A person in Maryland who has assets that he or she would like to leave to loved ones officially has an estate. However, with no estate plan, the state will end up choosing the person's heir, who may not be the person he or she might have intended. This is why estate planning is so critical for people of all income levels and no matter what size one's estate might be.
One of the first steps in creating an estate plan is drafting a will. Wills allow people to distribute their property to their chosen beneficiaries. These documents also allow individuals to designate the proper guardians for their dependents, as well as make charitable contributions.
An estate plan can additionally be used to establish a trust, which is another essential aspect of estate planning. A trust may be used to manage assets and for distribution timing. Trusts can also be used to protect the inheritance of an heir who cannot manage his or her own affairs. These estate planning tools can, furthermore, be useful for bypassing all of the complexities of the court system that governs distributions, known as probate.
It is also important to remember to update one's beneficiary designations. Certain assets, including IRAs and life insurance proceeds, bypass one's will and instead go directly to designated beneficiaries. Although developing an estate plan can be complex in Maryland, an applied understanding of the law may help a person to complete detailed estate planning in a manner that will benefit the individual and his or her loved ones in the event of his or her death.
Source: willitsnews.com, "Taxes & Finance: Need for estate planning", James Angell, Sept. 30, 2015