Estate Planning

Monday, May 14, 2012

Five Ways To "Upgrade" Your Estate Plan

Everyone must plan their estate. Otherwise, you run the risk of your affairs being a mess at your death and things not happening the way you intended. Make sure you speak with a qualified estate planning attorney to build your customized estate plan. Just like every person and family is unique, so is your estate plan. 

Here are five ideas for your plan: 

1. Testamentary Trusts Consider adding testamentary trusts to your will, either for your kids or grandkids. A customized testamentary trust has several benefits, including ensuring asset preservation, protection for minors, and more. A well-written testamentary trust is economical and can provide you peace of mind.
    
2. The Year of the Gift: Consider a sophisticated gift strategy. 2012 might be considered the "Year of the Gift" because of the large exemption amount of $5 Million that may disappear at the end of the year. Smart gifting can provide many benefits to you and your heirs, but you must ensure gifting is done properly and in a way that makes sense for you. Be careful about doing-it-yourself.
    
3. Write an ethical will: Most times, a Will or a Trust cannot capture the values, ideals, morals, judgments that you wish to pass on to the next generation. An ethical will can put those thoughts into words for you. Although it's not a legal document, an ethical will can be a great addition to any estate plan. 
    
4. Trust Strategy: Consider the use of trusts for certain needs. For beneficiaries on public benefits, a special needs trust should be established. If you wish to preserve assets against Medicaid spend down, a nursing home protection trust should be used. There are other trusts and strategies as well, and depending on your situation, they may make sense for your estate plan.
    
5. Communicate: Talk to your family! Communication is key for any estate plan to work. You don't need to tell your kids how much you have in your estate, but you should communicate your general intentions as to who the Executor will be, whether there are even or uneven distributions and why, etc. Surprises are never good and unpleasant or unexpected surprises can lead to lasting conflict. 

Please continue to update your plan regularly, and if you don't already have an estate plan, now is the time to put one into place!

Monday, May 14, 2012

Reverse Mortgage News

Reverse mortgage borrowers are getting younger, and that may not be a good thing.

The age of reverse mortgage borrowers is dropping, according to a new study by MetLife. Unfortunately, reverse mortgages come with risks, so younger borrowers need to be careful.

Reverse mortgages allow homeowners who are at least 62 years of age to borrow money on their house. The homeowner receives a sum of money from the lender, based largely on the value of the house, age of the borrower, and current interest rates. The loan does not need to be paid back until the last surviving homeowner dies, sells the house, or permanently moves out.

The MetLife study found that younger borrowers are taking out reverse mortgages. Today baby boomers aged 62 to 64 make up 21 percent of reverse mortgage applicants. In 1999, only 6 percent of applicants were in this age bracket.  Of homeowners who are considering a reverse mortgage, 46 percent are under age 70.

This new trend toward younger borrowers could spell trouble. While reverse mortgages seem like a great idea, there are major downsides. The closing costs for the loans are much higher than for conventional mortgages, and younger borrowers receive less money because their life expectancy is longer. In addition, the borrower is still responsible for property taxes, homeowner's insurance, and maintenance. If the borrower runs out of money and can't pay the property taxes or homeowner's insurance, the loan will default, and the borrower could lose his or her house.

MetLife's study also found that most reverse mortgage applicants (67 percent) wanted to use the reverse mortgage to lower household debt compared to 27 percent who wanted to enhance their lifestyle and 23 percent who wanted to plan for the future. Instead of using a reverse mortgage to pay for health care that would allow borrowers to remain in their homes during their final years, borrowers are using reverse mortgages to cover short-term financial shortfalls. The MetLife study finds that strong reverse mortgage counseling is needed, and it cautions that homeowners need to consider whether to use their home equity to shore up their retirement financing or preserve this asset for major unexpected expenses in the future, such as health-related expenses that inevitably increase as people age.  (Funds for reverse mortage counseling were eliminated in last year's budget deal between Democrats and Republicans but have since been restored.) 

To read the MetLife study, click here.

For more information on reverse mortgages, click here.

Monday, May 14, 2012

More Information on Reverse Mortgages

Under our "system" of paying for long-term care, you may be able to qualify for Medicaid to pay for nursing home care, but in most states there's little public assistance for home care. Most people want to stay at home as long as possible, but few can afford the high cost of home care for very long. One solution is to tap into the equity built up in your home.

If you own a home and are at least 62 years old, you may be able to quickly get money to pay for long-term care (or anything else) by taking out a reverse mortgage. Reverse mortgages, financial arrangements designed specifically for older homeowners, are a way of borrowing that transforms the equity in a home into liquid cash without having to either move or make regular loan repayments. They permit house-rich but cash-poor elders to use their housing equity to, for example, pay for home care while they remain in the home, or for nursing home care later on. The loans do not have to be repaid until the last surviving borrower dies, sells the home or permanently moves out.

In a reverse mortgage, the homeowner receives a sum of money from the lender, usually a bank, based largely on the value of the house, the age of the borrower, and current interest rates. For example, a 70-year-old borrower with a $200,000 house in Westchester County, New York, would be able to receive a maximum loan of $110,723 (based on 2009 figures). The lower the interest rate and the older the borrower, the more that can be borrowed. To find out how much you can get for your house, use the AARP's reverse mortgage loan calculator.

Homeowners can get the money in one of three ways (or in any combination of the three): in a lump sum, as a line of credit that can be drawn on at the borrower's option, or in a series of regular payments, called a "reverse annuity mortgage." The most popular choice is the line of credit because it allows a borrower to decide when he or she needs the money and how much. Moreover, no interest is charged on the untapped balance of the loan.

Although it is often assumed that an elderly person would want to use the funds from a reverse mortgage loan for health care, there are no restrictions--the funds can be used in any way. For instance, the loan could be used to pay back taxes, for house repairs, or to retrofit a home to make it handicapped-accessible.

Borrowers who take out a reverse mortgage still own their home. What is owed to the lender -- and usually paid by the borrower's estate -- is the money ultimately received over the course of the loan, plus interest. In addition, the repayment amount cannot exceed the value of the borrower's home at the time the loan is repaid. All borrowers must be at least 62 years of age to qualify for most reverse mortgages. In addition, a reverse mortgage cannot be taken out if there is prior debt against the home. Thus, either the old mortgage must be paid off before taking out a reverse mortgage or some of the proceeds from the reverse mortgage used to retire the old debt.

Reverse mortgages are somewhat underutilized now, but financial institutions, sensing an opportunity as the population ages and people live longer lives, are expanding their reverse mortgage programs.

The most widely available reverse mortgage product -- and the source of the largest cash advances -- is the Home Equity Conversion Mortgage (HECM), the only reverse mortgage program insured by the Federal Housing Administration (FHA). However, the FHA sets a ceiling on the amount that can be borrowed against a single-family house, which is determined on a county-by-county basis. High-end borrowers must look to the proprietary reverse mortgage market, which imposes no loan limits. On October 1, 2008, a new housing law took effect that increases the borrowing level on reverse mortgages. The national limit on the amount a homeowner can borrow is now $417,000. The limit can be increased to $625,000 in areas with high housing costs.

Is a Reverse Mortgage Right for You?

While reverse mortgages look like no-lose propositions on the surface, they also have some significant downsides. First, the closing costs for these loans are about double those for conventional mortgages. Closing costs on a reverse mortgage for the $200,000 home described above would be more than $10,000. These costs can be financed by the loan itself, but that reduces the money available to you.

Reverse mortgage payments also may affect your eligibility for government benefits, including Medicaid. Generally, these payments will not be counted as income as long as they are spent within the same month that they are received. If the funds are not spent, however, they could accumulate and push your resources over the allowable limits for Medicaid or SSI eligibility. In addition, payments from reverse annuity mortgages may be counted as income for purposes of Medicaid and SSI whether or not they are spent within the month they are received. This shouldn't be treated as income, since it simply involves withdrawing equity from one's home, but the state may view it differently since the funds come in a regular monthly check. In any case, you should consult with an elder lawyer in your state if you have any concern about how a reverse mortgage will affect your eligibility for federal benefits.

Also, bear in mind that if your major objective is to safeguard an inheritance for your children, a reverse mortgage may not be a good idea. As soon as the elderly person (or the survivor of an elderly couple) dies, it will be necessary to sell the home and much -- if not all -- of the sales proceeds will have to be paid to the lender. But if you have a pressing need for additional income and have no close heirs, or if you do not intend to benefit your children or your children don't particularly want to inherit the house, a reverse mortgage can be a way to supplement income, perhaps without jeopardizing Medicaid eligibility.

Reverse mortgages are complex products and borrowers are advised to acquaint themselves with the different options available and then carefully compare competing loan offerings. Following are two outstanding Web sites to get you started in that process:

• You can learn the basics about reverse mortgages from the AARP's excellent reverse mortgage Web site. The site includes a calculator for estimating the loan for which a borrower would be eligible. Go to: www.aarp.org/revmort
• For more details, background information, and supplementary materials, visit the National Center for Home Equity Conversion site at www.reverse.org

In addition, the names of FHA-insured lenders are available from the Federal National Mortgage Association (Fannie Mae), (800) 7-FANNIE.

Tuesday, February 21, 2012

Update Your Estate Plan!

The Only Good Estate Plan is an Updated Estate Plan.

Lately, many of my newest clients have come to me with very old wills and powers of attorney. The plan is nicely done, folded and tucked in a nice envelope. The older the will, the harder it is for me to unfold. Once I dust it off, the will done on the typewriter is readable. 

In any case, it's a relief to me when these clients visit with me and actually become clients. My thought is, at least I can help this family update their plan, because most of the time, the plan no longer reflects their wishes, values, or the realities of their family situation. 

Many times, the kids were young when you first sat down to make your will. The needs were different. The choice of executor or power of attorney may be a sibling that you no longer feel comfortable with having serve in these roles. The estate size and value have changed, as well as the types of accounts and assets you own. Maybe there has been a second, or third marriage. You get the point! 

That's why the only good estate plan is an updated one. An old estate plan may have provisions in it that go against your current wishes today. 

If you have an old estate plan, I applaud you for doing some planning in the first place. Too many people fail to plan. But now, take the next step and make sure to keep that plan updated. I recommend checking your plan every 3 years, and updating it every 5-10 years. Those are rough guidelines. If there are any major changes in your family or circumstances, update the plan immediately.

Monday, January 30, 2012

Gifting the House For $1: Good Idea or Not?

Sunday, January 22, 2012

Caution: Do-It-Yourself Wills

Is it a good idea to write your own will? I can’t answer that question without being somewhat biased, because as an attorney, I know that there are complex and unique issues that each family and individual faces. Therefore, it does concern me when I hear of someone writing his or her own will without an attorney’s help.

My mission as an attorney is to build a long-term relationship with each client and provide superior service to him or her. The stack of paper in a binder or folder that I eventually hand to my clients is not what they find valuable. They just find it heavy! So the question is, where is the value in working with an attorney on my estate plan? My clients tell me that they find value knowing that they have a trusted legal advisor that has taken the time to learn about their needs, their goals, and the unique aspects of their lives. Unique lives translate into unique estate plans.

When I hear about do-it-yourself estate planning, I can’t help but get nervous for the folks that use those products. Here’s what concerns me about folks writing their own will:

1. Failure to protect your assets: As an attorney, I always talk to my clients about their kids and grandkids, and I make sure that an asset protection plan is put in place. I want to make sure the client’s kids or grandkids are protected from themselves and others, including their creditors, spouses (or ex-spouses), business partners, legal judgments, etc. I can assure you that you cannot design a one-size fits all form for an asset protection plan, which is more important than ever today.
    
2. Failure to create an asset preservation plan: A will and power of attorney is important but only the start for many estate plans. A major concern for retirees and people close to retiring is making sure an asset preservation plan is crafted, so that if you go into a nursing home, the house will be safe and some assets will also be safe from Medicaid spend down.
    
3. False sense of protection: Doing it yourself and convincing yourself you only need the “simple will” may give you a false sense of protection, when in fact your situation is more complex. By complex, I mean things like second marriages, kids with financial issues, real estate under water, uncertain financial future, family conflicts, etc. I can assure you that these types of issues won’t go away when you pass on—in fact, our experience shows they only magnify if they’re not dealt with while you’re still here.
    
4. Legal issues and problems with the documents: Let’s be honest, you don’t know what you don’t know when it comes to estate planning. Work with a trusted advisor that knows what you need. Would you pull your own tooth? Do surgery on yourself? Estate planning and asset preservation is best done with the help of a professional.

Are you going to spend more money on an estate plan with an attorney? Yes. But do you really want the “cheapest” plan? Worse, are you making matters more complex by doing it yourself and saving a few bucks?

I make my living by being passionate about helping families deal with their estate planning goals, fears and hopes to ensure they leave a legacy they can be proud of, no matter what happens and when it happens. Think about estate planning as saving your family time, money, aggravation, conflict, and from your estate being unnecessarily spent down on long-term care. Then, the real value of working with a professional will be realized.  

Monday, January 16, 2012

Social Security For Spouses

Social Security benefits can be complex, and our article this week shows you why. If you need assistance with planning for Social Security, please contact our office.

Social Security doesn't just pay retirement benefits to retired workers; in some circumstances, it also provides benefits to a worker's spouse or ex-spouse and to a deceased worker's surviving spouse. Here are the ins and outs of spouse and survivor benefits.

SPOUSAL BENEFITS
Spouses are entitled to benefits if the marriage lasted at least 10 years. A spouse is entitled to an amount equal to one-half of the worker's full retirement benefit. To receive this benefit, you must be at your full retirement age or caring for a child who is under 16 years old. In addition, your spouse must have filed for Social Security retirement benefits even if he or she isn't receiving them.

If you could receive more from Social Security based on your own earnings record than through the spousal benefit, the Social Security Administration will automatically provide you with the larger benefit. If you have reached your full retirement age, you may also elect to receive spousal benefits and delay taking your benefits, allowing your own delayed retirement credits to accrue, and switch to your own benefit at a later date. However, you cannot elect to receive spousal benefits below your retirement age and later switch to your own benefits.

If you begin collecting your spousal benefit before your full retirement age, your spousal benefit will be permanently reduced.  But if your spouse retires early, but you wait until your full retirement age, you will still receive benefits based on one-half of his or her full retirement benefit.

DIVORCED SPOUSES
An ex-spouse is also entitled to receive one half of the worker's full retirement benefit as long as the marriage lasted at least 10 years. Unlike a current spouse, a divorced spouse can begin receiving benefits even before the worker has applied for benefits. The worker must be at least 62 years old and the divorce must have been final for at least two years.

SURVIVOR BENEFITS
If you are a surviving spouse at full retirement age, you are entitled to the worker's full retirement benefits. If the worker delayed retirement, the survivor's benefit will be higher. Survivors are entitled to benefits even if they are divorced as long as they had been married for at least 10 years. If you file for benefits before you are over age 60, but below full retirement age, you will receive a reduced percentage of the worker's benefits. Surviving spouses who are younger than 60 receive benefits only in limited circumstances, such as cases of disability or caring for a disabled child.

Monday, January 09, 2012

Your Digital Assets

What will happen to your digital assets if you pass away?

Monday, December 12, 2011

Estate Tax Update / 4 Common Estate Planning Questions

Tuesday, December 06, 2011

Asset Preservation: Your HOME

Preserving your assets is possible even if you are about to enter into a nursing home. But the worst thing you can do is wait until you're no longer healthy to start planning. Instead, start planning while you are healthy!

Like most people, if you own a home, typically that's your greatest concern when you sit down to consider what assets are most in need of protection.

Consider an example: Jon and Mary, both 68, own a $250,000 home. They have two children. Neither has long-term care insurance. Jon's health is a source of concern, but his doctors are confident that based on current information, he will not need long-term care for at least another 7-10 years. This presents a great opportunity to plan in advance.

With our customized Nursing Home Protection+ Account solution, we can protect Jon and Mary's home from ever being taken if Jon goes into a nursing home. Even better, when Jon and Mary both pass on, the house won't be subject to estate recovery. In other words, their two children will be able to inherit the house, even if Medicaid wants to re-coup their costs by taking the house. 

This type of asset preservation requires special skills and must be done carefully after considering many factors.

If you're interested in this type of planning, please contact our office today. 

Monday, November 28, 2011

Evaluate Your Estate Plan

Monday, November 21, 2011

Executors; Estate & Gift Tax Update

THE ROLE OF THE EXECUTOR... The Executor is the CEO of an estate. The individual or institution filling that role is, in essence, the owner of your estate when you pass on, and has a “fiduciary duty” to do what is in the best interests of your beneficiaries, the people you leave your stuff to.

Executors and trustees (if you have a living trust instead of a Will) need to be careful and diligent about their work, and consider hiring outside assistance (attorney, CPA, etc.) as needed to ensure accountings are filed correctly, and inheritance tax and estate tax returns are prepared properly.

Transparency is key when you are an Executor. For instance, sharing a full accounting and a copy of the Will with the beneficiaries goes a long way.

Also, if an estate has creditors, you must be diligent in ensuring they receive proper notice. If an Executor fails to give proper notice to creditors and the Executor distributes the estate, there is a possibility that the creditor could later appear, make a demand, and hold the Executor personally liable.

