#TuesdayTips: Major Changes for Maryland’s 2019 Estate Tax Exemption  

Effective July 1, 2018, for individuals dying on or after January 1, 2019, the Maryland estate tax exemption will be $5 million.  This is a drastic change from the 2014 law that gradually increased the Maryland estate tax exemption each year until 2019 when it was scheduled to match the federal basic exclusion amount. 

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By Jessica L. Estes

Effective July 1, 2018, for individuals dying on or after January 1, 2019, the Maryland estate tax exemption will be $5 million.  This is a drastic change from the 2014 law that gradually increased the Maryland estate tax exemption each year until 2019 when it was scheduled to match the federal basic exclusion amount.

Under the 2014 law, Maryland’s estate tax exemption was scheduled to increase beginning January 1, 2019 to match the federal exclusion amount, which was anticipated to be $11.4 million.  Further, under the 2014 law, Maryland’s estate tax exemption would have continued to increase based on inflation.  Now, however, Maryland has decoupled from the federal exclusion amount and Maryland’s exemption amount will remain static at $5 million, with no adjustment for inflation in the future.

Though, Maryland’s new law does provide that a surviving spouse may use any unused portion of his/her deceased spouse’s Maryland exemption (“portability”).  The unused portion of the deceased spouse’s exemption would be in addition to the surviving spouse’s $5 million exemption, but only if certain requirements are met.  For predeceased spouses dying on or after January 1, 2019, there must be a timely filed Maryland Estate Tax return on which is calculated the unused portion and an irrevocable election is made to use such unused portion at the surviving spouse’s death.  For predeceased spouses dying before January 1, 2019, or who were not Maryland residents and did not have taxable property within Maryland, there must be an election under §2010(c) of the Internal Revenue Code (“IRC”) on the predeceased spouse’s Federal Estate Tax return.

Moreover, Maryland’s new law does not provide any retroactivity, so if you have a predeceased spouse that died before July 1, 2018 (the date this new law takes effect) and there was no Federal Estate Tax return filed with an election under §2010(c) of the IRC, you will not be able to take advantage of the portability component of the new law.  Similarly, if you have a spouse that dies prior to the end of this year, you will want to consult with an attorney to make sure a timely election is made to preserve any unused portion of your predeceased spouse’s Maryland exemption.

In summary, instead of an estimated $11.4 million exemption per person, both federally and for Maryland, individuals dying on or after January 1, 2019 will now be limited to a $5 million exemption for Maryland, with the possibility of portability for married couples, but only if timely elections are made.  Even though this is roughly a $6.4 million difference, Maryland still does not have a gift tax so any gifts during an individual’s lifetime would not count against their $5 million Maryland exemption at death.

#FamilyFriday: Family Support Services

Families often wonder what resources are out there to help them in the midst of a family related litigation case.  There are numerous services available that can be requested by either party involved in the litigation and ordered by the Court.

By: Valerie E. Anias, Esq.

Families often wonder what resources are out there to help them in the midst of a family related litigation case.  There are numerous services available that can be requested by either party involved in the litigation and ordered by the Court.  On this week’s #FamilyFriday article, ERA Law Group, LLC discusses some of those services.

  1. Mediation. The Court often orders the parties to complete mediation early on in litigation.  This tool is especially helpful in limiting the issues at hand and encouraging families to settle their disputes.  As discussed in earlier #FamilyFriday articles, it is often recommended that families seek mediation services before filing suit.
  2. Custody Investigations/Evaluations. Upon request from a party or by the Court’s own initiative, a custody evaluation can be ordered.  A trained third party professional, will be required to conduct an interview of each party, an interview of the child(ren) (if the child has the capacity to be interviewed), a review of relevant records pertaining to the child, and an observation of the child with each party.  At the conclusion of the review, the evaluator will be required to report their factual findings of the needs of the child, the capacity of each party to meet those needs, and the evaluator’s recommendation as to custody and visitation.
  3. Mental Health Evaluations: Upon request from a party or by the Court’s own initiative, a party may be ordered to receive an evaluation by a mental health professional and in some cases psychological testing.  If one or both parties allege that a party suffers from a mental health issue which may impact the children, custody, and/or visitation, the party should motion the Court for the evaluation.  The Court will weigh the party’s allegations and decide whether to grant the motion and make such Order
  4. Substance Abuse Assessments: Upon request from a party or by the Court’s own initiative, a party may be ordered to undergo drug testing and/or assessment.  Depending on the outcome or the basis for the screening, the Court may then require random screenings and/or treatment related to the abuse.  This will also play a role in the Court’s determination of custody and/or visitation.
  5. Specific Issue Evaluation: Again, upon request from a party or by the Court’s own initiative, the Court may Order an evaluation based upon a specific issue related to one or both parties that affects the safety, health and/or welfare of a child.  The Court will analyze the specific issue and Order the evaluation by a professional with expertise related to that specific issue.

