FAQs Archive - Ritter Elder Law & Estate Planning

Frequently Asked Questions

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  • What is a Life Estate Deed Without Powers?

    In Maryland, a life estate deed is a type of legal agreement that allows a person (known as the life tenant) to own and use a property during their lifetime, while also designating one or more other individuals (known as remaindermen) to receive ownership of the property upon the life tenant’s death.

    Under a life estate deed, the life tenant retains the right to use and occupy the property for the rest of their life, but they cannot sell or transfer ownership of the property without the consent of the remaindermen. Once the life tenant passes away, the remaindermen automatically become the owners of the property, without the need for probate.

    Life estate deeds can be used for various purposes, such as to transfer ownership of property to family members while also allowing the original owner to retain use of the property during their lifetime. They can also be used to avoid the costs and delays of probate, as ownership of the property passes directly to the remaindermen upon the life tenant’s death. These types of deeds may also be used in Medicaid planning and asset protection planning.

    To create a life estate deed in Maryland, the property owner must execute and record a deed that designates themselves as the life tenant and one or more individuals or entities as the remaindermen. It’s important to note that once a life estate deed is created, it can be difficult to change or undo, so it’s important to consult with a qualified attorney before proceeding with this type of legal agreement.

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  • What is Probate?

    Probate is the legal process by which a deceased person’s assets and property are distributed to their heirs or beneficiaries under the supervision of a court. In Maryland, probate is a court-supervised process that ensures that the deceased person’s assets are distributed in accordance with their wishes or Maryland law, if there is no valid will.

    During probate, the court oversees the administration of the deceased person’s estate, including the identification and valuation of assets, the payment of outstanding debts and taxes, and the distribution of property to heirs or beneficiaries. The process can be complex and time-consuming, and it can involve multiple court appearances and legal fees.

    In Maryland, the probate process begins by filing a petition for administration with the Register of Wills in the county where the deceased person lived. The petition should include information about the deceased person’s assets, property, debts, and potential heirs or beneficiaries. The court will then appoint an executor or personal representative to oversee the probate process and ensure that the deceased person’s wishes or Maryland law is followed.

    It is important to note that not all assets are subject to probate, and some may pass directly to beneficiaries or heirs outside of the probate process. It is recommended to consult with a qualified attorney to understand the Maryland probate process and the options available for estate planning and asset distribution.

    Click here to visit RELEP’s Estate Planning and Probate webpage.

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  • What is a Buy-Sell Agreement?

    In Maryland, a buy-sell agreement is a legal contract between co-owners of a business or property that outlines the terms and conditions under which one owner may sell their share to the other owner(s).

    Buy-sell agreements are often used to provide a framework for the transfer of ownership in the event of certain triggering events, such as the death, disability, retirement, or voluntary departure of one of the owners. The agreement can also include provisions for the sale of an owner’s share if they default on a loan or violate certain terms of the agreement.

    The buy-sell agreement can specify the price at which the owner’s share will be sold, as well as the terms of payment and any other conditions that must be met before the sale can be completed. It can also address issues such as how the business will be valued, who will be responsible for managing the business, and how disputes will be resolved.

    A buy-sell agreement can be an important tool for protecting the interests of all co-owners and ensuring that the business or property continues to operate smoothly in the event of unexpected events. It’s important to work with a qualified attorney to draft a buy-sell agreement that meets the specific needs of the co-owners and complies with Maryland law.

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  • What is Maryland’s LTC Medicaid Asset Threshold?

    In Maryland, the asset limit for long-term care Medicaid is $2,500 for an individual, and $3,000 for a married couple, as of 2023. This means that an individual or couple must have no more than this amount of assets in order to be eligible for long-term care Medicaid.

    It is important to note that not all assets are counted towards the asset limit for Medicaid. Certain assets, such as a primary residence, personal belongings, and a single vehicle, may be exempt from the asset test. However, other assets, such as bank accounts, stocks, bonds, and second homes, are typically counted towards the asset limit.

    In addition to the asset limit, Maryland also has a “lookback” period of five years, during which the state reviews an individual’s financial records to determine if any assets were transferred or given away for less than fair market value. If the state determines that any such transfers occurred during the lookback period, they may impose a penalty period during which the individual will be ineligible for Medicaid benefits.

