Protecting Your Assets in Maryland: Estate Planning Essentials

Create a comprehensive list of all your assets including bank accounts, investment accounts, retirement accounts, real estate, vehicles, valuable personal property, digital assets, and business interests. Include account numbers, locations, and approximate values. Store this document securely and inform your executor or trusted person of its location. Update this inventory annually or whenever you acquire or dispose of significant assets.

In Maryland, a valid will must be in writing, signed by you (the testator), and witnessed by two competent individuals who also sign the document. Maryland does not recognize holographic (handwritten, unwitnessed) wills unless they were executed in a jurisdiction where such wills are valid. Your will should name an executor, guardians for minor children if applicable, and specify how your assets should be distributed. Consider consulting with an attorney to ensure your will complies with Maryland law.

A living trust can help your assets avoid probate in Maryland, which can be time-consuming and costly. Maryland's probate process can take 9-18 months, and fees are based on the value of the estate. A properly funded trust allows assets to pass directly to beneficiaries. The trust must be properly executed according to Maryland law and assets must be formally transferred into the trust to be effective. Decide between a revocable trust (which you can change) or an irrevocable trust (which may offer greater asset protection but less flexibility).

This document allows you to appoint someone to manage your financial affairs if you become incapacitated. In Maryland, powers of attorney created after October 1, 2010, must be in writing, signed by you, and acknowledged before a notary public. Maryland also requires specific statutory language. Consider whether you want the power to be effective immediately or only upon incapacity (springing). Choose your agent carefully, as they will have significant control over your finances.

This document appoints someone to make medical decisions for you if you cannot communicate. In Maryland, this is often combined with a living will in an advance directive. The document must be signed by you and witnessed by two individuals who are not your healthcare agent or entitled to any portion of your estate. At least one witness cannot be an employee of your healthcare facility. Your healthcare agent should understand your wishes and be willing to advocate for them.

In Maryland, a living will (part of an advance directive) allows you to specify your wishes regarding life-sustaining procedures if you have a terminal condition, are in a persistent vegetative state, or have an end-stage condition. The document must be signed by you and witnessed by two individuals, with the same witness restrictions as the healthcare power of attorney. Consider your values regarding life-sustaining treatments and discuss your wishes with your healthcare agent and family members.

This document allows healthcare providers to share your medical information with designated individuals. Without this authorization, even close family members may be unable to access your medical information due to federal privacy laws. In Maryland, there is no specific statutory form, but the authorization should comply with federal HIPAA requirements, including a description of the information to be disclosed, who can disclose and receive the information, an expiration date, and your signature.

Many assets pass outside of probate through beneficiary designations, including life insurance, retirement accounts, and transfer-on-death accounts. Review and update all beneficiary designations to ensure they align with your overall estate plan. Maryland law generally respects these designations regardless of what your will states. Consider naming contingent beneficiaries in case your primary beneficiaries predecease you. Keep copies of all completed beneficiary forms with your estate planning documents.

Maryland is one of the few states that has both an estate tax and an inheritance tax. As of 2023, estates valued over $5 million are subject to Maryland estate tax. The inheritance tax applies to property passing to anyone other than a spouse, child, parent, grandparent, sibling, or spouse of a child. The inheritance tax rate is 10%. Understand how these taxes might affect your estate and consider strategies to minimize tax impact, such as lifetime gifting or charitable donations.

If you have dependents with special needs, standard inheritance plans may disqualify them from government benefits. Maryland recognizes special needs trusts that can provide for a disabled beneficiary without affecting their eligibility for programs like Medicaid or Supplemental Security Income. These trusts must be carefully drafted to comply with both federal and Maryland state requirements. Consult with an attorney who specializes in special needs planning.

Maryland law provides certain exemptions that protect assets from creditors. For example, tenancy by the entirety ownership between spouses can protect property from creditors of only one spouse. Maryland also has homestead protection, though it's limited compared to some states. Consider whether strategies such as certain types of irrevocable trusts, family limited partnerships, or limited liability companies might be appropriate for your situation.

Store original documents in a secure location such as a fireproof safe or safety deposit box. In Maryland, you can file your will with the Register of Wills in your county for safekeeping for a small fee. Provide copies to your executor, healthcare agent, and financial power of attorney. Inform these individuals where to find original documents and any passwords or keys needed to access them. Consider using a digital vault service that complies with Maryland's digital asset laws.

Estate plans should be reviewed every 3-5 years or after major life events such as marriage, divorce, birth of children, death of beneficiaries, significant changes in assets, or moves between states. Maryland law may change over time, affecting your estate planning documents. Set calendar reminders to review your documents periodically. Consider consulting with an estate planning attorney for significant updates to ensure continued compliance with Maryland law.