To discuss your case and about services that may be available to you, call ERA Law Group, LLC today at (410) 919-1790 to schedule your FREE 30 minute consultation!

#TuesdayTips: Veterans’ Benefits

As Memorial Day approaches, I am reminded of the sacrifices our Veterans have made so we, the people, can retain our freedoms.  Many of these veterans require some form of long-term care; yet, very few are aware of the benefits that may be available to help them pay for that care. 

As Memorial Day approaches, I am reminded of the sacrifices our Veterans have made so we, the people, can retain our freedoms.  Many of these veterans require some form of long-term care; yet, very few are aware of the benefits that may be available to help them pay for that care.

If you are a Veteran or surviving spouse of a deceased Veteran and your income is not sufficient to cover your long-term care expenses, you may qualify for a benefit called Aid and Attendance through the U.S. Department of Veterans Affairs (“VA”).  This benefit provides a monthly, tax-free income for the Veteran or surviving spouse who needs assistance with at least two activities of daily living and who is in a nursing home or other facility or paying for care at home.

There are four basic eligibility requirements for the Aid and Attendance benefit: (1) you must be 65 or older, or permanently disabled; (2) your discharge from the military must be anything other than dishonorable; (3) you must have served at least ninety (90) days on active duty, but those days do not have to be consecutive unless service began after September 7, 1980, or any length of active duty if the Veteran has a service-connected disability discharge; and (4) one of those active duty days must have been during a period of war.  For VA purposes, the periods of war include the Mexican Border Period, World Wars I and II, the Korean Conflict, Vietnam Era and Persian Gulf War.

In addition to the eligibility criteria, the Veteran must also meet the entitlement requirements.  For a Veteran to be entitled to the benefit, the Veteran must pass the income and asset tests.  Generally, if the Veteran’s liquid assets are less than $80,000 and their income is less than their unreimbursed medical expenses, then the Veteran or surviving spouse will be eligible for the benefit.  Unreimbursed medical expenses include, but are not limited to, health insurance premiums (Medicare, supplemental insurance, etc.), prescription co-pays, doctor co-pays, nursing home or assisted living facilities or in-home caregivers.

When determining countable assets, the VA does not count the equity in a primary residence and household furnishings, vehicles, pre-paid burial plans, term life insurance, irrevocable trusts and qualified annuities.  If the Veteran’s countable assets total $80,000 or more, a claims examiner will determine if the Veteran’s net worth is excessive and a bar to entitlement of the benefit.

Moreover, a Veteran eligible for the benefit and who has a dependent spouse, will be entitled to $2,169 per month. An eligible single Veteran will be entitled to $1,830 and an eligible surviving spouse will receive $1,176 monthly.

As with any government benefit, the application process can be daunting.  If you need assistance filing an application for benefits, contact a VA accredited consultant.  They can assist you in making sure you have a fully developed claim.

#FamilyFriday: What is the “Best Interests of the Child” Standard?

After families separate, parents must decide where their children will live and what schedule the children will have with the other parent. To make this determination, the Court uses the “Best Interests of the Child” standard.

After families separate, parents must decide where their children will live, or custody, and what schedule the children will have with the other parent, or visitation.  Some families can settle this among themselves while others require Court intervention.  Often parents assume the Court will award custody to the mother however, that’s not necessarily the case.  In this week’s #FamilyFriday article, ERA Law Group, LLC explains the “Best Interests of the Child” standard used by the Court in determining custody.

Put simply, the Best Interests of the Child standard simply means that the Court looks at certain factors to determine what is in the best interest of the children involved in the family situation.  Even when parents have an agreement, the Court still must make a finding that the agreement is in the best interest of the child.  Often parents become disgruntled because they believe they are in the best position to decide what is in the best interest of their children.  Unfortunately, family litigation often results in both parents with opposing opinions about what is in the best interest of their children and the Court must step in to make its determination.

