Common Estate Planning Questions

Retirement, Income, Tax & Estate Planning.

Common Estate Planning Questions

July 26, 2013 Estate Planning Probate Wills and Trusts 0

Having a well-crafted estate plan is key for all families. If you don’t have a plan, you could leave your family with conflict and confusion. Below are a few common estate planning questions.

1. What if I don’t have a Power of Attorney, what happens?

You need to make sure you have valid health care and financial powers of attorney, because if you become incapacitated, someone needs to have authority to take over your affairs in a responsible way. If you do not execute valid powers of attorney, a guardian may need to be appointed for you, which is burdensome, time consuming and expensive.

2. Is probate a big deal in Pennsylvania? Do I need a living trust?

Although probate has been simplified in Pennsylvania, an Executor still has legal and fiduciary obligations that must be carried out properly. A living trust may be appropriate depending on the circumstances. However, a will is often appropriate. To determine whether you need a will or trust, you should see an attorney.

3. Why do I need a will if most of my assets are joint or have designated beneficiaries?

Regardless of if your assets are jointly titled and have beneficiary designations, it is imperative to have a valid will.

During the course of your life, a lot will change. You may acquire new assets that may not be titled jointly or have beneficiary designations.

From our experience, there are bound to be assets that WILL pass through the will! It always happens. Plus, even if that doesn’t happen, a will is important for other reasons, such as making sure you have an Executor appointed.

Finally, if you are married, a will may not be as important upon the first-to-die, but upon the second-to-die, a will becomes essential because it’s likely that many of those joint assets are no longer jointly held, and will pass through the will.

4. Where do I keep my estate plan, and should an attorney keep a copy?

We generally recommend you purchase a fire-proof records safe for your home and store your original estate plan there. Fire proof records boxes are safe but more accessible than a bank safe deposit box. Many attorneys keep copies of your plan. At our office, we keep an electronic signed copy.

5. Can I write my plan myself or with a LegalZoom type of service?

Of course you can, but it’s probably not a good idea. Besides, even those services tell you that a lawyer should review the plan! Would you skip the doctor’s office and diagnose yourself if you’re feeling sick? Estate planning is best done with an attorney who understands how all of the pieces of the puzzle fit together. Estate planning includes wills, powers of attorneys, and trusts, but it also includes strategies while you’re alive, and strategies for the next generation. Even a “simple” plan is best done with an attorney. Our experience is even the simplest of plans may require customization.

6. How often should I update my plan?

Check your plan at least every three years to make sure they still seem current. We recommend that you update the plan when you see a need for a change, and update your powers of attorney at least every ten years.

7. What are the taxes at death and how do I avoid them?

The U.S. government has a federal inheritance tax (only for the ultra wealthy as of 2013) and Pennsylvania has an Inheritance Tax.

For Pennsylvania Inheritance Tax, any asset transferred upon death in Pennsylvania is possibly subject to inheritance tax, with very few exceptions. The tax rates are relatively small (4.5% to kids and grandkids), so most of the time, planning to avoid PA inheritance taxes is not worth it. However, every case is different and we can discuss estate and inheritance tax planning strategies with you that may make sense. LIfe insurance is a great way to minimize PA inheritance tax, because it passes to your heirs inheritance tax free and income tax free.

Do you have an estate planning question or need assistance with your estate plan? Call us today at (215) 657-9200 to schedule your appointment with Jeremy A. Wechsler, Esq., Your Estate Planning and Asset Protection Attorney.

Our office is located in Willow Grove, PA and convenient to many locations such as Ambler, Huntingdon Valley, Northeast Philadelphia, Horsham, Bensalem, Langhorne and more.