Being Executor is not impossible to handle without a lot of outside help, especially for simple estates. But where there are complexities, beneficiaries with some conflict, creditors, etc., it makes good sense for your estate for the Executor to consider outside assistance. Remember, the Executor has a legal obligation and a fiduciary obligation.

FEDERAL TRANSFER TAX UPDATE... The so-called “super-committee” had apparently floated the ideas of changing the gift tax and federal estate tax before the year is out. Fun rumor, but not going to happen, as we have heard over the weekend that Congress is... surprise, surprise… deadlocked!

The gift tax exclusion stays basically the same in 2012. You can make $13,000 annual gifts to as many people as you want, no tax due and no filing needed. Over $13k, you have a $5.12 million lifetime gifting exemption. Anything above $13k, you need to file a Gift Tax Return (IRS Form 709). Any gift over $5.12 Million in 2012 is taxable at a 35% rate. This will potentially change again in 2013. Now is the time to make large gifts.

The federal estate tax remains at a $5.12 Million exemption in 2012, affecting very few people. Anything above $5.12 Million, or $10.24 Million for a married couple, is taxed at 35%. Again, 2013 could see major changes in this scheme.

The Pennsylvania Inheritance Tax rates will remain the same in 2012.

Of course, we’ll keep you updated on any changes.

Have a Happy Thanksgiving! Best wishes to you and your family.

Monday, November 14, 2011

Estate Planning Misconceptions

This week, we have selected five common estate planning misconceptions that we often hear from our clients. 

1. Gifting the house for $1 to my kids is always good idea

Gifting your house to your kids may save some inheritance tax dollars, but there will be no “step up in basis” if the kids try to sell the house after you pass on. To put it simply, there may be more taxes due than if you just left the house in your name. Additionally, once the kids own the house, you’re on the hook if they get into any sort of creditor or marriage trouble.

2. I only need a simple will, or no will at all

Every provision in your will is important. You want your will to be perfect, otherwise it could spell trouble for your family later on. You need to speak with an attorney about what type of estate planning tool you need.

3. I don’t need a will because all of my assets have beneficiaries on them

It always makes sense to have a will, regardless if anything will pass through the will. Inevitably, we find the will always disposes of some assets.

4. A power of attorney is just a form and is the same for everyone

Powers of attorney are subject to the most lawsuits because of this assumption. Your power of attorney needs to be carefully tailored so there aren’t too many powers.

5. I can’t gift more than $13,000 per year

As it stands now, you have a $5 Million lifetime gifting exemption through 2013. You can make the $13k gifts each year without paying taxes or filing gift tax returns. Anything over $13k is not taxed, but must be accounted for. Anything above $5 Million is taxed at 35%. For years, the lifetime exemption was $1 Million, so the $5 Million jump presents a great opportunity for wealthy individuals and families to make transfers.

Estate planning should be undertaken with a qualified estate planning attorney. Everyone needs to engage in estate planning to ensure they leave a legacy that's free of conflict and confusion. For a complementary estate planning consultation, please call our office at (215) 706-0200.

Was this week’s blog entry helpful to you? If so, we encourage you to forward it on to friends and family members who you think may find it informative as well.

Have a great week!

Monday, October 31, 2011

Nursing Home Costs - Rising Fast?

MetLife recently released their Market Survey of Long-Term Care Costs for 2011, and the statistics do not bode well for seniors and those that need long-term care. 

A few statistics from the report that you should know about:

• The average cost of a nursing home (private room) across the USA increased 4.4%, from $229 per day to $239 per day.
   
• On average across the country, a semi-private room costs $78,110 per year, and a private room costs $87,235 per year.
   
• In Philadelphia, the average costs are higher. The average private room costs $285 per day, with the high being $325 per day. At the average, the cost per year is $104,025 and at the high, the cost per year is $118,625. Ouch.
   
• Assisted Living Facilities: On average, they cost $3,477 per month, an increase of $184 or 5.6% from 2010. 
   
• Home Health Care: Average hourly rate is $21, and the daily rate for Adult Day Services is $70.

We continue to point out to our clients that long-term care costs are rising, probably faster than inflation. If you have concerns about long-term care costs, you should speak with an elder law attorney who can help your family plan craft a plan for preserving part of your estate in case long-term care is needed. Elder law professionals have a variety of tools available, such as long-term care insurance, trusts, sophisticated gifting strategies, and more.

Monday, October 24, 2011

Did Steve Jobs Have An Estate Plan?

Even several weeks after his death, people are still talking about Steve Jobs and his contributions to the technological advances we've made in the last 30 years. Just last week, there was a memorial for Apple employees, shutting down every Apple store for a couple of hours, to celebrate the life of Steve Jobs. I remember using the Mac Classic, a black and white Apple computer from the 1980’s, and being fascinated by what was then advanced technology (no WiFi, no Facebook, no internet but still great!). People are going to be talking about Steve Jobs for a long time.

As your estate planning attorney, I was intensely curious about what type of estate plan Jobs created. We have plenty of wealthy individuals who have not engaged in estate planning, and their affairs are simply a mess.  People like Elvis Presley, Sammy Davis Jr. and others lost a huge amount of their estate to unnecessary taxes because they didn’t plan properly. We can learn a lot from their mistakes. But we can also learn from those who actually did take the time to plan, like Steve Jobs. To be honest, the less we can learn about their estate plan, the better their estate plan probably was!

To read more about what Steve Jobs did and didn’t do, check out the Forbes article on his estate plan here.

Every estate plan is different. Most people don’t have the wealth that Steve Jobs had. Nonetheless, everyone needs a plan that works for them and avoids disputes, excessive taxes, and unhappy heirs. If Steve Jobs didn’t put the proper plan in place, we will surely find out sooner or later.

Have a great week!

Monday, October 17, 2011

CLASS Dismissed

Last week, the Obama administration formally shut down the CLASS Program, part of the Affordable Care Act (Obamacare). CLASS would establish a long-term care insurance program that individuals could pay into and then receive a daily benefit if they needed long term care.

But, the experts figured out that not enough people would sign up for the voluntary program. Thus, it would end up becoming insolvent, adding to the deficit and costing taxpayers.

Insolvent? Adding to the deficit? Costing taxpayers a lot? Sounds like Medicaid, Medicare and other entitlement programs!

Our political leaders just can’t seem to find a way around the problem of ballooning long-term care expenses. Meanwhile, a nursing home costs approximately $8,000 per month and at least 33% of people will spend on average 3 years in a nursing home during their lives. Do the math, and that adds up to almost $300,000.

Yes, Medicaid will cover the cost of nursing home care, but only when you have nothing left. The CLASS program aimed to fix this problem, but it was a failure.

Monday, October 10, 2011

7 Estate Planning Questions

Top 7 Estate Planning Questions That Clients Ask

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

You need to make sure you have a Power of Attorney, no matter what age you are. If something happens to you and you can’t make decisions for yourself, you need to make sure someone is appointed to handle your affairs. If you don’t, a guardian may need to be appointed for you. That means going through the courts, something that no one wants to be bothered with.

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

Probate is not the scary process that it used to be, at least in Pennsylvania. Most people in Pennsylvania opt to have a will over a living trust because probate is rather straightforward. Sometimes, an attorney may need to be retained to help with probate affairs, but many times, a family can do it themselves.

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

Regardless of if your assets are jointly titled and have beneficiary designations, it still makes a lot of sense to have a will.

First, you may acquire new assets or move assets around during the course of your life. You may forget to re-title beneficiaries, or you may not title the asset jointly.

Second, 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 store my documents, 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 planning documents there. They will be safe, but more accessible than a bank safe deposit box. As your estate planning law firm, we keep a copy of your documents on our secure LegalVault service, which also provides you and your health care providers access to your documents.

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. 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, because as of our experiences show, even the simple plans require customizations.

6. How often should I update my plan?

Check your documents 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 every five years.

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

There are both federal estate and state inheritance taxes. Most people today don’t worry about federal estate taxes today, because only folks with more than $5 Million of assets are affected. 

Pennsylvania has a state inheritance tax, and 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.

Monday, October 03, 2011

Is it time for a WILL review?

Is it time to update your LAST WILL & TESTAMENT? You don't know until you review it! We've put together a few tips this week for when it's a good time for you to pull the will out of storage and give it a review. 

1. THE WILL IS FIVE OR MORE YEARS OLD: You should review your estate plan at least every five years, even if you feel nothing has changed. It's a good habit to get into, so that you can be sure your plan works for you.

2. YOU DO NOT UNDERSTAND THE WILL: If you see parts of the will you simply do not understand, you may want to get it reviewed. Chances are, some of the sections or the language may simply be out of date.

3. YOU GET RE-MARRIED, DIVORCED, OR ARE NOW WIDOWED: The change in your marital status should prompt a will review and mostly likely require significant changes to your WILL.

4. YOUR KIDS WERE YOUNG WHEN YOU WROTE YOUR WILL: Now that the children are older, maybe out of college or even married with children, you probably have quite a few revisions to make in your will. 

5. NEW GRANDKIDS: You may wish to leave grandkids a direct inheritance, or not. But either way, you should make sure your will is reviewed when you have new grandkids. If they come into the inheritance early for some reason, you want to ensure that proper plans are made.

6. YOUR WEALTH HAS CHANGED FOR THE BETTER OR WORSE: Significant changes in your wealth should prompt a review of your will. There may be new strategies, depending on what types of assets you have and what your goals are.

Do you need a review of your Last Will & Testament? Call us to schedule a no-obligation Will review at (215) 706-0200. We'll take 30 minutes of your time and tell you whether you may need an update or not.

Monday, September 26, 2011

Estate Planning Tips

This week, I reached into my grab bag for a few best practices in estate planning. Everyone must have an estate plan because without one, you risk leaving your affairs a mess for others. Here are a few tips and ideas:

1. KEEP IT CURRENT:
   Keep your Powers of Attorney up-to-date. In the event of a disability, you want to ensure financial institutions and medical providers will accept these documents without reservation. Update them every 3-5 years.
    
2. DON’T LET PROBATE SCARE YOU:
   In Pennsylvania, don’t let the probate process scare you into writing big expensive estate plans to avoid probate. Probate is a relatively easy process in Pennsylvania compared to other states.
    
3. FOLLOW THE THREE C’S:
   In your estate plan, be CLEAR, be CONSISTENT, and be CAREFUL. Make sure you’re working with an attorney who only practices estate planning so you can rest assured knowing your plan meets this criteria. Make sure the language is clear, that nothing in the plan conflicts, and that you think through what you want your plan to say.
    
4. HOPE FOR THE BEST, PLAN FOR THE WORST:
   Estate planning is about as exciting as going to a dentist for many people. No one wants to do it, but it must be done. While you’re planning, make sure you plan for the worst-case scenario. For example, leaving your son a large inheritance and the chance that he could have creditor problems or he gets divorced and his ex-wife wants half of the estate. Yes, there are strategies we can put in place to protect an inheritance from these types of situations.
    
5. GIFT PROPERLY:
   Want to downsize, help your kids while you’re still living, or take care of the grandkids? Writing a check may make them smile, but there are other ways to make gifts, such as setting up life insurance policies inside trusts (great for asset protection) and creating a pension for life for your kids. If you want to gift, make sure you explore your options with qualified professionals. Doing so may provide multiple benefits to you and your heirs.

Monday, September 19, 2011

Five Myths About "Living Trusts"

Is the Revocable Living Trust, sometimes just called a Living Trust, the ultimate estate planning tool? It depends who you ask, and what state you’re in.

In Pennsylvania, Living Trusts aren’t used commonly as an estate planning tool. Instead, practitioners in Pennsylvania, as well as clients, tend to favor Wills as the fundamental estate planning tool.

Here are five myths about Living Trusts in Pennsylvania:

Myth #1: Living Trusts save, reduce or avoid taxes:
A Living Trust is NOT a tax reduction or avoidance strategy. You simply cannot avoid estate or inheritance taxes by using a living trust. It used to be that more people were effected by the federal estate tax, and that married couples could reduce their estate tax by using credit shelter trusts. But you could do the same thing in a Will!

Myth #2: They prevent estate challenges:
A Will is easier to challenge than a Living Trust, because a Will is probated and is public. However, just because a Living Trust isn’t probated, doesn’t mean it can’t be challenged in court. It just takes a little more time, effort and money to do so.

Myth #3: They avoid probate because probate should be avoided:
Pennsylvania probate is pretty simple, and a run-of-the-mill estate can be probated by the Executor him or herself without the help of an attorney. So probate shouldn't necessarily be avoided at all costs and you shouldn't be scared of probate in PA. Yes, living trusts avoid probate, but your living trust must be 100% funded with ALL of your stuff to do that! Even missing ONE small bank account means your loved ones will have to go through probate. Anyway, probate is not a big deal in Pennsylvania, unlike in other states such as California (yes, living trusts are popular there because probate is a COURT supervised process!).

Myth #4: A Living Trust will make things easier at the end of my life:
Not really… It is probably takes just as much work to probate the will, settle the estate, etc., as it does to manage an ongoing trust. Trusts need to comply with many rules, tax returns must be filed annually for trusts, and more. A living trust will usually require the help and services of a professional.

Myth #5: I need a living trust to shelter assets from nursing home costs:
A living trust would NOT be a good tool to use if you want to shelter some of your assets from being spent down by nursing homes. You need to use a Medicaid Asset Protection Trust, which is IRREVOCABLE, and establish and fund this trust when you’re still healthy. A living trust used in a situation like this would be a disservice to you and your family.

LIVING TRUSTS MAKE SENSE IN SOME SITUATIONS, BUT NOT ALL SITUATIONS.  Estate planning is an individual process that's unique for everyone. A qualified attorney can help guide you to what estate planning tools you need.

Want more information on what estate planning tools make sense for you? Call us today at (215) 706-0200 to schedule your complimentary visit.

Tuesday, September 13, 2011

IRA's and Estate Planning

IRA’s are increasingly becoming an important part of estate planning for middle class families, particularly those who have worked and saved their whole lives. Sometimes, you will need to live off of the income of your IRA in retirement, but sometimes you will have other sources of income that cover your life expenses.

When your IRA isn’t needed to live on during retirement, it can present great estate planning opportunities for you and your family. You can structure your IRA to leave a pension for life for your kids or grandkids, while allowing the IRA to grow tax-deferred, or if it’s a Roth IRA, tax-free.

To make sure the IRA stays safe and allows for maximum growth, an IRA Inheritance Trust is necessary to accomplish this goal.

How do you know if you need this kind of trust? Here are a few factors to consider when thinking about whether you might need an IRA Inheritance Trust:

• Size of IRA: Is your IRA worth at least over $500,000? If so, it may be a sign you should consider a trust.
   
• How many beneficiaries? If each beneficiary (a kid, grandkid, etc) may get $500,000 or more each out of your IRA, then you should consider a trust.
   
• Ages of beneficiaries: If you are leaving the IRA to several people, some older and some younger, it’s important to establish the IRA trust so that each share can be measured on his or her own life expectancy. The younger the beneficiary, the higher the life expectancy and the lower the RMD. The lower the RMD, the more ability the IRA has to grow and "stretch" out over time.
   
• Issues and challenges for beneficiaries: Are your beneficiaries spendthrifts? Are they too young for you to know if they might turn out to be? What about creditor problems, bankruptcy issues, special needs, divorces and more… These are all reasons that you want to protect and shelter the IRA in a trust for beneficiaries.
   
• Your goals: Depending on your estate planning goals and the factors above, an IRA Inheritance Trust may or may not make sense for you. It’s best to consider whether you need this type of trust with a qualified attorney who is analyzing your entire estate plan. This is simply one tool in the toolbox that can be used to effectively plan with certain cases.

Wednesday, September 07, 2011

Fall 2011 Estate Planning Essentials

Our blog entry this week focuses on five topics that have been hot button issues for clients over the last few months. Estate planning continues to evolve and therefore, we must continue to “think different."

Estate Planning in General: Estate planning today isn’t what it was 5 or 10 years ago. For most families that I see today, saving estate tax dollars is not an objective, because there are simply no taxes to begin with! But just because the tax problem went away (at least for the time being) doesn’t mean you shouldn’t plan. Our clients come to us to make sure their kids and grandkids will be taken care of properly, and that their estate is setup and optimized properly to achieve those goals. In other words, there are many more reasons to engage in estate planning than simply to save taxes.

Powers of Attorney: To put it bluntly, we are living longer. A Will by itself won’t suffice anymore. A Will is a death document, and only kicks in upon your passing. As we live longer, we have more time where we may be incapacitated or incompetent to make decisions. Therefore, powers of attorney, appointing someone to take over your affairs, continue to become more essential.

Long-Term Care: Long-term care costs are rising. See last week's blog entry on the latest average costs in Pennsylvania for long-term care. It is essential that middle class families plan for long-term care costs. There are strategies that can be employed to save at least part of your estate from costs that could ravage your estate.

Non-Probate Assets: More and more, people are acquiring assets that don’t pass their Will, such as IRA’s, 401(k)’s, life insurance, and annuities. In general, any asset with a beneficiary designation form avoids the Will and avoids probate. But it doesn’t mean you shouldn’t plan or protect those assets with trusts or other devices, and it doesn’t mean you should ignore them when planning your Will and estate.