The Court may consider a number of factors in its analysis.  Most commonly the Court focuses on the following factors:

  1. Primary Care Giver – Who is the person who takes care of the child? Who handles the child’s day-to-day activities?
  2. Fitness – What are the psychological and physical capacities of the parties seeking custody? Was there evidence of abuse – physical, emotional, or otherwise?
  3. Character and Reputation
  4. Agreements – Is there a custody agreement already in place?
  5. Ability to Maintain Family Relationships – Who will be best able to help the child keep family relationships, including relationships with the other parent’s family?
  6. Child Preference– Does the child have a preference?  Some courts will interview the children  outside of the presence of their parents.  The older the children involved the more weight is given to their preference.
  7. Material Opportunity – Which parent has the financial resources to give the child more things?
  8. Age, Health and Gender of Child
  9. Residences of Parents and Opportunity for Visitation – How close do the parents live to each other, extended family, school, etc?
  10. Length of Separation– How long has the parent been separated from the child?
  11. Any Prior Abandonment or Surrender of Custody – Is there a history of one parent walking out and leaving the other parent to cope with the child and the home?
  12. Religious Views – These will be important in the court’s decision only if you can show that religious views affect the physical or emotional well-being of the child. There is no consideration made for non-religious families.
  13. Disability – A party’s disability is only relevant to a custody decision if the disability affects the best interest of the child.

In addition to the above factors, the Court may also consider: Willingness to share custody; Fitness of parents; Child’s relationships with each parent; Ability to stabilize child’s school and social life; Employment considerations (e.g. long hours, extensive travel, etc.); Age and number of children; Financial status; Benefit to parent; Sincerity of parent’s request for custody.

Call ERA Law Group, LLC today at (410) 919-1790 to schedule your FREE 30 minute consultation!  Ask about our legal services including: mediation, marital separation agreements, and parenting plans!

#TuesdayTips: Utilizing Asset Protection Trusts

To utilize an Asset Protection Trust you must Assess your needs; Create what is missing; and Tie in your plan.  In other words, you must ACT!

By: Jessica L. Estes, Esq.

If you read last week’s #TuesdayTips article, you learned how to protect your stuff in three easy steps: 1) know the rules; 2) know your predators; and 3) know your options.  Easy, right?  But, knowing is only half of the equation.  Now, it is time to: Assess your needs; Create what is missing; and Tie in your plan.  In other words, you must ACT!

Protecting your stuff starts with an assessment of your needs, which, in turn, requires careful consideration of your goals and values.  Typical goals of an estate plan include maintaining control and not becoming a burden to loved ones, all the while keeping it as simple as possible.  Most people would agree that protecting their stuff from future long-term care costs, is important to them.  That way, they maintain control of the assets, protecting them after they are gone for the benefit of their loved ones, while at the same time, minimizing the costs of such long-term care and the burden to their family while they are alive.

So how, exactly, does an asset protection trust work? First, there are three parties to a trust – the grantor, trustee and beneficiary.  The “grantor” is the person who is transferring his or her assets to the trust.  The “trustee” is the person who manages and administers the trust in accordance with the trust provisions.  The Trustee is responsible for making all decisions regarding the trust, including any management or investment decisions, as well as deciding whether to make distributions from the trust.  The “beneficiary” can be a single person, multiple people or an entity such as a church or charity.  There are two types of beneficiaries: “lifetime” beneficiaries and “residuary” beneficiaries.  “Lifetime” beneficiaries are those individuals named by the grantor who are entitled to receive distributions of income and/or principal during the grantor’s lifetime.  The “residuary” beneficiaries are those individuals named by the grantor who are entitled to receive distribution of the trust assets after the death of the grantor.

After the trust is established, your assets must be transferred to the trust and the trust will become the owner of the assets.  Even though you will no longer own the assets, you maintain control of them because you are the trustee.  The plan must, of necessity, though, limit direct access to the principal to ensure that creditors, predators and lawsuits do not obtain access to it.  Still, the trust can provide indirect access to the principal during the remainder of your life through your designated lifetime beneficiaries.

Finally, upon your death, and because the trust is a separate entity, any assets owned by the trust would bypass probate and could be distributed immediately to your residuary beneficiaries.  Overall, irrevocable asset protection trusts are not only a great way to protect your stuff, but also can be very flexible and easily customized to meet your individual goals.

