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A will typically requires the use of the court to probate the will, which involves creating an inventory of assets or property for a court approved distribution to the beneficiaries. The administrator or executor will have the responsibility for making sure that the will is probated and the directives are followed. Sometimes a party can avoid probating a will if bank accounts and stock accounts have designated beneficiaries, allowing the money to transfer outside of the probate process.
A trust is similar to a will in that you can direct where assets, income and property will go both before and after death. Unless there is a dispute about the distribution, a trust typically will bypass the Court’s probate process.
All adults with property or assets should have a will or trust in place, along with a power of attorney and advance directive.
The executor or administrator of the will has the legal duty to probate the will or distribute assets in accordance with a trust. In most states he is considered a fiduciary, which means he/she is strictly liable for improper conversion or distribution of assets or property. Often the administrator is a trusted family member or friend. You can also hire an independent attorney to be an administrator, if you don’t want to burden a family member with that responsibility.
A POA is a legal document that gives someone else (typically called an agent or attorney in fact) the authority to act on your behalf to handle a wide variety of matters, including paying bills, managing your finances, making gifts, collecting debts and even making medical decisions. The POA creates a fiduciary duty between the principal and the agent. A fiduciary has a legal duty to act in another person’s best interests – its one of the highest legal duties imposed by law. The legal duties include the avoidance of self-dealing, conflicts of interest and conversion of property for the benefit of the POA (unless its expressly authorized under the POA).
The POA does not take away your ability to act – it simply gives another person the authority to act on your behalf. It’s up to you to determine what powers to bestow on the POA. You can grant the POA the limited authority to act in certain capacities for a limited time (ie, pay my bills until I get out of the hospital) or you can have a broad durable POA that stays in effect until the principal passes away. Upon death the POA becomes void and only an administrator appointed under a will or by a court order can handle estate matters, including the distribution of estate assets.
A POA takes effect when you want it to, as set forth in the document. You could have the POA vest (take effect) only after the principal becomes infirm or incapacitated. Alternatively, you can have the POA take immediate effect.
It’s a trust where a person (the grantor) permanently transfers ownership of assets or income into a trust during their lifetime and gives up the legal right to change or revoke the trust after it’s created. Once the assets are transferred under the trust, the assets or no longer owned by the grantor. A trust can be used to preserve a person’s eligibility for Medicaid or other government programs with income eligibility limitations. An irrevocable trust also provides certain protection from creditors and can reduce the size of your taxable estate
A guardian is typically appointed by the courts and has similar fiduciary responsibilities of the person. A guardian is typically appointed to manage the person, where a conservator is typically appointed to manage the person’s financial affairs. A guardian, like a Power of Attorney, is considered a fiduciary. If a person becomes mentally incapacitated before he executes a Power of Attorney, a guardianship proceeding will be necessary to appoint a guardian to manage his affairs.
Yes, a mentally incapacitated adult can generally not execute legal documents, including a will, POA or trust. This would include individuals with advanced dementia or Alzheimer’s disease. That is one of the reasons why individuals should complete these documents early in their lifetime, when there is no question of their capacity.
As of 2025, the current federal estate tax deduction is $13.99 million. This means that a person can transfer up to $13.99 million to their heirs without having to pay federal estate tax. For married couples the deduction is effectively doubled. Absent a change in the law, under the Tax Cuts and Jobs Act of 2017, the current exemption will revert to 5 million (adjusted for inflation) effective December 31, 2025.
It is important to realize that some states also impose separate estate or inheritance taxes. Virginia has no estate or inheritance tax. Maryland’s tax rate is 10 percent of the value of the inherited property, but it does not apply to the spouse, children, siblings, parents and spouse of a child.
A gift tax is a tax on the transfer of money or valuables, including property. The annual gift tax exemption is $19,000 per recipient. This means you can give $19,000 to as many people was you want without tax consequences. Married couples can give twice that amount.
A legal instrument where a person specifies his or her preferences for medical care in case of physical or mental incapacity. Such directives could be included in a living will, which can address such issues as to whether you want to be kept alive by machines if there is no chance of recovery. Similar instructions can be incorporated into a Durable Power of attorney which designates a third party to make medical decisions if you are unable to do so.
Also known as a Do Not Resuscitate (DNR) order, this directive tells a healthcare provider not to perform CPR or other advanced life saving measures should a patient suffer a heart attack or other sudden event causing a cessation of breathing. For the elderly or critically ill patients, doctors in the hospital will ask about the code status from the patient or a family member. DNR orders can also be incorporated into advance directive or living will.
For more information, contact the Law Office of Jeffrey J. Downey today for a free consultation.
We serve Virginia, Maryland and Washington D.C. If you can’t come to our office, we can come to you and/or handle meetings through video or telephone conferencing.
Law Office of Jeffrey J. Downey
8300 Greensboro Dr, Suite 500
Mclean, VA 22102
Phone: 703-564-7318 Email: jdowney@jeffdowney.com