Gifting: 2011 and 2012 present great opportunities to make large gifts without incurring gift taxes. You can optimize your estate plan and take care of your kids or grandkids with life insurance, pensions for life, and other great tools. Gifting may be more limited come 2013, so now is the time to act.

Fall is typically our busiest time for estate planning. Make your appointment now and reserve some time with me today if you want to optimize your estate plan. Call my office today at (215) 706-0200 or schedule an appointment online on our web site.

Monday, August 29, 2011

Long Term Care Costs

Most people know that it’s crucial to plan for retirement. It used to be the case that saving about $1 Million would cover a typical couple, but that number seems to be ticking up rapidly. Retirement planning is a specialty, and you should see a qualified retirement planning professional.

But in addition to retirement, what many people don’t consider is the cost of long-term care, if needed, for you and/or your spouse.

Consider Genworth Financial’s annual facts and figures on the costs of long-term care:

• Assisted Living Facility (One Bedroom) $36,000 per year
• Nursing home – Private room – $97,000 per year
  
• Home Health Aide - $46,000 per year.
  

Note that these are the average costs for 2011. The costs vary depending on the provider and your needs. Also, long-term care costs increase every year, and the increases are usually significant. So not only must you plan for long-term care, you must include inflation when factoring the costs.

You have to consider your family’s health history, your health history, the amount of assets you have, and other factors when planning for long-term care. There are different planning opportunities available to preserve at least a portion of your estate and qualifying for Medicaid sooner. However, these strategies are only available to those that start planning at least five years ahead of time. But it’s hard to predict when you’ll go into a nursing home. There are strategies available for “crisis planning” but the biggest problem with waiting until there is a crisis is that what we can do today, we may not be able to do tomorrow. The laws are constantly changing for Medicaid, especially since it’s a joint federal-state program.

The bottom line is that planning for long-term care costs while you’re still healthy is advantageous for you and your family. 

Monday, August 22, 2011

Powers of Attorney 101

You must have a financial power of attorney and health care power of attorney in Pennsylvania, and you must make sure these documents are updated every five years or so. It's important to update them because the older the documents are, the less likely an institution or individual will accept the documents as valid.

Why are these documents important? They allow someone to act for you if you become disabled or incompetent, temporarily or permanently.

If you don't have these documents, you are not guaranteed that a loved one or someone else can make decisions for you unless that person goes to court to get guardianship. That is time consuming, expensive, and burdensome. It is, in other words, unnecessary.

There are two types of Financial Powers of Attorney, IMMEDIATE and SPRINGING.

* Immediate Powers of Attorney: This type allow the person you appoint to act without doctors certifying incapacity.

* Springing Powers of Attorney: Here, (usually) two doctors must certify incapacity or incompetency in writing.

The problem with a Springing Power of attorney is that sometimes, people forget they have this type. When it comes time for the appointed person to use the Power of Attorney, they cannot unless they have the doctors certification. In other words, this can hold up important affairs, decisions and transactions. We're not saying that Springing POA's have no place, but often times, Immediate POA's make more sense.

Some people will ask to have a Springing POA because they don't trust the person they appoint to act properly if they have the ability to use the power of attorney right away. A Springing POA won't solve the trust issue though. Therefore, you need to start from scratch and decide who you trust completely to handle your affairs. Once you find someone you trust, then the type of POA will probably matter much less.

Tuesday, August 16, 2011

Ethics and Estate Planning

Is your attorney thinking about your case or his/her bottom line? How do you know for sure? When it comes to estate planning, and drafting your will, trust, powers of attorney, etc., you want to make sure you’re getting a plan that is based on your best interests.

Here are a few points to consider, red flags, and questions to ask to make sure your hiring an ethical attorney.

1. Are you meeting with the actual attorney who will be drafting your documents? If not, that is a red flag, and the firm/company could be breaking the law.
   
   
2. Ask if the attorney actually drafts the documents or not. Sometimes it is ok for a paralegal to draft part of the document, but some attorneys do not draft at all, which is a problem.
   
   
3. Ask if you’ll get to review the documents or not before you sign them. Also, will the attorney take the time to answer questions you have about the documents?
   
   
4. Has the attorney actually provided reasoning behind why he or she is putting in place a particular plan? If the attorney recommends a trust, why? If a will, why? You should know exactly why you are getting certain documents and plans.
   
   
5. The attorney should learn about your family, the dynamics, unique circumstances, and more. If they don’t inquire about your family and try to learn about you, that’s a red flag.
   
   
6. Don’t be afraid to ask questions. If the attorney doesn’t want to spend the time with you to answer your questions, you should probably see someone else.

Monday, August 08, 2011

Ten Reasons To Write A Will

Without a Will (or a trust for that matter), your estate will be dealt with according to the state law in place. In Pennsylvania, the estate becomes an “Intestate Estate” and is divided based on who your closest living family members are that survive you. Without a will, you are severely limited with who handles your estate, how it is divided, and more.

The 10 items below are not available to someone without a will.

1. You can name someone to care for your kids or dependents upon your death
    
2. Distributes your assets as you wish, and can establish trusts if you don’t want a beneficiary getting an inheritance all at once
    
3. Puts someone in charge of any pets you have, and provides compensation
    
4. Allows you to name who your Executor will be (very important in avoiding conflicts!)
    
5. Can disinherit someone if you wish
    
6. List who gets what for assets both big and small. Consider large assets like real estate, and smaller assets like jewelry, valuables, etc.
    
7. Expresses your wish for your final arrangements (burial, cremation, etc.)
    
8. Minimize challenges to your estate with proper language and considerations
    
9. Take advantage of any estate or inheritance tax planning possible with current laws
    
10. NOT split your assets evenly among your kids (maybe one is much better off than the other two)

Need a will or know someone who does? Contact our office today at (215) 706-0200. 

Monday, July 18, 2011

Five Estate Planning Red Flags

Monday, June 20, 2011

Asset Protection For Your Heirs

The question is, when you engage in estate planning, are you thinking carefully enough about protecting the inheritance you'll be leaving to your heirs?

If you leave your assets outright in a will to a beneficiary, the asset is owned by the beneficiary upon death. That means that the beneficiary can spend the asset however he or she would like. It also means that if the beneficiary is in debt, or suddenly becomes mired in debt, the creditor can come after that asset. 

How about if your beneficiary is married? 50% of marriages in the U.S. still end in divorce. You better believe your son or daughter in law will be pushing for equitable division of that inheritance.

No one wants to be involved in a law suit, but accidents happen, and we live in a litigious society. Insurance may cover up to a certain amount, but what happens after that? You can be sure that if there is a large inheritance available, an attorney will find it and come after it.

Bankruptcy, high risk professions, and other risk factors are always present as well.

You can protect against these predators and creditors for your heirs if you plan properly. Using trusts, for both non-IRA assets and IRA assets, we can potentially protect your heirs from themselves and others. 

Have you considered how to ensure your heirs don't squander their inheritance? 

If we can be of assistance, call our firm today at (215) 706-0200.

Tuesday, June 14, 2011

Estate Planning 101 - Class is in session!

Free Summer Estate Planning Classes!

Monday, June 06, 2011

Three BIG Estate Planning Mistakes

Tuesday, May 31, 2011

Free Summer Estate Planning Classes

Monday, May 23, 2011

Financial Power of Attorney Check-Up

We caught a great article in the Wall Street Journal last weekend (May 14-15, Weekend Investor section) about powers of attorney, and how they can be dangerous if the power gets into the wrong hands, and how they could be useless if they’re old or executed improperly.

In our practice, we counsel clients to carefully select their power of attorney – trust is paramount, and if there is even the slightest doubt that someone won’t have your best interests at heart, they aren’t the right choice.

We also counsel our clients to carefully choose which powers make sense in their POA documents. Unfortunately, it is impossible to predict future needs, so we must sensibly balance what powers we should allow for. One of those most abused powers in these documents is the gifting power. Usually, we limit how gifting can be done, and how much of your estate can be gifted at one time.

The WSJ article has some tips for folks that are setting up powers of attorney. A few of them include:

• Set up your POA early, while you’re still healthy and in control.
• Keep the estate plan, including the POA, current (We recommend every 3 years)
• Check with your banks and financial institutions, to ensure the POA will be valid and accepted by the institution (sometimes, institutions have their own POA forms they ask clients to use).
• If you are often in between two or more different states, have POA’s that comply with the respective state laws. In other words, have a POA for Pennsylvania, and if you are in Florida several months per year, have a POA for Florida as well.

A power of attorney in Pennsylvania that is more than 5 years old should be updated immediately. Let us know if we can assist you, by calling our office today at (215) 706-0200.

Tuesday, May 17, 2011

50/50

As an estate planning attorney, I hear about some of the craziest, outrageous estate planning matters gone awry. But those types of cases are outliers, and although they’re interesting, they’re uncommon. It’s the typical case gone wrong that really causes problems for more families.

For instance, in one relatively straightforward estate planning matter, I have a colleague who is currently representing a sister who is being sued by her sibling (brother) over some real estate their parents left them. When their parents died, they left their two children the house as equal owners – 50/50. The parents insisted that the children never had conflicts, and that the family was close. They couldn’t imagine how this simple matter could be anything but straightforward.

However, the client’s brother unfortunately got laid off in the recession, after having a secure job at a pharmaceutical company for many years. As a result, he could no longer afford his share of the expenses of the house. and needs to sell the real estate. The client doesn't want to sell as she feels they would take a big loss, as the housing market still has not turned around in many parts of the country. She would rather wait until the real estate market has recovered. Oh, and by the way, the parents named the two children as Co-Executors, something we always caution clients against doing.

Since they cannot come to an agreement, the brother sued the client to compel the property to be sold. The parents are probably rolling over in their graves, as the two siblings duke it out in court. Guess who wins? Attorneys, who spend plenty of time on cases like these and rack up many billable hours. It may take years for this family to recover from hard feelings and the conflict. Sadly, none of it needed to happen.

If you are leaving any property to your family after you are gone, talk to your estate planning attorney about establishing provisions in your will or trust to ensure that this never happens. Some ideas including setting money aside to handle the expenses (for many people, life insurance is an excellent option in a case like this). As I always say, none of us have a crystal ball, and you simply don’t know what will happen after you’re gone. Your estate plan needs to be crafted in such a way that takes into account multiple scenarios, and most importantly, the worst case scenario so that such a scenario can be avoided.

50/50 doesn’t seem so great after all. If your plan needs a fresh look, or if you know of someone who can use some assistance with estate planning, please call our office today at (215) 706-0200.

Monday, May 09, 2011

Inheritance Protection

Make sure your inheritance isn’t squandered!

Before we can help you write your will, trust, and power of attorney, we must understand your concerns and goals for estate planning. Many people have an overarching goal—that is, they want to be assured that the inheritance they are leaving to someone isn’t squandered.

Protecting an inheritance is a crucial goal, and one that we specialize in helping people deal with every day. But protected from whom and what, exactly? Here are a few answers, and they depend on who the person is:

• If the beneficiary is a minor, obviously we want to ensure the inheritance is used for their benefit and their benefit only.
• If the beneficiary has a spending problem, substance abuse problem, etc., our goal would be to limit how the inheritance can be spent.
• Is the beneficiary in a relationship with a daughter-in-law or son-in-law that you don’t care for or have a concern about? Worried that the inheritance would go to your beneficiary’s spouse upon divorce? We devise solutions to deal with these problems on a regular basis.
• What about beneficiaries in high risk professions, such as lawyers or doctors, where lawsuits are prevalent and where the inheritance could be attached to a lawsuit?
• Special needs beneficiaries, of which 15-20% of people are, must have their inheritance put into a special needs trust if you don’t want the inheritance to be squandered to cover costs that public benefits, such as SSI or Medicaid, would otherwise cover.

These are a few of many reasons why people are coming to us every day to make sure the inheritance they leave to someone else isn’t squandered. Remember, sometimes we know of these types of issues now or ahead of time. But more often, we cannot predict what will happen in the future. Do you want to risk your inheritance being used the wrong way? We can help craft a flexible plan that ensures your inheritance will go where you want it to go.

Let us know if we can help you protect your legacy. Call today for a complementary appointment, (215) 706-0200.

Tuesday, April 26, 2011

Disinheriting a Relative; Will Contests

We hope you are enjoying this wonderful weather! A couple of miscellaneous, but nonetheless important topics on this week’s blog: A quick discussion about disinheriting a relative, and a quick discussion about will contests.

DISINHERITING A RELATIVE

The question we always hear is, “Do I need to write in my will that I am disinheriting someone?” The answer depends on who it is. First, you can never completely disinherit your spouse, even if you write such a clause into your will. Your spouse, if you are still legally married at the time of death, is entitled to an elective share or 1/3 of your estate in Pennsylvania.

Second, you can disinherit a child, but you must be careful in this case. You should always write in your will that you are disinheriting the child. Usually, it is good practice to give the reason why you are disinheriting. Some people feel better giving a nominal inheritance of $1, but it is not necessary to do so if your disinheriting clause is clearly written.

Third, other relatives or people in your life generally don’t need to be mentioned. However, if you have written previous wills in which certain people have received inheritances, and you’re not sure if there are old copies of your will floating around, it may be advisable to insert disinheriting language into your new will.

You should always speak with an attorney when considering who to disinherit, and how to do so.

WILL CONTESTS

There are typically two reasons that someone can use to contest or challenge your will: Competency/capacity and Undue Influence. In Pennsylvania, undue influence is usually the best way to challenge a will.

Undue influence occurs when someone with whom you have a relationship with receives a substantial benefit as a result of your weakened intellect.

A typical case of undue influence is when one child brings mom or dad in to write a will, and that child convinces mom or dad to disinherit her other children. Mom or dad in this case would have some sort of condition, such as Alzheimers or general incompetency that would prevent them from making a rational decision.

In our office, we are careful to practice defensive lawyering, in that specific disinheriting language is used, and steps are taken to help prevent will contests. If we can be of assistance, please contact our office at anytime at (215) 706-0200.

Monday, April 18, 2011

What is a Testamentary Trust?

In Pennsylvania, many clients opt to use a Will rather than a Revocable Living Trust for their estate plan. Living Trusts can be beneficial in certain situations. Your attorney can speak to you about when a living trust may be appropriate. In Pennsylvania, living trusts are not appropriate simply to avoid probate, since the Pennsylvania probate process is not burdensome.

Although a living trust may not be advisable for your family, many people still want to control the inheritance they leave to their children or grandchildren, ensuring it gets to the right person and is used for the right purposes. In other words, give what you want, to whom you want, when you want.

Unfortunately, we livein a litigious society – assets held in certain trusts can be better protected for your heirs. Also, beneficiaries that are spendthrifts, in high risk professions, too young, have spouses that you can’t trust, etc. all are good reasons to think about trusts. 

For clients with these concerns, we can use testamentary trusts, or trusts within a will. The trust is not actually established until death, when your will is executed. The instructions for the trust are written into your will, and once your will is probated, the specified assets and amounts will be used to fund a new trust. At that point, your options are unlimited – perhaps you want to give a yearly percentage of assets to a child, or maybe provide only for their education and health. At our firm, we can help you customize your trust based on your needs and concerns.

You may already have a testamentary trust in your will, but it may not do what you really want it to do. Let us know if we can help you review your current estate plan.

To determine what type of trust is right for you, give us a call now at (215) 706-0200 or email info@jawatlaw.com. We can schedule your complementary consultation right now.

Monday, April 11, 2011

Co-Executors... Good Idea?

Naming Co-Executors appears to be a convenient way to make everyone happy in the immediate future when it comes to estate planning. But choosing more than one person to serve as Executor can have disastrous consequences on your estate.

Those with two or more children are most likely to consider naming Co-Executors. The thinking behind naming all children as Co-Executors is to not offend or show favoritism to any child. However, being named Executor or not is unrelated to the inheritance that someone receives. For instance, choosing Child A as Executor, does not mean you cannot split your estate three ways, between Child A, Child B, and Child C. It simply means that Child A will be the sole person to manage and oversee this process.

By choosing Co-Executors, here are some huge potential problems:

1. Co-Executors cannot agree on fair market value of real property, causing a severe delay in closing the estate.
2. Co-Executors may not communicate well, and with each taking action, there could be overlap, conflict, confusion, etc.
3. Co-Executors may develop a short-term or long-term conflict with one another as a result of working together. If Co-Executors are both family members, this could have a lasting impact on family relations.
4. As a result of conflict or disharmony, Co-Executors may end up in court to end the dispute, and no one wants to end up in court.

Instead, our firm often finds that it works much better to name a primary Executor, and then two successor backup Executors. This ensures that the role will always be filled, and allow decisive action on your estate.

Your Will should be written clearly so that nothing is left open to interpretation. This way, there will be no question regarding your wishes that your Executor is charged with carrying out.

Lastly, naming someone as Executor should not be a secret you keep to yourself. You should inform people that you have chosen to fill roles for your plan. This way, no one will be surprised when the time comes that they need to fill the role.

Do you have a plan that you are comfortable with? For a complementary estate planning consultation, please call our office today at (215) 706-0200.

