful planning and documentation at the time that the will, trust or other fiduciary instrument is created or undergoes significant change. We have seen close family members become alienated from one another as a result of estate, trust and fiduciary disputes. Poor planning can lead to unintended consequences that can result in years of painful and expensive litigation and the diminution or effective destruction of an intended legacy.
While Jacobs & Barney does not handle the creation or administration of estate planning and related documents (i.e., wills, trusts, codicils, powers of attorney, etc.) and do not practice tax law, we would be pleased to provide a referral if your issue is not one that we would handle.
Planning tips to help minimize the risk of estate, trust and fiduciary disputes during the initial stages of estate, trust and fiduciary planning or when taking steps to improve such planning:
When you are contemplating estate, trust and fiduciary planning and/or advanced directives, educate yourself and discuss with an attorney the legal requirements pertaining to such matters and the statutory powers of personal representatives, trustees and fiduciaries.
Maryland's Orphan's Court also posts a great deal of information on those topics.
And the Office of the Attorney General of the State of Maryland has published a guide to the “Maryland Advance Directive: Planning For Future Health Care Decisions.”
Read through those materials to educate yourself as to potential concerns. Discuss those matters with an attorney to help you to determine out how the laws apply to and impact your particular estate, trust or fiduciary concerns.
Create a plan when you are of sound mind to minimize the risk that your estate planning will be contested on the basis of alleged lack of legal physical or mental capacity.
Consult an attorney who is independent of persons interested in your estate to ensure that you are obtaining unbiased advice and to minimize the risk that your estate planning will be contested, for example, on the basis of claims of undue influence.
Choose personal representatives, trustees and other fiduciaries wisely. Problems may arise when, for example, interested persons do not trust the selected fiduciary or there is animosity between your designated fiduciary and beneficiaries or trustees. Consider the following when selecting a personal representative, trustee or fiduciary:
Is the person honest, trustworthy and competent?
Does the person understand your wishes?
Does the person have conflicts of interest?
Is the person willing to serve in such a capacity?
How are the persons interested in your estate plans likely to perceive and interact with the person?
Consider whether you wish to limit the statutorily granted powers of your personal representative, trustee or fiduciary. Problems may arise when, for example, interested persons disagree as to how a personal representative, trustee or fiduciary decides to exercise or not exercise those powers.
Provide a mechanism for the removal of fiduciaries without court intervention in appropriate circumstances in order to minimize the risk that your estate will be reduced by otherwise avoidable litigation costs.
Draft a clear and specific plan addressing your wishes with respect to the division of tangible assets and real property. Problems may arise when, for example, family members want a particular item of sentimental value or disagree as to whether real property such as a family farm should be distributed, divided or sold. For example:
Who is to receive specific items of personal property?
Should real property be sold, divided or distributed as a whole?
Should assets such as investments be sold or distributed?
Explain why you are disinheriting someone or providing for unequal distribution to help minimize the risk that your estate planning will be contested on the basis of, for example, undue physical or mental influence.
Review and update estate and trust planning and fiduciary arrangements regularly. Problems may arise when, for example, there has been a divorce, a marriage and/or when a new significant other comes into the picture and your plans do not take into account those relationship changes.
Establish mechanisms for the protection of you and your estate in the event you become vulnerable including in particular, protection from caretakers and others who may seek to take advantage of older or more vulnerable persons.
Draft a clear and specific plan addressing your wishes with respect to your business interests, particularly family business interests. Problems may arise when, for example, persons interested in the business disagree as to whether and how a business should be continued or whether and how an interest in a business should be transferred or liquidated.
Review and evaluate the titling and beneficiary designations of all of your assets (i.e., accounts, beneficiaries of insurance policies, investments, real property, etc.) to ensure that your assets are going where you intend and to help minimize the risk that your estate planning will be contested on the basis of, for example, whether a person listed on your account was listed for the purpose of convenience, for the purpose of making that person a co-owner or for the purpose of making a gift.
Talk to your family so that you can anticipate problems and take steps to minimize the risk of disputes following your death.
The above are just some examples of ways in which you might protect yourself. An attorney will be able to advise you as to additional means and how best to accomplish your objectives.
If an estate, trust or fiduciary dispute arises or seems imminent or if you have other questions, consult a dispute resolution firm such as Jacobs & Barney to evaluate your case, advise you as to its strengths and weaknesses, assist you in your decision-making processes to resolve the dispute and work towards a satisfactory and cost-effective resolution to your problem.