AVOIDING PROBATE - MVLS...AVOIDING PROBATE for low-income clients K. Alice Young, Esq. Nusinov...

AVOIDING PROBATEfor low-income clients

K. Alice Young, Esq.Nusinov Smith, LLP

6225 Smith Avenue; Suite 200BBaltimore, MD 21209

(410) [email protected]

TOPICS

• DEEDS FOR REAL PROPERTY,

• PAY ON DEATH ACCOUNTS,

• TRANSFER ON DEATH ACCOUNTS,

• BENEFICIARY DESIGNATIONS, AND

• MVA TITLE BENEFICIARY DESIGNATIONS,

A NEW PROCESS FOR TRANSFERRING CARS.

OVERVIEW

TRANSFER OF REAL PROPERTY

FINANCIAL ACCOUNTS

MOTOR VEHICLES

LAST WILLS& TESTAMENTS

Even if your client has low income or few assets, you must still be

concerned with the same complex interpersonal and family dynamics.

• Document family relationships in detail particularly if a client wants

to disinherit a spouse or child

• Ask about the financial circumstances of potential beneficiaries

and counsel your client that a gift may jeopardize means-tested

public benefits

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


WARNING ACHTUNG!

WHO IS

THE CLIENT?

IDENTIFYING

CONFLICTS

OF INTEREST

CAPACITY

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


ETHICAL CONSIDERATIONSTHE THREE C’S

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


INTERVIEWING THE CLIENT

GENERAL

ETHICAL CONSIDERATIONS& PRACTICE TIPS

FINANCIAL ACCOUNTS

POWERS OF ATTORNEY


At least a portion of the interview, preferably the beginning,

should be solely with the Client, in the absence of any support

person, to establish 1) the Client’s understanding of the

meeting; 2) your obligation to Client-Attorney confidentiality;

and 3) the Client’s central role in the planning conversation.

WHO IS

THE CLIENT?

IDENTIFYING

CONFLICTS

OF INTEREST

CAPACITY

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL


ADVANCE MEDICALDIRECTIVES

POWERS OF ATTORNEY


WHO IS

THE CLIENT?

IDENTIFYING

CONFLICTS

OF INTEREST

CAPACITY

Rule 1.7 - Conflicts of Interest, General.

Informed consent, confirmed in writing

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


WHO IS

THE CLIENT?

IDENTIFYING

CONFLICTS

OF INTEREST

CAPACITY

Contracts: understand the nature and effect of the act and the business being

transacted (variable)

Deeds: understand the nature and effect of the act at the time of the conveyance

Gifts: understand the nature and the purpose of the gift, understand the nature

and extent of the property to be given, understand the natural objects of one’s

bounty, and understand the nature and effect of the gift (may be a higher

standard than testamentary capacity)

Will: understand the natural objects of one’s bounty, understand the nature and

extent of one’s property, and interrelate the elements to make a disposition of

property according to a rational plan

Power of Attorney: generally parallel to the capacity to contract

Advance Medical Directive: generally parallel to the capacity to contract

ABA Commn. on L. & Aging & Am. Psychological Assn., Assessment of Older Adults with

Diminished Capacity: A Handbook for Lawyers (2005).

http://www.apa.org/pi/aging/resources/guides/diminished-capacity.pdf

Levels of Capacity Needed for Specific Legal Transactions

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


http://www.apa.org/pi/aging/resources/guides/diminished-capacity.pdf

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


SPOILER ALERT!

GENERAL



POWERS OF ATTORNEY


Per Stirpes

By Representation

“If s/he survives me”

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


Per Stirpes By Representation “If s/he survives me” Anti-Lapse

1-210 Intestacy. If the

intestate decedent is

survived by issue, the share

for the issue is split so that

each surviving child receives

a share and the surviving

children of a predeceased

child receive an equal portion

of that predeceased child’s

share

1-210.1 Testacy. Scheme

can be overcome by specific

instructions in the Will

Where all the members of

one class of takers

predeceased the decedent,

the division of interests is

equal at the next level at

which at least one member of

the class survived the

decedent.

Ex. If the decedent had no

surviving spouse, issue,

parents or siblings, the

intestate heirs are the

decedent’s first cousins; if no

first cousins survive, then the

division into equal shares

may take place at the level of

first cousins, once removed

3-110 – if someone who

would otherwise be an heir

fails to survive the intestate

decedent by at least thirty full

days, s/he is not entitled to

the rights of an heir

4-401 – unless the Will states

otherwise, Maryland’s statute

requires a legatee to survive

for thirty full days to receive

the legacy

4-403 – if a legatee dies after

the execution of the Will but

before the testator’s death,

then Maryland’s anti-lapse

statute directs the gift “to

those persons who would

have taken the property if the

legatee had died, testate or

intestate, owning the

property.”