Monday, April 04, 2011

A Solid Estate Plan is Like Insurance for Your Affairs during Incapacity and Death

I cannot count how many times I have heard people say, “I don’t care what happens when I’m gone… They can do what they want with my stuff, I won’t be here!”

I could likely convince over 90% of the people who say that to me, that they actually do care, but they’re frustrated over how to plan in a practical, sensible way that ensures their estate is left in good hands.

At our firm, we view estate planning as an insurance policy for your affairs. You need to ensure that your affairs are going to be handled smoothly in the event that you become sick, incapacitated or disabled. We don’t know when or if that will happen. Our hope is that it will not. But what if it does? Do you know who will care for you and manage your affairs? Who will make health care decisions for you? Some people will respond that their spouse will do these things. What if both of you are incapacitated at the same time? Then what?

Unfortunately, those that are most vulnerable (elderly, those that are incapacitated, etc.) are often taken advantage of the most. We see it all the time in the estate planning field. Our goal is to prevent this from happening to you.

You also need to ensure that your estate is handled properly upon your death. There are many things that could go wrong if you do not have a carefully written and thought out Will or Living Trust. Like any good or service, you get what you pay for. Sure, you can pick up a Will form in your local office supply store. Unfortunately, those forms are most often a disservice to people. It’s not about how “good” the form is, or the form at all… Can a two page form really make sense of every aspect of your family? Rather, it’s about knowing the right questions to ask, and taking lots of factors into account. Every family is unique and has issues that must be sorted out. It cannot all be put neatly onto a simple two page form.

Have you given your estate plan adequate thought? Need a review of your current plan? Contact our office today for a complementary consultation at (215) 706-0200 or www.JawAtLaw.com. We are located in Willow Grove, PA in the Executive Mews Office Complex.

Monday, March 28, 2011

10 Things That Could Go Wrong Without A Plan

Without an estate plan, many things could go wrong. As always, what could go wrong depends on your situation. Here are ten quick issues that could arise if you do not have an estate plan:

1. If you have kids but have not appointed a guardian, and something happens to you (and your spouse), someone will have to petition a court for guardianship, a burdensome process.
    
2. You have no control over how your assets are divided if you don't have a will.
    
3. If you become sick/incompetent, and an end-of-life health care decision needs to be made for you, your family may end up in court if there is disagreement and discord.
    
4. The state will determine who your Executor will be. What if more than one person wants the role? What if no one wants the role? Either way, this could lead to major conflicts in the family.
    
5. Particularly for a second marriage, if you don't have an updated and carefully drafted durable financial power of attorney, your spouse could cut out your children from the first marriage, particularly when it comes to retirement accounts.
    
6. Your family could inadvertently pay more inheritance taxes.
    
7. For those that are not married, but are either engaged or in a long term relationship and want that significant other to be in control of any decisions for incapacity, etc., you MUST have an estate plan with powers of attorney and wills.
    
8. For any family, there is the possibility of a family conflict over your personal belongings if they aren't assigned to someone in your plan, or while you're still living.
    
9. Without a plan, a trust is not established for minors, dependents, and special needs beneficiaries. Only a custodial account can be created under the UTMA, and the functionality and use of this account is severely limited.
    
10. Lastly, a plan that is not updated might be just as bad, if not worse, if a lot has changed between now and the time you put the plan together.

If you need assistance with your estate plan, please contact our office today at (215) 706-0200.

Monday, March 14, 2011

A Living Will Is Not Enough

A Living Will is a document that clarifies your wishes for the very end of life. Specifically, the Living Will, also known as an Advanced Directive, tells your family, loved ones and medical professionals whether to continue life support even if all realistic options for any meaningful recovery have been exhausted.

An updated Living Will is crucial for everyone to have. Without it, you are inviting conflict, disharmony and a potentially great burden for your family. Also, without a clear Living Will, there is always a chance that a situation could develop into a case like Terry Schiavo, which lasted years because Ms. Schiavo had no Living Will.

But a Living Will is not enough – it takes care of your very end of life decisions. What about the rest of your health care decisions that must be made if you’re not competent to make them yourself?

Today, we always create a Health Care Power of Attorney (in addition to the Durable Financial Power of Attorney). The Health Care Power of Attorney appoints someone to make all medical decisions for you, hire and fire doctors and other medical personnel, etc. In Pennsylvania, most attorneys include the Living Will within the Health Care Power of Attorney document.

If you are admitted to a hospital, the staff will want to know immediately if you have these documents. You can’t carry them with you everywhere, so we highly recommend you store these documents online with our LegalVault service, and carry around an emergency ID card that allows hospitals to access these documents at any time.

By having an updated Health Care Power of Attorney with a Living Will that hospitals can immediately access with your emergency ID card, you are making it much easier for your family and loved ones to make the right decisions for you.

If we can be of assistance in updating or creating these crucial documents, or if you are interested in LegalVault/Emergency ID Card, please give our office a call at (215) 706-0200. 

Monday, March 07, 2011

Don't Forget Your Pets

Many of our clients have furry friends in their homes that offer unconditional love to their owners. For many, our dogs, cats and other animals are a special part of our family. In return, if you pass before your pets, or you get sick and can't care for them, you should really consider putting in place at least provisions in your will and power of attorney, if not a pet trust.

Here are a few specifics tips to consider when planning your estate with pets in mind:

1. Talk with someone or an organization in advance if you want that person or organization to watch after your pet in the event that something happens to you. See what they will need in order to take this job on.
    
2. Consider leaving a sum of money in your will for each pet, depending on your pet's age, medical condition and other needs. Coordinate with your estate planning attorney and financial advisor to ensure there is enough liquidity available for this.
   
3. Make sure your power of attorney appoints your agent or someone else to care for your pets. Make sure that the power of attorney allows for at least reasonable compensation for the care of your pet, and also the ability for your agent to gift money for the care and maintenance of your pet.
   
4. A pet trust may be useful if you wish for an account to be established that will provide for your pet over the rest of his or her life. Any unused funds would pass on to contingent beneficiaries or charities.

Have you thought about your pets in your estate plan? If not, please call our firm at 215-706-0200 to schedule a complementary estate planning consultation.

Monday, February 28, 2011

No Plan? Big Problems.

Don't have an estate plan? No one can force you to engage in estate planning, but without a proper estate plan, you are putting yourself and loved ones at more risk than necessary. Here are some complications that can arise when you don’t have a plan. For our readers that have not engaged in estate planning or haven’t reviewed their plan for over 3 years, now is the time to get your affairs in order.

1. Intestate Laws: Pennsylvania has an intestate law that dictates how your property and assets are divided upon death if you do not have a will or other estate planning tool such as a living trust. Dying without a will can be costly, both in potential higher taxes and family grief/conflict due to a lack of knowledge about your wishes.
    
2. Dependents: If you have minors or care for dependents or pets, you want to ensure you appoint someone in writing to be in charge of your dependents, kids or pets. You also want to make sure you leave assets, preferably in trust, to care for your dependents. If you have kids and no estate plan and they inherit assets, a custodian account will be established. Once a child turns 18, however, they are free to do what they want with those assets. Typically, an 18 year old does not have the maturity to handle their own assets.
    
3. Spendthrifts and Special Needs: If you have a spendthrift child, or a spouse or child with special needs, there are steps you must take to ensure assets don’t end up in the wrong hands (creditors, government, bankruptcy court, etc.).
    
4. Family Battles: Don’t assume your family will just sort out your affairs without any conflicts or commotion. From our law firm’s vantage point, we often hear of cases that go to court that pit family member against family member. We also know that conflicts can largely be avoided by putting together a proper estate plan. It’s just not worth the risk, or your legacy.
    
5. Incapacity or Disability: You must ensure you have a power of attorney for your finances and health care. That way, if something happens to you and you cannot make decisions for yourself, someone you trust can immediately carry on your important affairs. Without a power of attorney, sometimes a guardian will have to be appointed in court, and the guardian must continue to be supervised by the Orphan's Court. This means legal bills can pile up quickly and unnecessarily.

If you, a friend, a neighbor or relative need estate planning assistance, we welcome you to contact our firm at your convenience. You can use our convenient online contact form or call us at anytime at (215) 706-0200. We are pleased to offer a complementary initial consultation.

Monday, February 21, 2011

Is Probate a Concern in Pennsylvania?

Should you worry about whether your estate will need to go through probate or not in Pennsylvania? For the majority of Pennsylvania residents, probate is not a concern for them or a burden on their family. However, there are times when probate should be avoided. A good estate planning attorney will analyze your situation and determine the appropriate planning strategies.

In general, probate is the process of your executor formally registering your will, hence the office that they go to is named the “Register of Wills.”

Pennsylvania is ahead of the curve in having streamlined the probate process years ago. Other states, notably California and Florida, still require court supervision, thus ratcheting up the costs of probate in those states. In Pennsylvania, the probate fees are reasonable. Yes, an attorney should still be retained by the Executor to ensure the process is handled absolutely correctly. But the cost of probate generally speaking is still far less than it would be in several other states.

Therefore, Pennsylvania is not a “living trust” state where the majority of residents have a revocable living trust rather than a will. Instead, many PA residents use will-based estate plans. That doesn’t mean a living trust never makes sense for PA residents. Sometimes, people who believe they need a “simple will” actually need much more strategic and careful planning. The best advice is to arrange for a consultation with a qualified estate planning attorney.

At our firm, we offer a complementary 60-minute consultation for estate planning matters. If you wish to have your plan reviewed, or need a plan crafted for your family, we invite you to call our office at (215) 706-0200.

Monday, February 14, 2011

Planning For College

Do you have children or grandchildren and you're worried about saving enough for their college tuition? Of course, you're not alone... this economy has not made it any easier on us to save for our children's future. Yet, it is essential that we engage in this type of planning. The less debt your child or grandchild has out of college, the better.

Pennsylvania has two 529 programs. One in particular is called the Guarantee savings program. Unlike other states that are cutting these programs, Pennsylvania's is growing. However, you must be careful in investing in a guarantee program, because it may not be as guaranteed as you think.

529's may be the answer for some families that want to plan for college, but they are not a one-size fits all solution. For a recent look at the state of 529's, check out this article from the weekend's Wall Street Journal titled "Prepaid College-Savings Plans Take Another Hit."

We regularly help young couples and also grandparents wishing to save for their child or grandchild's education. If we can be of assistance, please do not hesitate to call us at (215) 706-0200.

Monday, February 07, 2011

IRA Inheritance Trusts

The most substantial asset in someone’s portfolio is often their IRA. An IRA (Individual Retirement Account) is a tax-deferment or savings device. Whatever is left over is then passed on to the beneficiaries you designated on a form attached to the IRA.

Here’s a typical scenario… Mom wants to leave her $300,000 IRA to her child, who is 25 years old. Mom dies and child receives the IRA, since the child is the designated beneficiary. In this scenario, the child now has the option to let the IRA continue to grow tax-deferred (or tax-free if it’s a Roth IRA). By doing this, the child allows the account to grow substantially, because the younger you are, the smaller the required distributions. However, the child could cash the IRA out at this point, and spend all of the funds on foolish things.

Establishing an IRA trust is the best way to allow the IRA investments to grow substantially, control the distribution of your beneficiary so he or she can’t withdraw all of it at once, and also protect the asset from the beneficiary’s creditors, predators, divorcing spouses, etc. Also, if two or more beneficiaries are dividing the one IRA, an IRA trust can be set up so that each beneficiary uses his or her own life expectancy. A 3 year old grand-child will have to withdraw a lot less on an annual basis than a 25 year old child.

A will or even a standard living trust does not protect one’s IRA from any of the above. A stand-alone retirement trust, or IRA Inheritance Trust, is necessary. It must be designed carefully to comply with the IRS rules.

If you are interested in learning more about the IRA Inheritance Trust, please contact my office today at (215) 706-0200.

Tuesday, February 01, 2011

Help a Friend, Relative or Neighbor

Estate planning is something that most of us don't think about on a regular basis... It's easy for days, months and years to go by without ever doing any planning at all. 

Whether you've worked with us before, or are considering working with our firm, we hope that you will encourage your friends, relatives and neighbors to engage in basic estate planning if they haven't already. Remind them that they at least need an updated will, financial power of attorney and health care power of attorney/living will/advanced directive. Our firm always offers a complementary consultation for estate planning cases. 

If we can be of assistance at any time, do not hesitate to call our office at 215-706-0200 or email at info@jawatlaw.com. 

A few things that set us apart from other firms: 

• We take more time to educate you about your options than other firms
• We keep up with you on a regular basis to ensure your plan is up to date
• We offer a plan to keep you organized so that your plan is actually useful
• We have access to a one-stop shop for estate, retirement, tax and long term care planning
• We produce highly customized estate plans
• Our first appointment is complementary

We hope you'll encourage a friend, neighbor, or relative who needs basic estate planning to visit with us soon.

Monday, January 24, 2011

Types of Ownership

Joint ownership? Tenants in common? Right of survivorship? For many people, it is easy to get confused about how property is owned.  This week, we put together a quick guide for different ways to own property.

Our office regularly helps clients record property deeds for real estate and real property. We find it is important to educate our clients on the various ways that one can own property. There are tax advantages or disadvantages for every situation, which we will not be exploring today.

Joint Ownership With The Right Of Survivorship: (JTWROS) A common way to own real estate, two or more individuals own one piece of property together. All joint owners own the whole property (in other words, not easily partitioned). When one joint owner dies, the other owner automatically inherits the decedent’s share (survivorship). The decedent’s Will won't control how his or her share is distributed in this case, thus avoiding probate.

Tenants In Common: Two or more individuals own a share of the property. The property is easily partitioned. For example, you own 50% (the east side) and I own 50% (the west side). Upon death, the tenant in common’s share is passed through his or her Will. The advantage is that this type of property is easier to divide/partition, but doesn't avoid probate.

Tenancy By The Entirety: This is similar to Joint Ownership with Right of Survivorship above, but it reserved for legally married couples. This type of ownership offers additional creditor protection for the married couple. This method of ownership avoids probate.

Payable On Death (POD)/Transfer On Death (TOD) Accounts: These types of designations are typically found on a bank account or other financial account. An individual owns the property while he or she is living and has full control over it. The POD or TOD beneficiary only has access to the account upon the owner’s death. The advantage is that it passes directly to a person, and not through the Will, thus avoiding probate.

Life Estate: Used for real property, allows an individual to have a right to live in a property while he or she is living, but another person retains ownership interest. Can be advantageous for seniors, and for several situations, but you must be careful in setting up a life estate.

It’s important to know how your property and assets are titled, and who owns what. Whether it’s jointly held or not makes a big difference, for inheritance, planning and tax purposes. A good estate planning attorney always asks the client about how property is owned, and if the client doesn’t know, the attorney helps the client find out.

To schedule a consultation to review your estate plan, call us today at (215) 706-0200.

Monday, January 17, 2011

Does a Living Trust Make Sense in 2011?

Does a living trust make sense?

The term ‘living trust’ is tossed around a lot in the estate planning world and means different things to different people.

Clients and prospective clients sometimes believe that a living trust is necessary to ‘avoid probate’ and to ‘avoid estate taxes’.

Some attorneys believe everyone needs a living trust, no matter what the circumstance.

Both of these assertions are incorrect.

Living trusts ARE a will substitute that allows you, a trustee, to place your assets in a trust, and remain in control of those assets while you are living. The living trust allows you to provide detailed instructions upon how the assets will be distributed upon your death. The living trust can last for years and allows you to give what you want, to whom you want, when you want. For instance, once you pass away, you could instruct the person who takes over as trustee for you to pay your daughter a small sum annually and provide for your daughter for her health care or education needs at anytime.

Living trusts do NOT help a family avoid estate taxes or inheritance taxes. Actually, living trusts can help reduce federal estate taxes if you are affected by the tax (which most people aren’t today), but a Will can do the exact same thing. Therefore, if using a living trust only to save taxes, this is simply an incorrect reason to use a trust. Living trusts today provide a great mechanism for planning through generations… tax saving is not a consideration for most clients.

Regarding probate… Any asset placed within a living trust avoids the probate process. But to completely avoid probate, you must re-title all of your assets into the name of the living trust, and must do so anytime you acquire new assets.

Does it make sense to avoid the probate process? If you own property only in Pennsylvania, you might be better off allowing your estate to be probated. Probate in Pennsylvania is relatively straightforward, although there are several considerations and reasons that you may wish to avoid probate even in Pennsylvania. Sometimes, administration of your estate can occur more smoothly if you have a fully funded living trust. Some people like the idea that they will never need to publicize their will, or deny the government even a small fee. Call it the American spirit!

Another consideration in avoiding probate is that for many clients, at least half of their assets have already avoided probate because the asset, perhaps an IRA or an annuity or a life insurance policy have beneficiary designations. That means those assets go directly to those beneficiaries without probate. Same goes for any jointly held asset (joint with the right of survivorship).

Does a living trust make sense for you? Make sure when you are doing your estate plan that a living trust is at least discussed. It may or may not make sense for you depending on the circumstances.

Call for your complementary consultation today at (215) 706-0200 to find out if a living trust makes sense for you.