    It is important to note that the rules and requirements for long-term care Medicaid in Maryland can be complex, and may vary depending on the individual’s circumstances and the specific Medicaid eligibility category. It is recommended to consult with a qualified attorney or Medicaid specialist to determine your eligibility and navigate the Medicaid application process.

    Click here to visit RELEP’s Elder Law and Medicaid webpage.

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  • What is a Medicaid Asset Protection Trust?

    A Medicaid Asset Protection Trust (MAPT) is a type of irrevocable trust that can help individuals protect their assets and qualify for Medicaid benefits to pay for long-term care costs.

    To qualify for Medicaid benefits, a person must have limited income and assets. By placing assets into a MAPT, an individual can effectively remove those assets from their estate and potentially qualify for Medicaid benefits to pay for long-term care costs. The assets in the trust are managed by a trustee and can be used to pay for the individual’s care needs, while still protecting those assets from being depleted.

    There are certain restrictions and requirements for setting up a MAPT, and the rules may vary by state. Generally, the trust must be set up and funded at least five years before the individual applies for Medicaid benefits, and the assets in the trust cannot be used for the individual’s personal benefit during that time. In addition, the individual must be willing to give up control of the assets placed in the trust, as the trustee will have discretion over how the assets are used.

    While a MAPT can be an effective strategy for protecting assets and qualifying for Medicaid benefits, it is important to work with a qualified attorney to ensure that the trust is set up properly and complies with all applicable laws and regulations.
    Click here to visit RELEP’s Elder Law and Medicaid webpage.

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  • Does Maryland have an Inheritance Tax?

    Maryland’s collateral inheritance tax is a tax on the transfer of property or assets from a deceased person’s estate to non-lineal heirs or beneficiaries, such as cousins, nieces, nephews, or unrelated individuals. Maryland does not have an inheritance tax on direct lineal descendants (i.e., grandparents, parents, children, grandchildren, and siblings). Maryland does have a collateral inheritance tax on non-lineal descendants.

    The collateral inheritance tax rates in Maryland vary depending on the value of the property or assets received which is usually assessed around 10% – 11.1111% depending on the specific circumstances of the matter. The tax is calculated based on the fair market value of the property at the time of the deceased person’s death, and is paid by the recipient of the property or assets.

    It is important to note that there are certain exemptions and deductions that may apply to the collateral inheritance tax in Maryland, such as exemptions for property transferred to charitable organizations, or deductions for debts and expenses related to the transfer of the property.

    It is recommended to consult with a qualified attorney or tax professional to understand the Maryland collateral inheritance tax and the options available for estate planning and asset distribution.

    Click here to visit RELEP’s Estate Planning and Probate webpage.

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  • What is a Last Will and Testament?

    A last will and testament is a legal document that outlines how a person’s assets and property should be distributed after their death. It allows the person creating the will, known as the testator, to name beneficiaries, appoint an personal representative (also known as an executor) to carry out their wishes, and specify how any outstanding debts and taxes should be paid. The will can also be used to name guardians for any minor children and make provisions for their care. A properly executed last will and testament can provide peace of mind and ensure that the testator’s assets are distributed according to their wishes.

    Click here to visit RELEP’s Estate Planning and Probate webpage.

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  • Do I need to have a Contract to Sell Real Estate in Maryland?

    Yes, in Maryland, a contract is typically required to sell property. A contract is a legally binding agreement that outlines the terms and conditions of the sale, including the purchase price, the closing date, and any contingencies or conditions that must be met before the sale can be finalized.

    The contract is usually prepared by a real estate agent or an attorney and must be signed by both the buyer and the seller. Once the contract is signed, it becomes a legally binding agreement, and both parties are required to comply with its terms.

    In addition to the contract, there are several other documents and steps that are typically required to sell property in Maryland. These may include a property disclosure statement, a title search and title insurance, a deed, and various other legal documents.

    It’s important to work with a qualified real estate professional or attorney who is familiar with Maryland’s real estate laws and regulations to ensure that all necessary documents and steps are completed correctly and on time. This can help ensure a smooth and successful sale of the property.

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