REFERENCES TO THE ESTATES AND TRUSTS ARTICLE

GENERAL



POWERS OF ATTORNEY


Probate Estate Administration

Subject to Administration

through the Register of

Wills for the county in

which the Decedent was

domiciled at death

E&T 5-103

Total Estate:

Trusts; Probate; Non-Probate

Probate Estate

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


EVERYTHING ELSE!

Here we focus on avoiding probate by

deed, contract and operation of law

GENERAL



POWERS OF ATTORNEY


TRANSFER OF REAL PROPERTY BY DEED:

1. LIFE ESTATE DEED WITH POWERS OF APPOINTMENT

2. LIFE ESTATE DEED WITHOUT POWERS OF APPOINTMENT

3. JOINT TENANCY & TENANCY IN COMMON

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


PRO: Deeds can be used to avoid cost and time of probate

CON: Deeds themselves cost money to prepare and record

GENERAL



POWERS OF ATTORNEY


LIFE ESTATE DEED RETAINING POWERS TO ALIENATE• A life estate deed creates two owners – the life estate tenant and the remainderman

• The life estate tenant retains the right possess the property for her life

• On the life estate tenant’s death, the remainderman owns the property without the need for probate – this deed is essentially an estate planning tool

• Retaining powers to sell , mortgage, take back or give away (but not devise by Will) means the l ife tenant can destroy the interest held by the remainderman and so the transfer is not a complete gift

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


LIFE ESTATE DEED WITHOUT POWERS TO ALIENATE• A life estate deed creates two owners – the life estate tenant and the remainderman

• The life estate tenant retains the right possess the property for her life

• On the life estate tenant’s death, the remainderman owns the property – no probate

• Foregoing powers to sell , mortgage, take back or give away the property means the life tenant cannot destroy the interest held by the remainderman without the remainderman’s participation and so the transfer is a complete gift – implicates gift laws

• This is often used as a Medical Assistance planning tool, not just for estate planning

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


JOINT TENANCY v. TENANCY IN COMMON

Joint Tenants own an undivided fractional interests in something and the tenancy carries rights of survivorship – when one joint tenant dies, the remaining tenant/s own the deceased tenant’s share.

Tenants in Common own undivided fractional interests in something, but without rights of survivorship. A deceased tenant’s share passes through his or her estate.

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


JOINT TENANCY TO AVOID PROBATEOVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


TENANCY IN COMMONDOES NOT AVOID PROBATE

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


FINANCIAL ACCOUNTS, INSURANCE AND BENEFITS

1. Pay on Death Designation

2. Transfer on Death Designation

3. Beneficiary Designation

4. Custodial Designations where available

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


FINANCIAL ACCOUNTSFinancial Inst. Article 1-204. Multi-party accounts“A provision in an account agreement for a transfer on death in compliance with this section is nontestamentary and shall be effective according to the provisions of this section. Transfers pursuant to this section are effective in the form and manner prescribed by this section and are not to be considered testamentary .”

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


On legislative intent, see also the annotation:

Section 2, ch. 578, Acts 1992, provides that "this Act is intended to alter the

common law, including Whalen v. Milholland, 89 Md. 199, 43 A. 45 (1899),

Milholland v. Whalen, 89 Md. 212, 43 A. 43 (1899) and their progeny, as it

applies to all deposit accounts in financial institutions that are established in

the name of one or more parties, whether or not in trust, or with survivorship

rights, or with payable on death rights."

GENERAL



POWERS OF ATTORNEY


FINANCIAL ACCOUNTSMultiple-party accounts include:

1. Joint Checking and Savings Accounts

2. Pay on Death (POD) Accounts

3. Trust AccountsFor these accounts, a ‘party’ includes someone who has authority to make withdrawals and excludes someone who is a trust beneficiary, a POD payee and a convenience person.

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


On ownership v. right to withdraw, see also the annotations:

Md. Code Ann., Fin. Inst. § 1-204 governs only an account holder's ability to access funds from a joint account,

and it does not relate to the underlying ownership interests in those funds; § 1-204 does not affect or supersede

any relationship or agreement between the parties themselves relating to the ownership of the funds in an

account. Wagner v. State, 220 Md. App. 174, 102 A.3d 900 (2014).

Despite defendant's statutorily granted authority under (f) to access and withdraw funds in a joint account that she

held with her father, that did not confer ownership of the funds to her in such a way that she could not have been

held guilty for theft, based on her actions. Wagner v. State, 445 Md. 404, 128 A.3d 1 (2015).