Monday, January 10, 2011

Living Wills and Difficult End-of-Life Decisions

We recently came across an informative and touching article about end-of-life decisions, in which the author followed the emotional stories of a few different families. The article gives rich insight and into what families wrestle with when a relative falls ill and it may be getting close to the end. The article explores when the 'end' really is, and how, with so much new medical technology in the last 100 years, the lines have been blurred.

All of our clients complete a living will that is part of a broader health care power of attorney tool. This allows each client to designate someone (a relative, friend, etc) as their health care agent, who will be authorized to make all decisions regarding personnel, treatment, facilities, etc. and who will also be the guardian of the client's wishes.

A living will is not a perfect document by any means, and in many cases today, it is difficult to determine when nothing more can be done to keep someone alive. 

We recommend that you have a clear living will with your preferences for end-of-life decisions, and also choose an agent that you completely trust and who will make rational decisions even in a time of great emotion. Sounds easier said than done. However, this is what we counsel clients on day in and day out. If you have not done comprehensive planning, we suggest you schedule a complementary appointment today by calling (215) 706-0200. 

In the meantime, here is the article link: Letting Go: What should medicine do when it can't save your life?
Appeared in The New Yorker, August 2, 2010

Tuesday, January 04, 2011

Legal Vault

The Value of LegalVault Online Storage

Our firm has recently seen a surge in the enrollment and use of LegalVault, the online document storage and information service.

People always ask us, where should I store my documents? What happens if I lose my will, or lose my power of attorney? What happens if my executor or power of attorney cannot find my estate planning documents? One of the biggest concerns is making sure a hospital and doctors have a copy of your living will and health care power of attorney if needed.

LegalVault solves many of those problems. LegalVault offers a secure web site to store your estate planning documents and any other vital information. Only you and your attorney can access all of your documents, and only your health care provider/hospital can access your medical power of attorney and living will.

One of the biggest advantages of using LegalVault is that you’re given a laminated emergency ID card to carry with you. This card provides hospitals and doctors direct access to your medical power of attorney and living will only. This solves a significant problem of you or your loved ones not having the physical documents available when admitted to a hospital, which is when the hospital usually asks to see such documents.

If you are interested in learning more about LegalVault and how to enroll, please call our office today at (215) 706-0200.

Monday, December 27, 2010

When To Plan

When is the right time to start planning your estate? It really depends on your concern, but we help a range of people plan, from those in their 20's through the 90's.

It is especially important to plan if you have young children, or are newly married. You need to ensure a guardian is appointed for your children in case something happens to you and/or your spouse. Also, you want to ensure you have adequate life insurance for your children, and a trust set up in case something happens to you while they are still underage.

If you have grandchildren, you should encourage your children to engage in estate planning if they haven’t already.

Everyone, whether you’re 20 years old or 90 years old, needs a basic estate plan, which includes a will, financial power of attorney, and health care power of attorney (with a living will).

As you build up your 401(k) or IRA, you should see an estate planning attorney to ensure that your beneficiary designation forms are properly completed, and that these accounts are coordinated with your overall estate plan.

When you get into your 60’s, you should consider seeking the advice of an elder law attorney. Medicaid laws make it very difficult to shelter assets in case a spouse goes into a nursing home today. The earlier you plan, the better.

Everyone should update their estate plan every few years, to ensure the documents are still an accurate reflection of your wishes.

As you grow older, your needs will change. You may need more advanced estate planning. Some reasons for needing more advanced planning include:

• Family member with special needs
• Family member with health issues
• Estate value grows
• Property in multiple states
• Family conflicts
• New family members
• Charitable intentions
• Asset protection issues

If we can assist you with any estate planning matters, please do not hesitate to reach out to our office for a complementary consultation by calling (215) 706-0200.

Monday, December 20, 2010

Your IRA & Estate Planning

IRA's are often our clients most substantial assets in their estate. However, when we write a will or basic trust for a client, they understand that their IRA does NOT get distributed through the will or trust. 

Instead, the IRA has a beneficiary designation attached to it, that you complete when you open the account. A lot of folks forget to keep their beneficiary designation forms (BDFs) updated. Our firm assists clients in making sure that the BDFs are updated on a regular basis. 

The bottom line is, your will or basic trust has nothing to do with your IRA. Your children or grandchildren (or whoever you have specified as a beneficiary) will receive the IRA distribution outright, or all at once. It's their choice whether to leave those assets in the IRA and withdraw only the minimum required distributions (depending on how young the beneficiary is, the more or less they have to withdraw). A careless beneficiary could take the IRA and spend it all down at once, losing the huge growth potential of the asset.

However, there are better options that we have available at our firm. We can create a special retirement trust that ensures that the IRA does not get spent down all at once, and also protects the IRA from creditors, bankruptcy, divorce, etc.

If you are interested in learning whether this would make sense for you, please schedule a complementary appointment by calling (215) 706-0200.

Monday, December 13, 2010

Do I Need A Revocable Living Trust?

Revocable Living Trusts are a substitute to a Last Will & Testament, but for many Pennsylvanian’s, living trusts aren’t necessary for an effective estate plan.

Historically, many people have planned with a living trust to (a) avoid probate and (b) save on federal estate taxes.

Pennsylvania is one of a number of states that has simplified their probate process over the years. Probate in Pennsylvania is mostly handled by your executor and attorney outside of court, unless someone challenges your will or the distribution of your assets. Other states, like Florida and California, still have more burdensome probate processes that require court supervision.

Federal estate taxes fluctuate, but the rates that Congress is discussing for 2011 and 2012 mean that far less than 1% of people will ever be affected by such a tax. The White House and Congress are proposing an estate tax exemption of $5 Million. That means you will not be affected by the tax until you have over $5 Million in assets. Regardless of whether you are affected or not, a living trust does no better than a will with a testamentary trust in saving on tax dollars.

Because probate is simpler in Pennsylvania and living trusts are not tax avoidance tools, many people in Pennsylvania have wills as their fundamental estate planning tool. However, a living trust does have benefits for certain cases. You should seek an estate planning attorney to help educate you about what tools you need for your estate plan. Estate planning is a very individualized field of law, and the tools you need depends on your family, your circumstances and your goals.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Tuesday, December 07, 2010

Federal Estate Tax Breaking News

Under the bipartisan compromise between the White House and republicans, the federal estate tax will return in 2011 and 2012. 

The exemption amount will be $5 million per person, or $10 million for a married couple. That means that as an individual, you must have over $5 million of assets to ever be hit by this tax. Once you are over that exemption amount, the amount over the limit is taxed at a 35% rate.

So far, this is only a deal in theory, and has not been passed by either house, nor signed by the President.

Assuming this compromise becomes law...

• The good news: The vast majority of people aren't going to be hit by this tax.
  
  
• The bad news: Congress has punted on creating a coherent, long term tax structure yet again. By only extending the tax cuts for two years, they have promised  more uncertainty in the near future. As a client of our firm, we will keep you updated on any tax changes that could effect your plan.
  

Your estate planning documents should be updated to reflect the new federal estate tax once the legislation is passed into law. If your estate planning documents are more than a few years old, and you had a A-B or credit shelter trust in place, these should be reviewed because they likely will not work as you intended. Please call our office today at (215) 706-0200 for your complementary review.

Monday, December 06, 2010

Ethical Wills

Why do we engage in estate planning? Most people would say their priorities in estate planning are protecting their assets and ensuring those assets get passed on properly.

However, we often miss the equally important goal of estate planning: passing on your values, hopes, fears, lessons learned, etc. to the next generation(s).

An ethical will is not a formal legal document, nor is there one right way to put an ethical will together. Your ethical will could be a single sheet of paper, or an hour-long video. It could be something you do once and tuck away, or it could be an ongoing process for you. There is no right or wrong way to go about writing or producing an ethical will.

The purpose of an ethical will is for you to pass on non-material, intangible things, ideas, wishes, etc. that are important to you. What were the lessons you learned in life that you want to pass onto the next generation? What would you want to tell your grandkids if you never knew them? These are just a couple of the countless reasons to write an ethical will.

For a great article on ethical wills, check out last week's Philadelphia Inquirer piece here.

If we can assist you with any questions regarding writing an ethical will, please call our office at (215) 706-0200.

Monday, November 29, 2010

Storing Your Estate Plan Online

Our firm is pleased to offer a secure online service called LegalVault, which allows our clients to store all of their estate planning documents.

There are two levels of access to LegalVault, one level for health care providers only, and the other level for you and your attorney.

The most important level of access is for your health care records. When you enroll in LegalVault, we’ll give you a custom ID card so that if you become sick, disabled or incapacitated, a hospital can immediately access your health care power of attorney and living will. Hospitals will only have access to these documents, and no others. When someone is ill, the ability to access these documents immediately reduces error, and reduces burdens on family.

The other level of access is for you and for your attorney. You can store copies wills, trusts, financial power of attorney and any other documents that you wish. You can also provide instructions for your Executor directing him or her to where your original documents are located. The benefits of storing the documents online include ensuring authenticity, providing peace of mind, reducing clutter, and staying organized. At the appropriate time, when your executor needs access to your LegalVault account, your attorney will provide him or her that information.

Security is key, and LegalVault is proud to use sophisticated security systems on par with major banks security systems.

For more information about LegalVault or to enroll, simply call our office today at (215) 706-0200.

Monday, November 15, 2010

Leaving Your Stuff To The Kids & Grandkids

Leaving your estate to your kids and/or grandkids is often a prime objective of many clients we meet with.

Every family situation is different, but in many cases, it often does not make sense that a child or grandchild receives a check from your estate, to do whatever they want with.

Why not? Quite simply, once they receive that check, they have full control over it. That means their their spouse, any creditors that come after them also have potential control over it. What if your child is involved in a lawsuit? What if he or she is in a high risk profession? Bankruptcy proceeding? All of these issues present a critical threat to preserving the inheritance you have left your child or grandchild.

When I help people with their estate plan, I will often hear things like, “my children would never get into trouble.” But the fact is, we just don’t know. One of the most valuable aspects of planning is taking into account a range of possibilities, and then planning for all of them.

At our firm, we can create an asset protection trust for you within your Will that allows your child or grandchild the flexibility to take from the trust when they need it, for things like education, and maintaining their general lifestyle. This mechanism ensures the trust is used for valid purposes only, and isn’t raided by creditors, ex-spouses, the IRS, and litigation.

Most important to you is we can make this planning tool affordable for you, and easy to understand. Let us know if we can assist you or someone you know in this type of planning. Call us today for a complementary consultation at (215) 706-0200.

Monday, November 08, 2010

Superior Estate Planning

What separates a mediocre or good estate plan from a great one? At our firm, we like to think that we go the extra mile for each and every client we see, no matter what the circumstance. Here are a few things that separate us from other estate planning firms:

1. We understand that estate plans don’t work well in isolation. They must be connected to your financial plan, retirement plan, tax plan and long term care plan. We have put in place a network of professionals that understand how all of the pieces of this puzzle fit together, and can help you craft a well-rounded plan.
    
2. We take more time than most attorneys do, to both meet with you to design the plan, and to walk you through how it works.
    
3. We offer a 100% satisfaction guarantee. Therefore, you can rest assured that we will do whatever it takes to get your plan right.
    
4. We’re members of WealthCounsel, the premier national organization for estate planning attorneys. Collectively, WealthCounsel attorneys are by far the most experienced estate planning attorneys in the country, and together, we all keep up on the latest trends, laws and planning techniques.
    
5. We never write cookie-cutter plans or offer cookie-cutter solutions. A living trust isn’t for everyone. Some people may need a simple will. Others may need a retirement trust. We walk you through all appropriate options, and educate you so that you can decide what is best for you and your family.
    
6. Nobody likes to see an attorney. We understand that, and aim to make sure that you and your family are completely comfortable in our office. We have lots of beverages, snacks and a warm environment to relax you.
    
7. For estate planning cases, we never bill by the hour. We’ll quote you a reasonable flat fee at the end of our first meeting based on the plan we determine is right for you. You’ll never have to worry about calling us if you have a question, because the meter won’t be on.
    
8. We make sure you keep your plan updated, and that you're organized so when the time comes, your plan is ready to be utilized. Our goal is not just to write your plan, but to make sure it is able to be executed flawlessly.

Can we help you, your family, or friends with estate planning? Please call our firm to set up a complementary, no obligation consultation today at (215) 706-0200.

Monday, November 01, 2010

Protect and Stretch Your IRA's

You cannot engage in estate planning today without considering your Individual Retirement Account(s) (your IRA's) and other retirement accounts. Ironically, we often find that these are the most significant assets in a person's estate, and yet these assets are given the least attention. 

Even worse, most estate planning attorneys don't help you plan in conjunction with your IRA's. Why? Because they haven't been trained how to help you in this area. Instead, most attorneys will tell you that your IRA passes outside of your will or living trust, and that the IRA asset will go directly to the beneficiary or beneficiaries you've chosen... case closed.

Most estate planning attorneys do not understand that it doesn't have to be that way! Without better planning, your heirs can withdraw the entire IRA principal, which doesn't allow for growth of the funds. Further, if the IRA is significant in value and you distribute it outright, it is exposed to your heirs creditors, spouses, and themselves (think: are your children spendthrifts?).

By having your IRA distributed to a trust, you are ensuring much greater creditor protection, protection from divorce, spendthrift children, etc. You're telling your heirs that you love them and want the best for them. 

Furthermore, a trust encourages (if not mandates) that heirs only take the required minimum distributions of the IRA. If set up correctly, these required distributions are measuring on the life of your heir. For example, want to leave your IRA to a 4 year old grandchild? That grandchild's required distributions will be a lot less than a 40 year old, allowing great "stretch" opportunities.

Few attorneys understand the complex rules and requirements to ensure this is all done correctly. Many will say you can't put the IRA into a trust. That is incorrect. We've been trained by nationally recognized experts on this subject, and we can assist you in making sure all of the pieces of your plan fit together. 

One more thing… why is this area complex? Mostly because the IRS wants to encourage people to spend down their IRA's. Therefore, the tax laws discourage people from passing on an IRA in such a way that allows for the asset to be a wealth transfer tool. It's not that you can't do it. It's just that the IRS makes it tricky for attorneys to do. Proper language must be used on the beneficiary designation form and in the trust.

Need a review of your IRA and your estate plan? Let us assist you.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Monday, October 25, 2010

Special Needs Trusts: The Basics

If you wish to provide for a loved one with either a medical or educational disability, a Special Needs Trust is usually the best option to achieve this goal.

It is a detriment to any person that receives public benefits (SSI, Medicaid, etc.) if they are provided money outright. Therefore, a Special Needs Trust is important in these circumstances, and they successfully avoid this dilemma.

By setting up a Special Needs Trust carefully, we select a Trustee who cares for your loved one, and provides for any supplemental needs with the trust fund. The Trustee makes sure that your loved one never actually touches the funds. This ensures that eligibility for public benefits will never be in jeopardy.

If you establish a Special Needs Trust for the benefit of another person, this is called a “Third Party Special Needs Trust.” With these types of trusts, the Pennsylvania government is not entitled to recover any assets (“estate recovery”) when the person dies. In other words, they cannot dip into whatever is leftover in the Special Needs Trust to cover the cost for any public benefits that were consumed.

A Special Needs Trust is a specialized tool and provides many benefits. If you have a loved one on public benefits that you wish to provide for, we can assist you.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Monday, October 18, 2010

Top 10 Signs It's Time To Review Your Plan

Your estate plan should be reviewed on a regular basis. Here are ten signs that it is time to review it. If you are not sure whether your plan needs to be altered, get in touch with our office at anytime.

1. Your plan was crafted over five years ago.
    
2. You moved to a different state.
    
3. You got re-married, or got divorced.
    
4. You’ve been blessed with grandchildren.
    
5. You no longer talk to one of your kids, or you have reconnected with your child.
    
6. You are now widowed.
    
7. You have acquired significant assets, or lost substantial assets.
    
8. You don’t feel that your plan really meets the test for a good estate plan: “Give what you want, to whom you want, when you want and how you want.”
    
9. You have over $1 million in assets, or you and your spouse together have over $2 million in assets, which means there may be pending estate tax implications for you.
    
10. You’re worried about your kids, either because they spend too much, they are in a high risk profession, they may get divorced, etc.

In general, any time that an event occurs that changes your life or your family should prompt you to review your plan. We are pleased to provide a complementary consultation to you if you wish for our office to review your plan.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Monday, October 11, 2010

Living Wills and End-Of-Life Instructions

A Living Will is not the same thing as a Last Will & Testament, which provides instructions for dividing your estate upon death. Instead, a Living Will describes your end-of-life health care preferences, and what is to happen if you become permanently unconscious and there is no hope of any recovery.

Your preferences for whether life support be withdrawn or not is only used after your health care agent and doctor(s) decide, together, that you have reached the point where there is no hope of any recovery.

Often, this is a difficult decision for many of our clients. Religious beliefs, personal feelings about death, and other considerations can affect a person’s end-of-life wishes.

It is crucial that you have a Living Will, regardless of the choices you make regarding your preferences.

Here are a few reasons why having this document is important:

• Gives your health care agent/family certainty over your preferences
• If your preference is to end your life when there is no hope for recovery, a hospital and doctor need to know
• Avoids unnecessary conflict/uncertainty/bad feelings within your family
• Gives you peace of mind knowing that you have control over this situation if you were ever to be in it.

