Estate Planning & Administration
We recognize the sensitive nature of planning your estate. We approach all matters of estate planning with sensitivity, patience and concern, while maintaining the confidentiality of your assets. Our firm has extensive experience in the estate planning and estate administration area. There are some fundamental documents that we will discuss as part of your estate plan and include a Will/Trust, Power of Attorney, and Advance Directive/Living Will. These documents serve different purposes but are part of a complete estate plan.
What is a Will?
A Will is a written document that comes into effect upon your death. In your Will, you state the actions you wish to be taken after your death in regard to the disposition of your assets and/or property. In your Will, you will appoint the Executor or Executrix who will be in charge of settling your estate, and when appropriate, the Guardian who will take physical custody of your minor children, and when appropriate, the Trustee who will hold/manage/invest your assets/property left for the benefit of your minor children. You will also identify who you want to receive your assets and when they receive them. Through the use of trusts, we can delay the receipt of a person’s inheritance, or set limits on how much they receive. We can also prepare within your Will a Special Needs Trust so that a beneficiary with special needs does not lose the government benefits to which he or she is entitled.
Should everyone have a Will?
Generally, a Will is a good idea for most individuals, especially for people in the following situations: individuals and couples with minor children (to designate the guardian of your choice for your minor children); individuals and couples with children with special needs; individuals whose proposed executor resides outside of Pennsylvania – a bond will be required unless this requirement is waived in the Will – a bond may cost several thousand dollars even on a modest sized estate; individuals and couples with step-children; to establish trusts within your Will to provide pay-outs to your children at times you designate – without a Will, your estate will be paid to your children’s guardian, and will be paid to them outright at age 18; to make charitable contributions; and to make specific gifts to other family members or friends.
What occurs when there is no Will?
People who die without a Will are said to die intestate. In this event, the Pennsylvania Intestate Law provides a mechanism for the distribution of the assets and administration of your estate, including appointment of an administrator. The distribution of assets depends on whether you are survived by a spouse, parents and children, initially. For example, if you are survived by a spouse and children (and the spouse is the father/mother of your children), then your spouse would get $30,000.00, plus one-half of the estate. Your children would get the remaining 50% of the estate. Your surviving spouse would be the Administrator of the estate. Bottom line, the resulting settlement process may not produce the results that you would otherwise prefer for your survivors. You can prevent this from happening by having a Will drafted that reflects your intentions.
What is Probate?
Probate is the legal process for settling an estate, whether one has a Will or not. The Executor named in the Will is appointed as the personal representative of the estate, and if the decedent died without a Will, an Administrator will be appointed the personal representative of the estate. This is accomplished by going to the Register of Wills in the County in which the decedent resided. The Register of Wills then grant Letters Testamentary, or Letters of Administration in case of intestacy, which give the personal representative the legal authority to act on behalf of the estate. This grant of authority to act on behalf of the estate is reflected through the issuance of short certificates to the personal representative. Short certificates are used by the personal representative to gain access to assets of the decedent and to administer the estate.
What property comprises your probate estate and passes under your Will?
Your probate estate and the assets that pass under your Will consist of all assets held solely in your name at the time of death, including but not limited to, real estate, bank accounts, investments, and automobiles. Your probate estate does not include assets held jointly with your spouse, or another person, or assets that transfer to beneficiaries pursuant to a contractual provision (e.g. life insurance, transfer on death (TOD), in trust for (ITF), or for benefit of (FBO) accounts, etc.) at the time of death. These assets will pass directly to the joint owner or named beneficiary. Therefore, it is important to understand and coordinate which assets/property will pass under the terms of your Will and those that will pass by way of contractual obligation.
When should a Will be changed?
The disposition of your assets/property is determined by many factors including family and personal relationships and interests in charities. Your Will should be changed when those relationships, including death and divorce, change. Changes to a Will may be made either by a completely revised Will or by a Codicil (amendment) conforming to the requirements for a valid Will.
For some estate plans, we will recommend to a client that we use a trust to implement their wishes. There are many types of trusts with many different names that is often confusing for many people. Generally, trusts can be formed during your lifetime as a document separate from your Will (Living Trust), or can be created within your Will (Testamentary Trust). Trusts can also be “irrevocable” or “revocable”. An irrevocable trust is used for tax planning since the assets in the trust are not taxed to your estate. However, once you fund them, you are generally prohibited from terminating the trust and retitling the trust assets in your name. Revocable trusts can be terminated by the person who created the trust, and the assets can be retitled in his or her name. These are the most common type of trusts but do not provide any shelter from estate or inheritance taxes.
Power of Attorney
What is a Power of Attorney?
A Power of Attorney is a written document in which one person, the principal, authorizes another person, the agent, to act on the principal’s behalf.
What authority is granted by a Power of Attorney?
The Authority granted by a Power of Attorney depends on the type:
- General Power of Attorney: The authority granted is very broad. The agent is granted essentially the same legal authority held by the principal. This means that the agent can exercise such powers as making gifts, buying and selling assets, and filing tax returns on behalf of the principal.
