BowieFest 2015

DSC_9787

Author: Shameka Sterling

McChesney & Dale, P.C., will be at Bowiefest!! Come out and visit our attorneys and staff!!

Bowiefest 2015 is here! Join us for good food, music, entertainment and tons of information about local businesses at Allen Pond Park on Saturday, June 6, 2015 from, 11:00 a.m. to 6:00 p.m.

WHAT:           Bowiefest 2015

WHEN:           Saturday, June 6, 2015

11:00 a.m. – 6:00 p. m.

WHERE:         Allen Pond Park

3330 Northview Drive

Bowie, MD 20716

 

We invite you to come out and visit us in the Business Expo area located in the Bowie Ice Arena. We would love to meet you and answer any questions you may have.

*We will also hold a raffle where we will give away three (3) $100 Visa gift cards. Be sure to visit our booth for more information.

Bowiefest is a City tradition, bringing the community together to enjoy the local entertainment, food, community organizations and businesses. More information about Bowiefest can be found at http://www.cityofbowie.org/index.aspx?NID=783.

 

 

 

 

 

 

Can I Disinherit My Spouse?

DSC_0244

Author: Denise A. Martin

For various reasons, clients sometimes ask if they can exclude their spouse from receiving anything under their will or other estate planning documents. For example, their marriage may be a second marriage for one or both or may have occurred late in life, such that they have separate assets and separate beneficiaries they would like to benefit upon their death. The short answer is: you can try to disinherit your spouse, but you may not be successful. Under Maryland law, even if you explicitly exclude your spouse from receiving assets under your will, they are entitled to claim an “elective share” of your net estate (i.e., the remaining probate assets after the payment of funeral expenses, probate expenses, family allowances, and enforceable estate debts). See Md. Est. § Trusts Code Ann. § 3-203. The amount of the elective share depends on whether the predeceased spouse had surviving children. If the predeceased spouse had surviving children, the surviving spouse may elect to receive one-third of the net estate. If the predeceased spouse did not have surviving children, the surviving spouse may elect to receive one-half of the net estate. A surviving spouse is also entitled to receive an allowance of $10,000 from the estate for personal use. Md. Est. § Trusts Code Ann. § 3-201. Now, while a surviving spouse has the right to elect the spousal allowance and the elective share, there is no requirement that they do, and they may choose not to do so.

There are ways to avoid the potential risk of a spouse claiming the elective share, such as through trust planning or establishing a pre-nuptial or post-nuptial agreement. Contact our office if you have questions!

What is an Employer Identification Number (EIN)?

DSC_9769

Author: Victoria Chan-Pablo

What is an EIN? An EIN, short for Employer Identification Number is a tax identification number you may apply for through the IRS website. An EIN generally needs to be issued for the administration of an estate for purposes of opening up an estate bank account. An EIN would also need to be obtained if you are establishing a business entity for purposes of tax filings and/or opening up bank account for the business.

The offices of McChesney & Dale can help you obtain your EIN. If you would prefer to file the application for an EIN yourself, the IRS has an online application available. Check out the IRS website for more information on EIN’s.

Flexibility of Bequests to Minors

DSC_0244

Author: Denise Martin

Maryland law provides great flexibility to individuals seeking to leave assets to minors or young adults after death. Generally, assets cannot be titled solely in a minor’s name, and further, many minors and young adults do not possess the fiscal responsibility to be entrusted with valuable assets. So what should a parent, aunt, uncle, grandparent or family friend seeking to pass assets to a minor upon their death do?

One option available is to include a simple bequest in a will or trust document to a minor under the Maryland Uniform Transfers to Minors Act (UTMA). Typically, a parent of the child serves as the custodian of the account until the child reaches age 21. However, that property typically becomes the minor child’s outright at age 21, which may be sooner than one would prefer.