Your Living Will should generally be reviewed every 3-5 years, and re-drafted and executed every 5-10 years. Why do you need to re-write it every 5-10 years? If you don’t, a hospital or doctor can question the validity of the document and your preferences, since they are considered outdated.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Wednesday, October 06, 2010

The Will of Teddy Pendergrass

The famed Teddy Pendergrass, who died in early 2010, is back in the news. It seems that his second wife and son are both locked into a will challenge. 

Will challenges are never fun, and as you'll see from the article, become nasty and time consuming battles.

How do you avoid what happens to Mr. Pendergrass' estate? 

• Never keep your old wills, or copies of old wills. Whenever you re-write your will, destroy the old ones immediately.
   
• Never write anything on your will, nor add or remove pages to it.
   
• Keep your will in a safe place, usually a fire proof records safe at home. 
   
• However, depending on your age and circumstances, you can leave the will with your executor (in this case, if Teddy really wanted his son not to be cut out, perhaps he should have followed my instructions, particularly this one).

Here is the article link. Enjoy: Philly.com Article

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Tuesday, October 05, 2010

Where Should I Store My Will?

Should you keep your Will in a safety deposit box at the bank? Probably not. But conventional wisdom, at least in the past, has been to favor storing Wills and Powers of Attorney in safety deposit boxes. 

It doesn't make much sense to keep your estate planning documents there for a couple of reasons:

• Banks are not open 24/7. You don't want to delay the ability for your Executor to be able to get possession of your Will or Power of Attorney.
   
• Depending on who your Executor is, he or she may face hurdles in opening the safety deposit box, particularly if they are not a joint owner of the box.
   
• How often do you check your safety deposit box? We always recommend that people review their documents every couple of years. Having them stored in a bank does not make this easy, nor does it encourage review of the documents.

We typically recommend that clients store their original documents in a fire-proof records safe at home. Walmart, Target, Staples, etc. all sell these boxes for approximately $40. This protects the documents against any wind, rain and fire damage, but allows you to access them at your convenience.

If there is concern that a family member may try to tamper with your Will, then there are alternatives to storing your documents, including our online Legal Vault service. 

Additionally, if there is great concern that a family member would tamper with your Will, or that a potential Will challenge is possible, there are other estate planning tools that can help to prevent this. 

If you have any questions about storing your Wills or Will challenges, please do not hesitate to reach out to our office.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Monday, September 20, 2010

Living Trust?

Do you really need a living trust? Living trusts, also known as Revocable Living Trusts (RLT's) have been an on and off fad in Pennsylvania for at least the last fifteen years.

There appears to be a resurgence in the discussion about living trusts. Think Suze Orman, or the mailers you probably get emphasizing the absolute necessity of a living trust.

A living trust is not a silver bullet, and they are not for everyone, particularly in Pennsylvania. Certain states, like California or Florida, have a probate process that is much more burdensome than the one in Pennsylvania. Pennsylvania's probate process is much simpler, and is not court supervised.

In other words, if you are only interested in having a living trust to avoid probate, and you live in Pennsylvania, you may be spending a lot of money on something you really do not need.

Another misconception is that a living trust will allow a person to avoid taxes. This is categorically untrue. Any tax saving or tax reduction strategies can be carried out and executed with a will just as easily as with a living trust.

Because probate is simpler in Pennsylvania and living trusts are not tax avoidance tools, many people in Pennsylvania have wills as their fundamental estate planning tool.

A living trust does have benefits for certain cases. You should seek an estate planning attorney to help educate you about what tools you need for your estate plan. Estate planning is a very individualized field of law, and the tools you need depends on your family, your circumstances and your goals.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Sunday, September 12, 2010

Beware of Will Making Software

The New York Times has an informative article this weekend on various software programs that can be used for you to write your own will. The general consensus seems to be that, yes, a will making program will probably produce a valid will. However, whether the will actually does what you intend it to do is another story.

Without a trained lawyer helping you, you are putting your estate plans at risk.

Here are some other reasons that writing your own will may not be a good idea:

• May need additional estate planning tools, including certain types of trusts for various issues
• Everyone needs powers of attorney in addition to wills
• You don't know what you don't know - every word, sentence, phrase and clause in your will has significant meaning.
• The law is always changing - your software program may not be up to date

Do you have a do-it-yourself will? We can review it for you during a complementary consultation.

Let our firm assist you: Our firm offers a complementary estate plan review and consultation. Please call us today at (215) 706-0200 or email us.

Pass the word on: If you know someone who can benefit by reading this blog, please forward it on to them, or subscribe your friend or family member through this link.

Tuesday, September 07, 2010

Estate Planning To-Do List

Make sure you have your estate plan up to date. Here is a quick to-do list. There is no better time than now to get serious about creating or updating your plan.

1. Make sure you have an updated Last Will & Testament: This describes your wishes for your estate upon your death. You may need a more advanced Will or even a trust, depending on your needs.
    
2. Make sure you have updated powers of attorney: You need powers of attorney for both for your general/financial affairs and for your health care. These ensure that if you become disabled, someone will have the power to step into your shoes.
    
3. Check your beneficiary designation forms for life insurance policies, IRA's, 401(k)'s, etc: Many people forget to update these forms for various accounts. Any account with this type of form does not pass through your Will or trust!
    
4. Make sure you know where your original Will and powers of attorney are: They should be in a fire-proof records safe in your home, not a safe deposit box at a bank.
    
5. Communicate: Ensure that your agents (executor, trustee, powers of attorney, etc.) know their respective roles, and know where your original estate planning documents are.
    
6. Keep Up To Date: Continue to review this blog for updates on the federal estate tax. It could potentially come back in 2011 and effect many more people than it used to. If that occurs, you will need to have your estate plan reviewed.

If you need your estate plan created or reviewed, contact our office today at (215) 706-0200 for your complementary consultation.

Tuesday, August 31, 2010

Estate Planning for Young Families

It is never too soon to write a will, and have powers of attorney drafted, particularly if you are married and have children. Young families in Pennsylvania need to have a fundamental estate plan in place. Once the fundamentals are in place, as your family grows, you can build on your estate plan as needed.

The fundamentals of a young family's estate plan includes:

• A Last Will & Testament: If you and your spouse go at the same time, you need to ensure that your assets are protected for your children. You also need to make sure a guardian is appointed, so that no guardianship proceedings are necessary.
• Financial Powers of Attorney: This ensures that if you become disabled or incapacitated, someone else can make decisions for you. If both you and your spouse both are disabled at the same time, this document also ensures that you have put a temporary guardian in place for your children.
• Medical Powers of Attorney: Your health care decisions and end of life preferences are extremely important, and you must appoint someone to have authority over such decisions if something were to happen to you.
• Adequate Life Insurance: For young children, parents need to ensure that there is at least a term life insurance policy to provide the resouces to care for a child, pay for college, etc. if the spouse who generates the income dies.
• 529 Plan/College Savings Plan: A college savings plan should be in place for your child or children.

These are the basics of any estate plan for a young family. As your family matures, or if there are unique circumstances in your family, different estate planning tools may be needed. Our firm is equipped to assist young families with all of their estate planning needs in the Philadelphia area. For a complementary consultation, please call us today at (215) 706-0200 or email info@jawatlaw.com.

Sunday, August 29, 2010

Who should be my Executor?

The question is simple, and we hear it every day in our firm. Who should manage my affairs when I die? 

• 150% Trustworthy
• Peacemaker
• Competent
• Ability to accept role and carry out all parts of role
• Location (closer, the better)
• Relationship with other family members
• How ethical the person is

Wednesday, August 25, 2010

Testamentary Trusts

Since probate avoidance is typically not a concern if you are a Pennsylvania resident and only have Pennsylvania property, a living trust is usually not recommended. Revocable living trusts are more expensive than a will, and are usually more complicated.

Revocable living trusts are useful in some situations, but they are not recommended simply to avoid probate, which is not burdensome in Pennsylvania.

Trusts can provide a controlled inheritance – give what you want, to whom you want, when you want – and protect your beneficiaries from themselves and others (think creditors, divorce, bankruptcy, high risk professions, spendthrift kids, etc.).

If our clients are interested in controlled inheritances, we can often write a trust in the will. This is called a testamentary trust. The trust is not actually established until you die. The instructions for the trust are written into your will, and once your will is probated, the assets that you direct go into the trust. At that point, your options are unlimited – perhaps you want to give a yearly percentage of assets to a child, or maybe provide only for their education and health.

Testamentary trusts are more economical than a living trust, and they often make sense for many clients.

To determine what type of trust is right for you, give us a call now at (215) 706-0200 or email info@jawatlaw.com. We can schedule your complementary consultation right now.

Tuesday, August 24, 2010

Can I Write My Will By Myself?

On first blush, writing a will seems easy enough... leave my stuff to my loved ones, and simply write that on paper.

Based on that misconception, we often get calls asking if we would advise someone to write their will themselves. We cannot advise someone whether to do this or not, but we definitely don't recommend it.

Services like LegalZoom are more prevalent than ever today, and services like these make estate planning seem easy, to the point where you can fill in a few blanks and have a perfect plan. I've seen Suze Orman's living trust sample forms used by some potential clients. They lived in Pennsylvania, but their trust was written for California law.

The problems with writing a will by yourself are numerous. Here are some reasons why writing your own will can be a problem:

• An estate plan usually includes more than a will -- think powers of attorney, living wills, etc. which are often times more important than a will.
• A will may be inappropriate in a few cases, and a living trust may make more sense.
• No independent third party (the lawyer) to review and ensure your wishes on paper reflect both your actual wishes and reality of your family circumstances.
• Over 50% of the time, clients we see that need a "simple estate plan" actually need quite a bit of customization, and a few will need more advanced planning based on their goals.
• If you create a trust within a will (a testamentary trust), your will becomes more complicated. Fill-in-the-blank services cannot do an effective job building trusts for you.
• Our firm builds relationships with each and every client. We make sure your estate plan stays updated at least every few years, which is crucial.
• Today, many of your biggest assets probably won't be distributed through your will. IRA's, 401(k)'s, life insurance, etc. is all distributed through a beneficiary designation form. An attorney can help you plan your inheritance taking into account the entire estate.
• A lawyer knows the law, and the minefield that exists with will challenges, capacity in writing a will, conflicts, etc... all the legal stuff that you probably don't want to worry about. A lawyer can ensure that when you write a will, it will be upheld if need be in any court.

These are just a few reasons why writing a will by yourself is not a good idea.

One more thing... if your estate plan is indeed a simple one, our firm's rates aren't much more expensive than LegalZoom, and the value you receive by seeing an attorney is so much greater.

To speak with our firm today, please give us a call at (215) 706-0200. We can conduct a complementary review your do-it-yourself will and estate plan. 

Monday, August 23, 2010

Comprehensive Estate and Retirement Planning

An estate plan completed by a law firm, by itself, is simply the legal documents that are drawn up to make sure your wishes are valid when you become incapacitated and when you die. 

However, an effective estate plan should be part of your overall retirement plan and wealth management plan. 

When our clients want to make sure their estate plan is seamless with their retirement plan, income plan and tax plan, we work with Franklin Retirement Solutions, a firm that specializes in retirement planning. Together, we can make sure all of the pieces of your plan fit together.

Here's just one of many examples of how a "piece meal" plan can go wrong: Client X has a financial advisor, who doesn't know the estate planning attorney. Client X has a special needs child. Client X asks attorney to protect assets for the special needs child, and attorney drafts both a will and sets up a special needs trust. Client X dies, and estate realizes that assets were not allocated properly (as a special needs child, putting assets directly into this child's name is a really bad idea). Client X's financial advisor was not aware of rules for special needs persons that are on public benefits. As a result, Client X's son almost lost his public benefits. 

By combining your financial planning and estate planning, your plan becomes a lot more effective. Most of our clients love having access to a financial planner, tax planner, Medicare supplement/Long-term care insurance specialist, and more.

To summarize, here are a few advantages of planning with this approach:

• All parts of your plan work together
• Ensures your plan will be reviewed and, if needed, updated more often
• Provides a more seamless transition to your heirs, since your affairs are in order.

We find that this type of planning is extremely beneficial to middle class clients. To learn more about our comprehensive approach to estate and retirement planning, please give our office a call today at (215) 706-0200.

Wednesday, August 18, 2010

Technology and Estate Planning

In 2010, we have more machines than ever. Many of us are addicted to our Blackberry's, laptops, netbooks, iPads and more. We conduct more transactions "online" than ever before.


As you grow older and the chance you become disabled or die increase, I worry more about your agent, executor and/or trustee having access to crucial online account data.

Let me take a step back... For the most part, a properly named executor will be able to access most online accounts that he or she is aware of.

The problem is that there are online accounts that the executor may have no idea about!

As an estate planning attorney, I can help you make the burden on your executor easier. First, I always provide my clients with a "vital document/account locator" which allows them to list this type of information in an orderly way. Second, we offer a service called LegalVault that allows our clients a secure way to store their estate planning documents online, as well as confidential online account information. All of this information can only be accessed once the principal is deceased or incapacitated.

This is one of several value-added services we offer all of our estate planning clients. For a complementary estate planning appointment, please call (215) 706-0200.

Wednesday, August 11, 2010

Paying PA Inheritance Tax is Not Optional

No one likes taxes, especially “death taxes” – many people fundamentally disagree with a system that taxes a dead person’s belongings that pass on to their loved ones. However, if you are a resident of Pennsylvania, and due to your death you pass property onto others, your estate and/or your heirs are responsible for paying Pennsylvania Inheritance Tax.

The vast majority of property passed on is subject to PA Inheritance Tax. Most property owned by the decedent is taxable at rates that have been pretty steady. The Pennsylvania inheritance tax rates in 2010 are:

• 0% for spouses,
• 4.5% to kids, grandkids and parents,
• 12% to siblings and
• 15% to all others. 

There is no common law marriage in PA or domestic partnership laws. Therefore, property passing from one person to another in a type of relationship listed right above is subject to the 15% rate.

Inheritance taxes are due 9 months after the person dies. Paying within 3 months rewards the taxpayer with a 5% discount off the total tax bill.

Quite a few estates, on paper, are plush with assets. However, many estates have a high majority of assets that aren’t liquid – think about retirement accounts, real property, etc. That makes paying inheritance taxes difficult at times. I recommend that you plan in advance with a qualified estate planning attorney. Our firm can assist you in making sure your estate is setup properly to ensure your loved ones can pay the inheritance tax without dipping into their own assets.

Inheritance taxes must be paid. You cannot simply avoid paying the tax bill if you are an executor, personal representative, or someone receiving an inheritance. The state may very well eventually catch up with you if you fail to pay the taxes. If you are caught, you will be faced with severe penalties and interest.

No one likes to pay taxes, but paying Pennsylvania inheritance taxes are not optional. We recommend that an executor or personal representative of an estate hire a qualified estate planning/estate administration attorney to assist in all matters relating to the estate, including the filing of the PA inheritance tax. An executor does not need to hire an attorney, but it is highly recommended, even for estates that seem fairly basic.

If you have any questions about estate administration or inheritance tax issues, please contact our firm today at (215) 706-0200. We offer complementary initial consultations.

Thursday, August 05, 2010

What's up with the Federal Estate Tax?

2010 has been quite a year already... The U.S. Congress has failed miserably at giving us direction on what the tax landscape will look like come 2011. Folks, we're only five months away from 2011, believe it or not. And in 2011, the federal estate tax comes back with a roar. If Congress does nothing, many more people will potentially be effected by the tax. For married couples, you will be able to pass on about $2 Million to your heirs, estate tax free. If your estate is worth more than $2 Million, every dollar past the $2 Million mark will be taxed at a 55% rate. $2.5 million estate? Count on your heirs paying Uncle Sam $275,000.

Congress has not stepped up to the plate at this point, and there have been no meaningful committee votes or full member votes on any estate tax fix. A couple of senators and house members have spoken up, but that's not enough when you have 535 such members. Therefore, I am not optimstic right now that there will be a fix come 2011. If you think your estate is worth around $1 million or more if you're single, or $2 million or more if you're married, you need to start thinking about planning now. There are things we can do to minimize the estate tax if you were effected by it.

Here are a couple of great articles I've found this morning on the federal estate tax.

• What's next for the federal estate tax? Pittsburgh Post-Gazette. This article is great for Pennsylvanian's to read.

• Ways to shelter your money should the estate tax return. NJ Star Ledger. Provides a couple of ideas for reducing the estate tax if you're effected.

The best time to plan is now. Please do not hesitate to reach out to my firm to get started on planning. Call us at (215) 706-0200.

Monday, August 02, 2010

Estate planning in the uncertain economy

Proper estate planning during the challenging economic times we face is essential. Sure, proper estate planning does come at a cost. However, the cost of not planning is potentially much greater for your family.

Estate planning is for everyone, regarding of income and asset levels. The belief by some that estate planning is only for millionaires is simply not reality.

What are the benefits of estate planning during uncertain times?

• Make sure that if you become disabled or incapacitated (over 50% of us do at some point in our lives), we have a plan ready so that no guardianship proceedings are needed
• Understand exactly what your estate is worth -- many families find this extremely valuable
• We can assist you in coordinating your last wishes with a retirement plan that will ensure you do not run out of money as long as you live
• Although the times are uncertain, you will feel better knowing that you have a plan that is certain to work for your family when it needs to be executed.