- Special Power of Attorney: The authority granted to the agent is limited to those powers specifically defined in the document. Special Powers of Attorney are frequently used in real estate transactions to authorize a person to sign a deed to sell a specific property, and then upon completion of the sale, the power of attorney terminates.
- Durable Power of Attorney: Another form of General Power of Attorney is the Durable Power of Attorney. The primary distinction between the two is that a General Power of Attorney is effective only during the capacity of the grantor, while a Durable Power of Attorney will remain effective even if the grantor becomes incapacitated. Generally speaking, a Durable Power of Attorney will become valid and effective when it is signed by the grantor in front of 2 witnesses and a notary public, and then accepted and signed by the agent. A different type of Durable Power of Attorney is also used by some people who are concerned about the granting authority to an agent while the grantor is still competent. This is called a Springing Power of Attorney and will only become effective (even when completely signed by all parties) when the grantor is deemed disabled and/or incompetent, as determined by the grantor, the grantor’s doctor, or the Court.
Why should you consider a Durable Power of Attorney?
A Durable Power of Attorney can give the agent the authority to manage such practical issues as making living arrangements for a disabled person and paying the bills. With a Durable Power of Attorney, the agent also acquires the authority to implement an estate plan and manage the principal’s estate during a period of incompetence. In the absence of a valid Durable Power of Attorney, if you became incapacitated, your family will be required to have a court appointed guardian named to manage your affairs. This can costs thousands of dollars, and involves having to take the deposition of your doctor, and a court determination that you are not able to manage your affairs. Also, the court will determine who will take care of your affairs, and if there is a fight between family members, the court may appoint an outside agency, which will add to the expense. This can be avoided by having a valid Durable Power of Attorney in place.
Advance Directive/Living Will
What are Advance Directives?
Advance Directives are a way to “have your say” about the type of care you receive (or don’t receive) in the event you suffer a catastrophic medical event, such as a stroke or an accident, or if you suffer from a debilitating medical disease, that leaves you unable to communicate your wishes. Every adult should plan ahead by completing an Advance Directive that specifies his or her personal preferences in regard to acceptable and unacceptable medical treatments. There are two types of Advance Directives:
- Living Will: A Living Will states your preferences regarding the type of medical care you want to receive (or don’t want to receive) if you lack capacity to understand, make or communicate treatment decisions relative to an end-stage medical condition (which will result in your death, despite the introduction or continuation of medical treatment) or you are permanently unconscious such as an irreversible coma or an irreversible vegetative state and there is no realistic hope of significant recovery. Reasons to consider a Living Will include:
- A belief that adults have the right to control medical decisions regarding their care, including the right to refuse or withdraw life-sustaining treatment;
- Concern about the suffering and loss of dignity that can occur with life sustaining measures are used to prolong inevitable death;
- Easing the emotional pain the family might otherwise have to suffer in making such a difficult decision; and
- Language concerning organ donation can be included in a Living Will.
- Medical Power of Attorney: Also known as a Durable Power of Attorney for Healthcare or Healthcare Proxy, a Medical Power of Attorney names another person, such as your spouse, daughter or son, to make medical decisions for you if you are no longer able to make medical decisions for yourself, or you are unable to communicate your preferences. Note that a Medical Power of Attorney is not the same as a Power of Attorney, which gives another person the authority to act on your behalf on matters you specify, such as handling your financial affairs.
In Pennsylvania, state lawmakers, lawyers and medical professionals have adopted a standard format for a Durable Healthcare Power of Attorney and Healthcare Treatment Instructions (Living Will), which contains provisions for both a Living Will and Medical Power of Attorney. The Pennsylvania format contains provisions regarding what forms of medical treatment you would like to receive if you are in an end of life condition. This form also lets you decide whether these instructions should be strictly followed or whether they should be used as guidelines.
Important Points to Remember:
Living Wills are only effective when you are unable to communicate for yourself, and you are in a state of permanent unconsciousness, and there is not a realistic hope for recovery.
You can modify, update or cancel an Advance Directive at any time.
If you spend a good deal of time in several states, you may want to get an Advance Directive for each state.
Make sure that the person you name to act for you – your healthcare proxy – has current copies of your Advance Directive.
Give a copy of your Advance Directive to your physician, and if appropriate, to your long-term care facility.
In the event that a loved one has passed on, we are able to assist your personal representative in carrying out the terms of your estate plan, including making sure your assets are distributed in accordance with your wishes, and all taxes are paid. Unlike other firms who bill you based on a percentage of the value of the estate, we prefer to handle these matters on an hourly basis based on the actual amount of time we work. This leads to a more cost efficient handling of the probate proceedings and helps families keep more of their assets. If you prefer, we will work with clients on an agreed-upon flat fee for estate administration.
Orphans Court Litigation
In addition to our estate planning and administration practices, we represent parties in all types of orphan’s court litigation, including guardianships, will contests, claims against agents under a power of attorney and claims against an estate by creditors.
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