Another, more flexible option available is the use of a trust established in one’s will (a “testamentary trust”) or other estate planning document, such as a revocable trust agreement. A trustee is appointed to oversee the trust on the child’s behalf and to make disbursements. The individual creating such a trust has the ability to determine at which age or ages the child should receive the asset outright. For instance, the trust creator may want to delay the minor’s receipt of the asset until age 25 or allow for graduated disbursements (e.g., 50% at age 25 and 50% at age 30). Others may wish to incentivize life achievements by limiting disbursements based on accomplishments, i.e., graduation from college. Limitations can also be placed on what disbursements may be used for, i.e., for educational purposes, for the purchase of a home, etc. The possible structure of such a trust is so flexible that the options are virtually limitless.

Estate Planning for Young Adults

DSC_9792

Author: Shameka Sterling

Estate planning, which includes wills, power of attorneys, living wills, etc., is a very important life process and helps families prepare for difficult or unexpected scenarios. These documents provide instructions to our family and the court as to what we want to happen in certain situations.

In general, young adults may think that estate planning is just for older or wealthy people. They do not understand that you do not have to have significant assets or be elderly to start preparing. They may not understand the importance of these documents because they do not know exactly what the documents are or what they mean.

While young adults may not think about estate planning, it is just as important for young adults, especially those who have children or may be heading off to college, to consider this issue as it is for their parents. As our lives get busier and more complicated, estate planning becomes increasingly important.

Last Will and Testament: A will states who will receive your assets, assume guardianship of your children or pets, and more. For example, if you have a treasured piece of jewelry or a prized model car collection that you wanted your sister to have, your will would provide for this.

General Durable Power of Attorney: A general durable power of attorney appoints someone you trust, such as a family member, to make financial and legal decisions on your behalf. This document can be used to allow the person you appoint to make these decisions in the event that you cannot make them on your own. It is not only for use in the event of your incapacitation. For example, if you travel for vacation or are away at college, this person can act on your behalf as your agent.

Living Will and Advance Medical Directive: A living will, or health care directive, lets you set specific medical wishes in a case where you may be alive but unable to speak for yourself. It allows you to specify your preference for any and all pain medications, life support, medical procedures, etc., if you fall terminally ill, into a vegetative state, or into a coma.

While it may be difficult to think about these topics, we cannot predict or control the future. Every family’s legal needs are important, but perhaps the most important step is starting the conversation. Speak with the young adults in your family about preparing their estate planning documents.

If you or any of your loved ones have any questions about the process of preparing or about the documents themselves, please give the attorneys at McChesney & Dale a call at (301) 805-6080.

Tax Planning with Respect to Disability Insurance

DSC_0261

Author: Charles F. Fuller

No one wants to become disabled, but when a disability arises that prevents you from working, the existence of disability insurance could provide you with an income stream during the period of disability. Often, people are provided short term and long term disability insurance coverage through their employment as part of their employee benefit package. Other times, people purchase individual disability insurance policies. Under either scenario, it is helpful to consider the tax effects of such disability coverage at the time that you obtain it and before you become disabled.

For individual policies where premiums are paid by the policyholder, the premiums are usually paid with after-tax dollars and therefore any disability benefits that you receive under the policy are not taxable for federal or state income tax purposes. This is rather straightforward and does not require much tax planning.

In situations in which an employee is provided disability coverage through employment, the employee should inquire with the employer regarding the tax consequences of this employee benefit should you be required to use it. In other words, you should ask your personnel or human resources department if there is a way to ensure that benefits you may receive as a result of disability under this policy can be received free of any income tax liability. Some employers have thought about this issue prior to implementing their employee benefit plan, while others have not. As a general rule, if the disability insurance premium is paid after being deducted from the employee’s paycheck (after tax dollars), any resulting disability benefits received should be free of tax. If the premium is paid with pre-tax dollars, either from a cafeteria plan[1] or deducted from your pay by your employer before taxes are deducted, any disability benefits received will most likely be taxable. If you have disability coverage, you should investigate now whether there is a way to ensure that your benefits would be free from income tax liability if you become disabled and receive benefits. It is important to investigate and plan for this contingency before you become disabled to determine if you can have greater resources (through tax-free disability benefits) should you become disabled.

[1] A cafeteria plan is an IRS-approved reimbursement plan which allows employees to contribute a certain amount of their gross income to one or more designated accounts before payroll taxes are computed. The account(s) can be used to pay for insurance premiums, medical and/or dependent care expenses not covered by insurance.