We do not believe estate planning has to be expensive, but we do believe each plan must be effective. Contact us today at (215) 706-0200 to set up your complementary consultation today.

Friday, July 30, 2010

Ten Common Estate Planning Mistakes

As heard on our radio show on July 31, 2010.

1. Discounting the importance of your plan. Many people think they only need a “simple will”, Period. Every family requires an attorney who will carefully analyze their situation.
    
2. Not hiring a “specialist” – letting a general practice attorney handle your estate plan.
    
3. Thinking that you can break the rules and get away with it – for example, not probating a will or not paying inheritance taxes.
    
4. Not planning at all.
    
5. Avoiding dealing with conflict within family that could effect the plan later on.
    
6. Joint ownership to avoid probate.
    
7. Using a revocable living trust to avoid taxes. Living trusts do NOT help you avoid taxes.
    
8. Waiting until you are in poor health to complete your estate plan.
    
9. Not reviewing your estate plan at least every few years.
    
10. Assuming “things will work out” or your kids will “do the right thing.”

If you need estate planning assistance, please do not hesitate to give our firm a call at (215) 706-0200 or email us.

Tuesday, July 27, 2010

Should I Transfer My Home To My Kids Now?

Have you heard advice that you should sell your house to your kids now for $1? We advise you to schedule an appointment with us before you re-title property in your children's names.

Here are the reasons why you should reconsider this option and consider alternatives:

* Inheritance Taxes: Many people are under the impression that Pennsylvania Inheritance Taxes are more than they really are. Upon your death, property that is transferred to your lineal heirs (children) is taxed at a minimal 4.5% rate, that has remained steady for years and is not expected to change. 

* Step Up In Basis: By gifting your property to your children for $1, you could potentially be giving them more of a tax burden if they end up selling the property later. Be careful.

* Your Children Will Own The Property: Let me repeat that. Once you gift your home to your children, your children will own the property. Even if you are a joint owner with your children, they will still own a share. The question becomes.... What if your child gets in trouble... What if your child gets divorced... What if your child goes through bankruptcy... If you don't think it could happen to your family, you are playing the odds.

There are other reasons why you should re-consider jointly titling property.

If you are seeking to avoid probate, you may want to set up a revocable living trust, which is a way to avoid probate. Keep in mind that probate is relatively simple in Pennsylvania and not as costly for the most part. If you are not concerned about probate (and you probably shouldn't be), then using a will to convey your house is a good option.

If you have multiple homes (i.e., home in Pennsylvania, vacation home in New Jersey or Florida), you should strongly consider setting up a living trust. This will avoid ancillary probate (probate in other states), which could be a real hassle.

Remember: Your estate plan is important, and there is no "simple" estate plan. Make sure you consult with our firm before you deed your property to your kids. Let us help you explore your options. To schedule your complementary consultation, call our office at (215) 706-0200 or email us at info@jawatlaw.com 

Monday, July 26, 2010

Having a Will is Essential

If you don't have a Last Will & Testament (or a Living Trust), you are leaving your estate in the hands of the government to determine who will manage it, and who will receive it. Sometimes, this works out okay. But more often, this opens up unresolved family conflicts, battles and arguments.

Why is that the case? Here's an example. You die and leave a $500,000 estate (house, IRA, bank accounts, etc.) without a will (dying without a will is called "intestate"). You have three children. One child has been helping you with your medical care more than others and he thinks he is entitled to more of your estate. He helps himself to more than his fair share of your estate after you die. Your two other children are furious, and they challenge this--in court. If it sounds messy, it is messy.

Creating a will and mapping out your estate plan is the perfect antidote to dilemmas like the one above. By making your wishes clear, and putting one person in charge of your affairs, you have hampered most possible will challenges. Further, by discussing your plan openly with your family (letting them know who the executor will be, why you chose to divide your estate the way you did, etc) will greatly help quash any possible future conflict.

Please call our office today to schedule a complementary estate planning consultation at (215) 706-0200. Don't forget to listen to us on the radio every Saturday at 8:30 AM on AM 1340 WHAT (and listen online at www.am1340what.com).

Friday, June 25, 2010

Federal Estate Tax News

The U.S. Senate continues to kick around ideas for how to deal with the Federal Estate Tax in 2011 and beyond. Right now, there is no estate tax if you die this year, 2010.


The estate tax is scheduled to come back in 2011 at a 55% tax rate for any estate over about $1 million.

Looks like most middle class Americans will not have to worry much about the estate tax under two different proposals in the Senate right now. The first proposal fell apart a month or two ago, and the new proposal likely won't gain much traction.

Therefore, there is still much uncertainty about estate planning. We see many wills, trusts, etc of married couples that have outdated language regarding A-B trusts, credit shelter trusts, and marital deduction planning. Make sure these documents are reviewed now, and in 2011.


 

Here is the link to the latest article:

http://online.wsj.com/article/SB10001424052748704227304575327131250814258.html?mod=googlenews_wsj

Wednesday, June 23, 2010

Do I Need a Living Trust?

What are living trusts?

A living trust is a valid will substitute in the Commonwealth of Pennsylvania. During your lifetime, you have the ability to place your assets in a trust, designate a trustee (usually yourself while you’re living), a successor trustee (someone to take the job after you pass away), and beneficiaries. A living trust can be superior to a will, depending on the needs, goals and size/complexity of the estate of a particular client. However, living trusts are not for everyone, particularly in Pennsylvania.

Why do people create living trusts?

1. Avoid Probate: Many people create living trusts to avoid probate, the process of proving your will. However, Pennsylvania’s probate process is much simpler compared to other states. Pennsylvania probate is not a court-supervised process, and only takes a relatively short amount of time to become appointed executor. Yes, there are probate fees for the County (probably in the range of $300-$1,000, depending on the size of the estate) but they are relatively modest. Therefore, avoiding probate (assuming you only own property in Pennsylvania) is not a good reason, by itself, to create a living trust.
    
2. Asset Protection: You can’t protect yourself from creditors, spouses, etc. by creating a living trust. But you can potentially protect your children, heirs and other beneficiaries from themselves and from others. A living trust can never guarantee asset protection, but can help fend off predators and creditors, depending on the situation. In addition, the living trust must be set up in a particular way, with limitations on your beneficiaries, in order to effectively protect the assets.
    
3. Seamless Transition: A living trust, if funded during your lifetime, can provide a smoother transition from one generation to the next. With a living trust, you have the potential to carefully lay out a distribution scheme in which the assets can flow to beneficiaries quicker.
    
4. Privacy/Avoid Potential Estate Challenges: A living trust set up properly and funded with all of your probate assets can avoid probate completely, and therefore, is subject to privacy from the public. A potential beneficiary or anyone for that matter can challenge the validity of a trust, but it is much more difficult to do so since they don’t have easy access to the document.
    
5. Control From The Grave: A living trust allows a grantor to control an inheritance long after they pass away. For instance, you can spread out an inheritance over 20 years, or only for certain needs, such as education or health. However, we can do the same thing in a will with a testamentary trust.
    
6. Reduce/Avoid Taxes: Actually, this is a myth. A living trust does not do a better job than a will or any other testamentary device in avoiding death taxes, estate taxes or inheritance taxes. You can take advantage of the marital deduction and unified credit through a will with a testamentary trust and it will have the same effect. Don’t get sold on creating a living trust solely for tax benefits.

Do you recommend a living trust?

Living trusts are expensive to create, and we do not recommend creating one unless you have legitimate concerns about:

• Privacy
• Estate challenges
• Asset protection
• Assets in more than one state

Those concerns, coupled with the desire to avoid probate are good reasons to create a living trust.

If you want to know more about what tools make sense for your estate, whether it is large or small, contact our office today at (215)706-0200 or info@jawatlaw.com. We offer complementary initial consultations to determine if we’re a good fit.

Friday, June 11, 2010

Kids Inheritance: Freedom vs. Control

When we are concerned about the well-being of our children, estate planning quickly becomes complex.

Why?

Because if we have concerns about our children but love them unconditionally, we want to make sure they spend their inheritance wisely. Yet, we often hesitate about limiting their ability to control their inheritance.

Clearly, we must find a compromise – we can’t discount our concerns and fears, and we also can’t discount the fact that we feel we should completely trust our children.

When we create a trust for our children, we’re setting rules. Rules are found everywhere, from home, to the work place, and our society at large. Why shouldn't we have rules for a trust? When we give our children money to spend, sometimes we give it to them unconditionally as a gift. But more often, we give them money for specific things—a new down payment on a home, a new car, education, money towards a marriage, etc. If we gave our children money towards a masters degree, and they ended up going to the casino and spending it all, would we be very happy?

Having an independent co-trustee coupled with rules on trust distributions protects your children from themselves and others. It says to your children, I love you very much, and I want the best for you for the rest of your life and even perhaps your own children’s lives. Of course, others will look at the same plan and shrug their heads, saying they can’t fathom telling their kids how to spend their money.

You have to decide which camp you fit into – the freedom camp or the control camp. There is a compromise. But you cannot have absolutely freedom and absolute control.

Tuesday, June 01, 2010

The Worst Case Scenario

Sometimes, the catalyst for estate planning is when you see someone in a situation where there was a poor plan or no plan at all and as a result, something bad occurs. Another catalyst is that you've had a scare of your own. For clients that fall into one of these two categories, it is easy to show them the logic of planning for the worst case scenario.

However, for the remaining clients who do not have any urgent reason to do estate planning, it is often times more difficult to show them the value of planning for the worst case scenario. By worst case scenario, we mean scenarios such as giving children an inheritance, only to watch them go bankrupt and have the inheritance go down the tubes... Or two siblings get along now, and have gotten along all their lives, but after mom or dad (or both) pass, something happens that triggers a major conflict between the two.

Reality check: These scenarios and others are not pleasant to think about. But like it or not, they happen more often than we'd like them to happen.

In fact, this is usually one of the biggest challenges in estate planning -- presenting a range of worst case scenarios to people based on their family situation. Unfortunately, many estate planning attorneys will tell you only what you want to hear, and will not present such scenarios for you to consider.

As uncomfortable as it may be to face certain facts and possible outcomes, by doing just that, you will sleep better at night knowing that you have a comprehensive plan. Consider the definition of estate planning:

• Have complete control of your property while you are alive;
• Take care of you and your loved ones during disability or incapacity;
• After you pass, give what you own to whom you want, the way you want, and when you want.
• Furthermore, save every last tax dollar, professional fee and court cost to the maximum extent possible.

Considering that complete definition, it's easy to see how an estate plan that is comprehensive can provide all of the above.

It's also easy to observe that a plan completed in 15 minutes probably won't account for every part of the definition.

You should not walk away from careful and comprehensive planning -- work through the challenges, and let the attorney help you find the solutions.

On the flip side, don't overthink it. Overthinking leads to exhaustion and complacency, and you will end up with no plan at all.

Wednesday, May 26, 2010

Talking To Your Agents About Their Role

One of the more challenging aspects of estate planning can sometimes be choosing our agents—who will manage our affairs when we become sick (power of attorney), and who will manage them when we die (executor of a will or trustee of a trust). Not only do we need to choose agents, but we always need to choose at least two backup agents just in case the initial agent can’t or won’t take on the role.

For some of our clients, it is easy to choose agents – maybe a husband or wife, an only child, and another close relative. For others, they just aren’t sure who to choose!

While contemplating who to select as your agent, you should really consider talking to them about the roles they will fill and also make sure they are willing to accept the role.

For your initial agent, let them know that they will be the first person to be in charge if something were to happen to you. Let them know where you have kept your original estate planning documents, and let them know if you have any copies of the documents and where they are as well. Also, let them know where they can find a list of your assets, including bank accounts, securities, investments, IRA’s, etc. They will need this information!

You should tell your agents that by agreeing to the role, they will be accepting a major responsibility, one that must be taken seriously. You must let them know that they must act in your best interests, and that you’ve put safeguards into place to make sure that occurs.

You should explain your health care preferences and end of life preferences to your agent. Even though you’ve written down your preferences on your living will and health care power of attorney, it’s still important to verbally communicate your wishes so that your agent is clear about your instructions. You should let your agent know that if you were at an end-of-life situation and you asked for “the plug to be pulled”, your agent would still have to confirm those instructions with the doctor in charge, which could be a painful decision for the agent to make.

In summary, your agent should know as much as possible now about your plan. There should be no surprises as to who the agents are, what you expect from them, and what your medical preferences are. Your agents should always be people you trust without a doubt.

Remember, make sure you review your plan every few years to make sure that the agents you selected then are the agents you would like to have listed now.

Our firm has the expertise necessary to help you choose agents, and make sure you have a well-crafted legacy plan. Please contact us today at info@jawatlaw.com or by calling (215) 706-0200 for your complementary consultation.

Thursday, May 20, 2010

Estate Planning in Uncertain Times

When I assist people in estate planning, we look at many scenarios.  We plan for the “god forbids” and hope they never happen, but if they do, that they happen far down the road. Who wants to plan 20, 30 or 40 years out when their true concern is how bad or good their portfolio will look tomorrow?

I understand. In these uncertain times (and yes, we see a recovery happening, but who knows how much or how fast?), many people are afraid to engage in estate planning. Forget uncertain times… even in good times, 60% or more of adults in this country don’t plan! It’s no wonder I get calls daily to help clean up messes on estates where the deceased person left no will.

For those that don’t plan during uncertain times, they likely believe that whatever they put on paper today, will change tomorrow. Very true. However, I approach estate planning as a lifelong process, one that doesn’t stop after the first time you create a plan. Just as our lives change on a regular basis, so to should our estate plan. If we thought about estate planning as a one-time process, we would all be in a stalemate.

Remember, what you put on paper today is not written in stone. You can always change it tomorrow. In fact, I encourage my clients to continue to update their plan (with the assistance of an attorney) whenever something significant in their lives change, and to at least review their plan every few years.

For our readers that do have plans, have you thought about your plan, and has it been reviewed and updated in the last few years? For those that don’t have plans, is it because it just hasn’t been the “right time” yet? Even in the most uncertain of times, having a plan will only benefit your heirs and loved ones. Now is the right time to update your plan, and to create one if you don’t yet have one.

Thursday, April 22, 2010

Appointing Agents -- An Important Estate Planning Component

One of the most difficult tasks in any estate plan is choosing who will manage your affairs while you’re alive and after you pass away. In addition, if you have children under eighteen, you also must consider who will step in as guardians if need be. An agent is a broad term, and emcompasses several roles, depending on what components of an estate plan you put into place. Agents include powers of attorney, personal representatives of the estate, trustees and fiduciaries.

Below are some ideas to start with on how you might go about filling these important roles. After reading this article and gathering some ideas, you should seek the assistance of a qualified estate planning attorney to help you make these decisions.

• Who do you trust? Trust is key in appointing anyone to serve in these important roles. When I think of trust, I think of a gut feeling that I have about a person. I ask, will that person have my best interests at heart when they are acting on my behalf? Finding someone you can place your trust in for these roles is easier said than done. Whatever you do, don’t simple choose someone because of convenience.
   
• Who is capable? Assuming most people are good-natured, the next question becomes, who can actually manage your affairs, your estate and your children? Sometimes, managing the affairs of someone else can be extremely complex, depending on the assets that the person has. Consider whether that person will have to hire an attorney to help him/her manage your affairs. That can get costly.
   
• Who would agree to the role? Just because you have decided to appoint someone does not mean they will agree to serve. In fact, a person filling a role can resign at anytime. Make sure the person you appoint is on board to serve.
   
• Who will the backups be? In the event that your first choice cannot serve in the role, you must make sure you have at least one, if not two trusted backups. You must make sure the backups are trustworthy, capable and willing to serve as well.
   
• When does it make sense to appoint two or more people to fill one role? Typically, I do not recommend setting up your appointments like this. Consider this: You really want to have whoever is dealing with your affairs to speak with one voice. There is much potential for disagreement and discord if two or more people are filling one role. Remember, your goal is to create a smooth transition, not hamper it even more.

In general, you should review your choices for these roles at least every five years, if not sooner. You don’t want to have outdated documents with people filling roles you no longer want them to fill, or roles they can no longer fill.

We offer complementary 90 minute consultations for estate planning issues. Call our office today (215) 706-0200 or email us at info@jawatlaw.com to set up your appointment today. Our team would be pleased to assist you in all of your estate planning needs.

Wednesday, April 07, 2010

Vital Estate Planning Documents

Only 35% of Americans have their estate plan completed, either with a will or trust. Therefore, over 6 out of every 10 people reading this have not done any planning! Instead, they have decided to let the government do their planning. Not a good idea.

For those putting off planning, you've likely been talking about planning for a while now and keep pushing it off. Being in this profession, I see way too many unfortunate circumstances where planning was not done before time was up. It is vital to put at least a basic plan in place today. Here is what you need to at least get started:

1. Last Will & Testament: The will is the document that lists your wishes after you pass. You will names your executor, the person who handles your estate, lists who the beneficiaries are (a beneficiary is the person who receives property from you), and lists any immediate family members that you have disinherited. It can also name a guardian for minor children, and list your wishes on whether you want cremation or not. Wills can be more advanced, and can include provisions such as setting up testamentary trusts so that all assets are not immediately distributed. You must have a will. If you don't, the government has what's called an intestate/intestacy statute that lists in detail who in your family will take property. You will have no control, and neither will your heirs!
    