GENERAL



POWERS OF ATTORNEY


FINANCIAL ACCOUNTS

Transfer on Death (TOD) designation serves the same purpose as a Pay on Death (POD) designation, but for an investment account. Joint ownership and TOD registration allow the ownership of the account to pass to a surviving co-owner or a TOD recipient without the need for probate.

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


LIFE INSURANCE

Beneficiary Designations

1. Beneficiary designations are contracts and interpretation is limited to the four corners

2. As with any contract, the insurance company’s form can be modified to suit the policy owner, as long as the modification is accepted by the insurance company.

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


LIFE INSURANCE

Beneficiary Designations can also include provisions for proceeds payment to a Custodian for a minor.

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


Sample Designation: Grampa Joe, father of the Insured, as custodian for

Chris Chisolm, child of the Insured, under the Maryland UTMA.

Sample Designation: David Doe, former spouse of the Insured, as custodian

for Chris Chisolm, child of the Insured, under the Maryland UTMA, and David

Doe as custodian for Pat Chisolm, child of the Insured, under Maryland UTMA,

in equal shares; provided, however, that if at the time of the Insured’s death,

either Chris Chisolm or Pat Chisolm is not living, the entire proceeds shall be

paid to the custodian for the survivor of them.

GENERAL



POWERS OF ATTORNEY


OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


In this case, the grandfather received this check from the life

insurance company and converted it to his own use. The grandfather

has pleaded guilty to theft, repaid just over half of the misappropriated

funds and has a judgment for restitution against him.

WHOM DO YOU TRUST?

GENERAL



POWERS OF ATTORNEY


MOTOR VEHICLES

THE FINAL FRONTIER OF

NON-PROBATE TRANSFERS

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES

LAST WILLS &TESTAMENTS

GENERAL



POWERS OF ATTORNEY


TRANSFER ON DEATH FOR

MOTOR VEHICLESOVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


Transportation 13-115. Transfer-on-death beneficiary designation.

(a) In general. -- An individual who is the sole owner of a motor vehicle may apply to the Administration to designate a beneficiary to take ownership of the motor vehicle on the death of the owner.

(b) Manner of designation. -- The designation of a beneficiary may be shown by the words "transfer-on-death" or the abbreviation "TOD" after the name of the registered owner on a certificate of title.

(c) Effect of designation; cancellation or change. --

(1) The designation of a beneficiary for a motor vehicle does not affect the ownership of the motor vehicle until the death of the owner of the motor vehicle.

(2) The owner of a motor vehicle may cancel or change the designation of a beneficiary at any time without the consent of the beneficiary by applying to the Administration.

(d) Requirements. -- The designation of a beneficiary is not required to be supported by consideration, and the certificate of title of the motor vehicle for which the designation is made is not required to be delivered to the beneficiary in order for the designation to be effective.

(e) Death of owner. -- On the death of the owner of a motor vehicle who has designated a beneficiary, ownership of a motor vehicle shall pass to the beneficiary if the beneficiary survives the owner.

GENERAL



POWERS OF ATTORNEY


TRANSFER ON DEATH FOR

MOTOR VEHICLESOVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


https://securetransactions.mva.maryland.gov/emvastore/(S(douijlehqfxxdsqvkyhkdvl4))/MustHave2.aspx

GENERAL



POWERS OF ATTORNEY


LAST WILLS & TESTAMENTSEveryone Needs a Will – No Matter How Well You Plan

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


The will is the testator’s set of final technical instructions and should include

1. Indication that the executor may serve without purchasing an insuring bond;

2. Authorization for executor to pay funeral expenses without court approval;

3. Instruction as to the payment of any death taxes owed by any legatee;

4. Uniform Transfers to Minors Act instructions;

5. Nominations for Custodian and Guardian where there may be minors;

6. Nomination and contingent nomination for executor; and

7. Recipients and contingent recipients of gifts.

Even when you [think you] have designated everything to pass byDeed, Contract or Operation of Law:

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


GENERAL



POWERS OF ATTORNEY


ET 4-102. Execution formalities

Except as provided in §§ 4-103 and 4-104 of

this subtitle, every will shall be (1) in writing,

(2) signed by the testator, or by some other

person for him, in his presence and by his

express direction, and (3) attested and signed

by two or more credible witnesses in the

presence of the testator.

OVERVIEW


FINANCIAL ACCOUNTS

MOTOR VEHICLES


THANK YOU!

K. Alice Young, Esq.Nusinov Smith, LLP

6225 Smith Avenue; Suite 200BBaltimore, MD 21209

(410) [email protected]

AVOIDING PROBATE - MVLS...AVOIDING PROBATE for low-income clients K. Alice Young, Esq. Nusinov...

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Transcript of AVOIDING PROBATE - MVLS...AVOIDING PROBATE for low-income clients K. Alice Young, Esq. Nusinov...