Call ERA Law Group, LLC today at (410) 919-1790 to learn more!

 

#TuesdayTips – New Guardianship Rules

eing declared incompetent is not something Maryland Judges take lightly.  In fact, in order to provide even more protection to these vulnerable adults, members of the Maryland Guardianship Work Group worked actively to change certain rules.

 

As of January 1, 2018, rules related to Court-Appointed Guardians, Guardianship’s, and Attorneys changed.  In this week’s #TuesdayTips article, the attorneys of ERA Law Group remind our readers the purpose of a Guardianship and what rules have changed.

Many people find themselves in a precarious situation when their spouse, parent, sibling, friend, etc. are no longer able to feed themselves regularly, pay their bills, see the doctor, and just generally not take care of their person or finances.  When a person is no longer able to appropriately care for themselves or manage their property, it is important to ensure that they are protected.  To do so, a Petition for Guardianship of the Person, Property, or both is filed with the Court.

When filing a Petition for Guardianship of the Person and/or Property, the Petitioner is seeking the Court to declare the alleged disabled person incompetent and therefore unable to care for themselves and/or manage their property/finances.  This would let the Petitioner, when appointed Guardian, to act on behalf of the alleged disabled person and make sure they are taken care of physically and financially.

The Petition itself requires various information about the alleged disabled person, including but not limited to their finances, the purpose of the filing, the diagnosis, etc.  Attached as exhibits, the Petition also requires two certificates completed by two different medical providers who have evaluated the alleged disabled person.  After filing, the Court will appoint the alleged disabled person an attorney to represent them in the proceeding.  The Petitioners will also be required to notify certain people and facilities that would need to be made aware of the Petition.  Finally, there will be a hearing to decide whether the findings are such that the Court will declare the person incompetent and appoint a Guardian, presumably the Petitioner.

Being declared incompetent is not something Maryland Judges take lightly.  In fact, in order to provide even more protection to these vulnerable adults, members of the Maryland Guardianship Work Group worked actively to change certain rules.

As of January 1, 2018, the following changes were made:

  1. There are new certificate requirements to be completed depending on whether the medical provider is a physician, psychologist, or licensed certified clinical social worker.
  2. There are now training and eligibility requirements for Court Appointed Attorneys for alleged disabled persons.
  3. Appointed Guardians are now required to undergo an orientation and training so that they have knowledge of their new roles as Guardians of the Person and/or Property of the disabled person.
  4. Additional factors for the Court to consider when determining whether to appoint someone a Guardian who has been convicted of a serious offense or when to require a Guardian to post a bond.

The health, safety, and wellbeing of your friend or family member is of utmost importance.  Call the attorneys at ERA Law Group, LLC today to help navigate you through this process.

Family Law Changes in 2017

On this week’s #FamilyFriday article, ERA Law Group, LLC wants to discuss some recent changes in Maryland Law including the admissibility of Domestic Violence Orders in divorce cases and getting back your maiden name!

Welcome back to #FamilyFriday!  In the last several weeks ERA Law Group, LLC moved to its new location at 20 Ridgely Avenue, Suite 204, Annapolis, Maryland.  We are excited to welcome you to our new office!

On this week’s #FamilyFriday article, ERA Law Group, LLC wants to discuss some recent changes in Maryland Law including the admissibility of Domestic Violence Orders in divorce cases and getting back your maiden name!

Prior to October 1, 2017, Courts could not use the fact that there was a Domestic Violence Order, such as a Protective Order, as a ground for granting a divorce or for considering custody.  This meant that victims of domestic violence could not admit as evidence a Domestic Violence Order s/he had obtained.  Even if s/he did speak of a prior Domestic Violence Order, the Court was obligated to disregard this information when making its decision. As of October 1, 2017, this statute has been repealed and Courts are now permitted to consider and parties may admit into evidence Domestic Violence Orders.

Previously when a party filed for absolute divorce and wished to return to their maiden name, they were required to make such a request in the initial pleading.  If the party failed to do so, they would then have to file a separate pleading requesting a name change.  What should have been a seemingly quick and easy process turned into a burdensome time consuming mess.  Not anymore!  As of October 1, 2017, a former spouse now has eighteen (18) months after the final decree of absolute divorce to return to their maiden name.

If you or someone you know needs help navigating their divorce, tell them to call ERA Law Group, LLC today at (410) 919-1790.