You just learned you are inheriting assets.  You have questions – lots of questions.  What kind of assets am I inheriting — cash, stock, real estate, artwork, other personal property, retirement accounts or investments?  Are there any taxes associated with the inheritance?  Do I need to modify my estate planning documents?  Will the inheritance be considered marital property if I get divorced?  Can I protect them from claims by an ex-spouse?

 

These are all great questions.  The experienced estate planning attorneys at Azrael Franz can help you to:

 

• Ascertain what you will receive. Inheritances do not always come in the form of a check.  They can be money, stocks, bonds, real estate, jewelry, collectibles or other personal property, retirement accounts and/or other assets.  It is important for planning to know what kind of assets you will receive.

 

• Learn when you will acquire the assets and options you may have to control when you receive the funds. Not all inheritances are received at one time.  Sometimes estates or trust make partial distribution.  Further, with life insurance, retirement accounts and other assets you may be able to elect to have the funds paid over extended period of time.

 

• Determine whether you need to modify or create estate planning documents to protect you and your family and potentially save future taxes given the change is in your financial situation.

 

• Connect, if needed, with appropriate financial, accounting and insurance professionals so that these new assets are part of updated overall financial plan with insurance as needed.

 

• Understand future tax consequences related to your new assets and the time for paying any taxes. For example, on some inheritances over $1,000.00 from a cousin, an aunt or uncle or friend, you May have to pay Maryland’s 10% inheritance tax shortly after it is reported to the Register of Wills.  On others there may be capital gains taxes due following a sale or income taxes payable after distributions from an inherited retirement account.

 

• Plan to protect the inheritance from a spouse’s claim in the event of divorce. Maryland law provides that property acquired in an inheritance or “directly traceable” to an inheritance is not property that is subject to division in a divorce.
  • Accordingly, the general recommendation is to keep inherited assets separate and not commingle them in jointly held accounts with your spouse. There are additional considerations on beneficiary designations for retirement accounts.

 

Paul Schwab (pschwab@azraelfranz.com) and Jon Azrael of (jazrael@azraelfranz.com) Azrael Franz Schwab Lipowitz & Solter, LLC are experienced in simple and complex estate planning.  For a consultation on your estate planning or other legal needs you can email Paul or Jon or call them at (410) 821-6800.