HELPFUL INFORMATION

Here are some answers to frequently asked questions from our clients. The responses provided are not intended to be, nor should they be construed as legal advice.

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When should I setup an estate plan?
If you have assets you should have an estate plan to make sure they pass as you wish. But it is most important to establish your estate plan when you get married or have children, regardless of the value of your assets.
Does a revocable trust save taxes?
Generally, no, although there may be ways to utilize a revocable trust for tax-planning objectives.
What are the current estate tax exclusion amounts?
As of January 2020, each person can leave up to $11,580,000 of assets free of federal estate tax. Lifetime gifts in excess of $15,000 per donee per year reduce the amount that can be left free of estate tax. In DC, the exclusion is $5.6 million; in Maryland the exclusion is $5,000,000; Virginia has no estate tax. There are multiple planning tools to minimize your potential estate tax liability.
Do I need a revocable (or living) trust?

There are several reasons one may wish to have a revocable trust in addition to a Will. The primary reason is to avoid probate. Probate is the legal proceeding in which the local court supervises the administration of the estate, the claims of creditors, and disposition of assets in accordance with the Will. Depending on where you live, it can be unnecessarily time consuming and expensive. Assets in a revocable trust are generally not subject to probate.

A second reason to have a revocable trust is to avoid probate in multiple jurisdictions if you own real estate in more than one state.

A third reason to have a revocable trust is to maintain privacy. Upon your death, your Will gets filed with the local court and become a public record. A revocable trust generally does not. If you would rather not have your wishes made public, a trust may be for you.

A fourth reason to have a revocable trust is if you are at a point in your life where you would like to have another person (your co-trustee) available to manage your assets for you.

Do I need life insurance?
There is not a one-size answer to this question. Our rule of thumb is that you should have enough life insurance to allow your surviving spouse or partner to stay in your home in the event of your death. If you have children, you will likely also want to ensure there is enough liquidity to pay for your children’s support, maintenance, and education, at least to the age of majority. If you do not yet have a spouse or children, or if your children are grown and you have no mortgage (or you have sufficient other assets), you may not need life insurance.