Alaska has officially joined the short list of states (North Dakota, Arkansas and Ohio) that allow people to safe-guard their wills against challenges after death.

The law, signed this month by Governor Sean Parnell, allows people to “prove” a will in probate and also have trusts declared valid.  The idea is that this will protect against relatives or other persons from challenging their intentions.

Many wills and trusts are challenged each year by beneficiaries or would-be beneficiaries.  Such battles cause huge problems and the person who left the legacy is no longer there to testify that the document actually says what he intended. There are four ways to contest a will; claim the person who made it was incapacitated, under duress, unduly influenced or didn’t follow proper rules.

Great food, family get-togethers, holiday cheer…estate planning?!?  While it may seem like a less than ideal topic for a fireside chat, estate planning is critically important and the holidays can present a golden opportunity to get things in motion.

Here are few things to consider:

The More, The Merrier – With siblings scattered across the country and grandkids away at college, it’s rare that families members are the in the same place at the same time.  Odds are that holiday get-togethers are the only exception.  Take advantage of having more of your loved ones under one roof so you can have the conversations you need to have with individuals or a group.

Don’t Be Left Out in the Cold - A common misconception is that estate plans are only important for the ultra wealthy - the Gates, Buffets and Rockfellers of the world.  Nothing could be further from the truth. Yet, more than 60% of all Americans die without one, leaving their estates to be divided and taxed according to predetermined federal and state laws, perhaps in ways they didn’t intend.  If this is the case, then unfortunately, no one will care about the best interests of your family, your heirs and your legacy. 

Ties that Bond – We all love the timeless gift-giving traditions of the holiday season – but that new tie, while nice, certainly isn’t legacy-building.  What do you want to be remembered for?  What do you want to pass on to the next generation?  Estate planning can go well beyond simply who/what will get your assets.  Other considerations include values, taxes, medical care, charitable gifts, educational trusts, pets and more.

Say “No” to Online Shopping – Buying a sweater online is one thing, but drafting a will online is another.  Think of drafting a Will online like trying to tackle your own electrical or plumbing problems.  It’s risky business.  Why chance your family’s future to an online estate planning service instead of hiring an experience professional to assist you?  If you draft a Will by yourself, and it has a problem, by the time it is discovered, it could be too late.  The stakes are too high.

Making a List, Checking It Twice - Even if you already have an estate plan, it needs to be reviewed at least every four years.  That said, if any of the following events occur, you should have your estate plan reviewed immediately: 

• A change in marital status
• The birth of a child
• A change in your state of residence
• A significant change in the value or character of your assets
• A change in intended beneficiaries
• The death of a beneficiary
• The death of a guardian, trustee, or personal representative named in your will
• A change in tax laws affecting federal (and your local state) estate tax deductions and calculations
• A change in privacy laws or other laws that affect the access to medical and financial information

The bottom line:  An outdated or inadequate plan is often worse than no plan at all.

Take time this holiday to discuss estate planning with your loved ones.  You’ll be glad that you did.

In most trusts, there are current beneficiaries and future beneficiaries.  A current beneficiary is someone who is currently entitled to receive, either mandatory or discretionary, distributions of income or principal.  A future beneficiary is only entitled to distributions of trust income or principal upon the death of the current beneficiary or beneficiaries.  The law in most states, including Maryland, has long held that a current beneficiary is entitled to receive an account, on an annual basis, of the income, expenses, gains, losses and distributions of the trust.   However, whether a future beneficiary was entitled to receive an account was not always required.

Today, the Maryland Court of Special Appeals held that a future beneficiary, i.e., someone who was not currently entitled to receive the income or principal of the trust, but is only entitled to receive a distribution upon the death of the current beneficiary, is entitled “to make a reasonable request for an accounting [of the trust] based upon his status as a Trust beneficiary who possesses a future interest in the Trust.”

Also, and maybe more importantly, the trust in this case was a joint revocable trust, one which both spouses create and are the trustees and beneficiaries.  This revocable trust divided into two trusts when the first spouse died.  One of these trusts was irrevocable that could not be changed by the surviving spouse.  The other trust was revocable and could be changed by the surviving spouse.  The Maryland Court of Special Appeals held that the future beneficiary was entitled to receive an accounting of both trusts, even the one trust that the surviving spouse could completely change. 

In my practice, I have rarely created joint revocable trusts, except when I am almost certain that there will be no estate taxes at either spouse’s death.   This case confirms my belief that joint revocable trusts should not be used in Maryland when there will be the creation of an irrevocable trust at the first death in order to save estate taxes at the second death.  In those cases, I always recommend separate revocable trusts.  After this Maryland case, I will continue my practice and recommend separate revocable trusts for married couples who have a potential estate tax problem (i.e., a combined estate in excess of 1 million dollars, which is the amount of assets that can pass free of Maryland estate tax).