2. Financial Power of Attorney: This document controls all of your non-medical affairs when you become disabled or incapacitated. Sometimes it is more important than having a will. These must be updated every few years or so because some institutions, such as banks, investment houses, etc, will say they are "stale" if more than 5-10 years old. This is a powerful document, giving your agent (the person who acts on behalf of you) the power to manage your assets, property, businesses, accounts, etc. It also may give your agent the ability to handle your retirement accounts (be careful with this) and to make gifts (also another one to be careful about). You can also use this document to appoint a guardian for yourself or for your children during your incapacity.
    
3. Medical Power of Attorney / Living Will: In Pennsylvania, the medical/health care power of attorney and living will can be combined into one document. The power of attorney controls while you are alive but disabled. The living will controls at the end of life phase when there is no realistic hope of recovery. This document gives the person acting on behalf of you to speak with your doctors, hire and fire your doctors, tell the doctors what to do based on your wishes, etc.

These documents are only a start to a solid estate plan. Estate planning requires a lot of thought and analysis, and takes into consideration you, your family, the legacy you want to leave and the assets that you currently own. More advanced estate planning can often be necessary to save taxes, probate fees and provide asset protection.

Finally, if you already have a basic estate plan, make sure to update it at least every five years, if not sooner.

Please contact our firm today if we may be of assistance. We can provide an economical basic estate plan that will be the foundation of a sound estate plan. Inquire about our outstanding services today.

Thursday, March 25, 2010

Special Needs Trusts

Sunday, March 14, 2010

When To Update Your Estate Plan

Monday, March 08, 2010

Beneficiary Designation Forms

Your will does many things, but any asset that has a beneficiary designation form, such as a life insurance policy, annuity, IRA, etc., does not pass through your will.

Instead, those assets with a beneficiary form pass directly to the specified benefiary, and the will does not control in those situations.

What are the implications of this for your estate plan? All too often, families have not given serious thought to fairness and equality in distributing assets and personal property. For example, in your will, you leave 50% to Child A and 50% to Child B. But you have a large life insurance policy that you purchased before Child B was born, and Child A is the sole beneficiary. As a result, the distribution of your estate is unequal.

The example above is a simple one, but many plans have more assets, family members and gray areas. You should speak with a qualified estate planning attorney who can analyze your entire estate, including the assets that pass outside of your will, and implement a superior solution that will benefit your family.

As always, we recommend that you review and possibly update your estate plan in Pennsylvania no less than every five years. Your will, trust, powers of attorney and beneficiary forms may need changes, and it's a good idea to meet with your attorney to review your documents. If you have not reviewed your estate plan for over five years, please call our office at 215-706-0200 to schedule a complementary consultation.

Sunday, February 28, 2010

Values, Service and Experience.

We want you to choose an estate planning attorney that is right for you.
Consumers often find it difficult to select the right estate planning attorney. We cannot tell you how to choose the perfect attorney to handle your estate planning needs. Each attorney and law firm has different values, levels of service and expertise. Below, learn about our firm's values, level of service, and wide-ranging experience that we provide. If you are an existing client, this is a great item to forward to your friends and family. For prospective clients, we hope that this will help you in selecting an estate planning attorney in the Philadelphia area that meets your needs.

Our values

* Estate planning is a highly personal matter, and every family is unique.

* Estate planning is done out of love for your family to provide for you and your loved ones for generations to come.

* We value a client-centered approach to the lawyer-client relationship. We value the knowledge, experience, wishes and hopes of each and every client that we meet with and make sure that we actively listen to what the client wants.

Service

* Our clients tell us they love the fact that we return calls and emails on the same day.  We do not allow any client to get lost in the shuffle.

* We do not cap our initial complementary consultation at 60 minutes. Our consultations usually last over 2 hours, so that we can get to know your family, you can get to know us, and we can see if we're a good fit.

* The documents that we craft for you are organized, easy to read and professional. We provide you an original and a reference copy in a planning binder that allows you to have a central resource for your estate, financial and memorial plans.

* We offer maintenance programs that permit doctors to instantly access your health care documents on a secure web site, and allow your designated family members to access your estate planning documents when appropriate.

Our Expertise

* As a member of the national organization WealthCounsel, we have access to the latest, most innovative estate planning techniques and technology.

* We offer a holistic approach to retirement planning, and our firm is part of an umbrella of highly respected professionals that can assist you, if needed, on your retirement financial plan, long term care insurance, life insurance, and tax planning.

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We know that it is not easy to choose the right attorney and that not every attorney is right for every client. That is why we offer a complementary consultation. We hope you'll take us up on the offer to meet with you to determine if we can assist you in crafting your estate plan.

Thursday, February 25, 2010

Jeremy Attends Estate & Elder Law Symposium

Yesterday, your estate planning attorney Jeremy A. Wechsler attended the Pennsylvania Bar Institute's annual Estate & Elder Law Symposium. Jeremy believes that continuing to learn the latest estate planning techniques and case law is crucial to maintaining top standards in practice.

For instance, several key cases came through the Pennsylvania courts this year regarding estate planning. A big case, Slomski, has huge ramifications for powers of attorney, and whether certain language in your power of attorney gives the agent the ability to change beneficiaries on your retirement accounts. Was your power of attorney drafted a while ago? Better have it reviewed by us to make sure the language is proper. In fact, there have been dozens of cases throughout Pennsylvania this year that could have estate and elder law ramifications. Bottom line is, your documents from 10 or 20 years ago may not work today.

Other topics discussed yesterday were new and current asset protection strategies that actually work in Pennsylvania. Asset protection simply means planning ahead of time to keep your assets as safe as possible, using legal strategies. There are many strategies to protect your assets -- it's really about knowing the law. What assets can creditors get to? What is restricted? What strategies can you use to get money out of your estate and into your son or daughter's hands? What about strategies to protect your son or daughter with that estate? These are all questions we can help you with.

Also of interest was the latest elder law issues, such as Medicaid planning and the Medicaid application process, social security issues, and family caregiver agreements.

If you need a review of your estate plan, or need an estate plan crafted, make sure you visit with an attorney who keeps up with the latest law and most innovative techniques that actually work.

Thursday, February 11, 2010

Updated and Accurate Powers of Attorney

Sometimes, a power of attorney is more important than your Will. A power of attorney essentially lets someone step into your shoes, to take care of your financial and health matters if you become disabled or incapacitated.

Many people have power of attorney documents, and a good portion of these documents were probably executed over ten years ago. It is important to have an updated power of attorney. Why? Your family or family circumstances may have changed. The agent listed may no longer be the agent you want. Most importantly, Pennsylvania laws and regulations have changed within ten years, adding and modifying requirements for powers of attorney.

Even if you are married, it is still essential to execute both the health care power of attorney and financial power of attorney.

Make sure your attorney carefully crafts your document and only gives the powers you want to grant. Pay particular attention to retirement plans and the power to change beneficiaries, the power to deal with life insurance policies, and gifting powers.

For a free review of your power of attorney, your estate plan or to craft an estate plan, please call our office at 215-706-0200 to schedule an appointment.

Thursday, February 04, 2010

IRA Podcasts

A great resource to learn more about IRA's, Roth conversions and more is Natalie Choate's podcast page. Natalie is one of the foremost expert on IRA's.

Should you convert your IRA to a Roth IRA? What effect does remarriage have on your retirement? What things should you avoid with your inherited IRA? Natalie's podcast page is chock full of resources. Check them out today:

http://advisor.morningstar.com/products/podcasts/choate.xml

Thursday, January 28, 2010

How Often To Update Your Estate Plan

People always ask us how often they should review their estate plan, whether it be a Will or Revocable Living Trust. Just as your family changes, your estate plan should reflect those changes. Good estate planning attorneys try to plan ahead for as many contingencies as possible in each estate plan. However, even the best estate planning attorney cannot plan for every change down the road.

Therefore, we recommend that you have your estate plan reviewed every 3-5 years, or sooner if there is a major change in your family, or you change your mind about something in your plan.

An estate plan is not a static document, and must be updated throughout the course of your life.

Our firm offers different maintenence programs, and we even offer a secure online service to store and access your important documents. If you are interested in having our firm review your estate plan--whether it be your will, trust, powers of attorney, or living wills, please do not hesitate to contact us by email (info@jawatlaw.com) or telephone (215-706-0200).

Sunday, January 24, 2010

Grantor Retained Annuity Trusts

A Grantor Retained Annuity Trust (GRAT) is an advanced estate planning tool sanctioned by the IRS. GRATs are a great vehicle to benefit both you and your heirs. With a GRAT, you typically put an investment asset in this trust. Your heirs receive the investment earnings, and you receive the principal back, all while avoiding any gift tax consequences. Like loans, GRATs mature after a number of years.

GRATs are grantor trusts. As such, they allow you to pay capita -gains and income taxes on the investments in the GRAT on behalf of your heirs. Because the IRS doesn't consider such tax payments a gift, they are another way to transfer wealth to the next generation free of gift and estate taxes.

But there are drawbacks. Because GRATs have to pay you higher rates than short-term and medium-term family loans, they pass along slightly less to your heirs. The biggest risk is that you might die before your trust ends. In that situation, it's as if the GRAT never existed: Its entire value -- including returns -- is generally included in your estate and subject to tax.

Friday, January 22, 2010

February Workshops

Join us on February 23, 2010 at the Solaris Grille in Center Square or February 25, 2010 at The William Penn Inn for our workshop that will help you to Keep From Losing Your Stuff.

Clients love our holistic approach to retirement planning. An estate plan on its own is simply not as valuable without working in concert with a retirement planner, financial advisor, CPA and long term care specialist. At this workshop, we will bring you a new, comprehensive approach to wealth management and preservation. We'll teach you how a coordinated approach can add value to you and your family's finances and legacy. Learn about asset protection strategies, how to craft the perfect living trust, and why every estate plan must be unique for your family.

The classes are free, and seating is limited. In addition, a complementary delicious dinner will be served! Just click on CLASSES on the menu bar above to register for one of the two workshops. We hope to see you there!

Saturday, January 16, 2010

Wills vs. Trusts

People always ask, what is the difference between these two documents? Will or trust, I'm still leaving my assets to the people I care most about, right? Sure, that is true, but there are several key differences between the two.

Trusts are usually pieces of a larger puzzle. For instance, you may have sizeable assets that you want to protect. Revocable living trusts (this is your standard trust), along with other asset protection tools, can offer greater protection when you pass assets onto your kids, grandkids and spouse. For instance, you have a son who is married. You are weary of your daughter-in-law, and worried that if they ever got divorced, she would make out like a bandit with all of your assets. Set up correctly, trusts can minimize this concern. With a will, you are passing on your assets outright, meaning that upon your passing, your assets simply become part of your son's estate, therefore greatly increasing the chances that your daughter-in-law could take the assets.

Wills are not private. When you write a will, you have to realize that upon your passing, the will is probated and becomes public. Why does this matter? First, if someone wants to challenge your will, the fact that it is a public document makes it much easier for anyone to browse your will and find ways to challenge it. Trusts that are funded do not go through the probate process, and therefore they are not public.

The Tax Issue. Neither a will nor a trust can avoid Pennsylvania inheritance tax or federal estate taxes (that is, when there is in fact a federal estate tax). However, trusts, set up correctly between spouses, can minimize and delay federal estate taxes. Remember that in Pennsylvania, property transferred between spouses is taxed at a 0% rate.

Trusts Offer Greater Control. If you are worried about your 25 year old son inheriting $200,000 and spending it down in two months, you're not alone. A will, leaving that money outright to your son, will attach no conditions to how or when he can spend the money. With a trust, the options are limitless as to what conditions you want to attach to those assets and when your son receives it. For instance, you might want to distribute certain assets for education, a wedding, health and maintenence, when a child is born, etc. Again, it is up to the imagination. The great thing about trusts is that they survive after you pass, allowing you to have potentially eternal control.

Prices. Wills are cheaper than trusts. However, with a will, your heirs will pay later in probate and administration fees. For instance, a $1,000,000 estate going through probate could cost as much as $20,000-$30,000 in attorney fees and state/county fees, and that doesn't even include taxes. Trusts do cost at least several thousand dollars to build, but if built properly, avoids those huge fees at the end of your life.

If you want to review your estate plan, and you're not sure if you need a will or trust, please contact our firm today and set up a complimentary consultation.

Tuesday, January 12, 2010

Life Insurance Trusts

Have you considered an Irrevocable Life Insurance Trust (ILIT)?

There is a common misconception that life insurance proceeds are not subject to estate tax.  While the proceeds are received by your loved ones free of any income taxes, they are countable as part of your taxable estate and therefore your loved ones can lose over forty percent of its value to federal estate taxes. As you probably know, there is no federal estate tax in 2010 as of now. However, don't count on that being the norm -- In this economy, you can be sure the federal estate tax will be back in 2011 to raise revenue for the federal government. 

An Irrevocable Life Insurance Trust keeps the death benefits of your life insurance policy outside your estate so that they are not subject to estate taxes.  There are many options available when setting up an ILIT.  For example, ILIT's can be structured to provide income to a surviving spouse with the remainder going to your children from a previous marriage.  You can also provide for distribution of a limited amount of the insurance proceeds over a period of time to a financially irresponsible child. In general, life insurance is a valuable estate planning tool for many families, as it provides a source of liquid cash to handle estate administration upon the passing of your loved one.

If you are interested in discussing ILIT's as part of your estate plan, please contact us.

Wednesday, January 06, 2010

Great Planning Tips

CBS News MoneyWatch came out with a great article today entitled "Estate Tax: What You Need to Know for 2010." The article is full of great information... Here is one essential point:

* Most estate planning attorneys, including myself, agree that it is more likely than not that Congress will retroactively apply a federal estate tax effective 1/1/2010. The exemption would likely be at the 2009 rates of $3.5/7 Million. Therefore, in 2010, the estate tax would again affect relatively few estates.

Link: http://moneywatch.bnet.com/retirement-planning/article/estate-tax-what-you-need-to-know-for-2010/378294/

Saturday, January 02, 2010

Estate Planning 2010

Welcome to 2010 and a happy and healthy new year to everyone. We can all use a fresh start from time to time, and the new year is ripe for new, innovative ideas and resolutions to grow and improve. Furthermore, as we enter the next decade, we are reminded (most of us anyway) how quickly time passes, and that we need to make the most of every day with our loved ones...family, friends and others.

With that said, 2010 is going to be an important year for estate planning for many people. We are in a state of flux right now. Here are some updates and some ideas to consider in 2010:

- The federal estate tax is currently on hiatus, but with that, step up in basis was also repealed for the year. This could put a squeeze on many people.

- Your retirement assets are probably one of the largest assets you own, yet they are often not protected. We can help you build an IRA Inheritance Trust or retirement trust to protect this asset and also allow them to grow, especially if you wish to see these assets passed on to your heirs and grandkids.

- So many people have not updated their estate plans for a long time. I hear people all the time saying things like, they do not know where their will is... they don't know who their executor is... they had a will amendment (codicil) written but they never signed it... they haven't updated their will since 1985. I recommend in any of these situations to schedule an appointment with us as soon as possible to make sure your estate plan is up to date.

- Related to that, in modern estate planning, regardless of tax planning, a will is often not adequate to protect your assets especially if you have minor children (or even grown children!). Think about coming in to sit down with us and evaluate whether your estate plan needs some new tools from our toolbox.

Have a great 2010 and be sure to keep reading our blog for the latest in estate planning news and techniques.

Tuesday, December 29, 2009

January Classes Posted

Join us on January 19, 2010 or January 21, 2010 at The Buck Hotel for our new class, Keep From Losing Your Stuff.

We're teaming up with a premier retirement planner and long term care specialist to bring you a new comprehensive approach to wealth management and preservation. We'll teach you how a coordinated approach can add value to you and your family's finances and legacy.

The classes are free, and seating is limited. Just click on CLASSES on the menu bar above to register for one of our four classes (three on Tuesday 1/19, and one on Thursday 1/21). We hope to see you there!

Saturday, December 19, 2009

What happens if you don't have a will or living trust?

Wednesday, December 16, 2009

Gift Tax

The IRS recently announced that the annual gift tax exclusion will stay the same in 2010 at $13,000.??If you're married, each spouse gets an exclusion so a married couple can gift $26000 to each individual without creating a tax liability or necessity for reporting.

With proper gift planning, a family could transfer a significant amount of money to their children and grandchildren while saving money on federal estate taxes. With the estate tax potentially going back to only a $1 Million exemption in 2011, gifting may make sense to more clients. Reducing your estate tax is complicated, and you should consult a qualified attorney to determine whether you are liable for the estate tax, and how to reduce your liability if necessary.

Also note that gifting is not for everyone. For instance, the chance that senior citizens need Medicaid is typically increased and gifting in this instance can disqualify you from certain government benefits.

Monday, December 14, 2009

Wills Are Public Documents

A lot of people ask our office what the difference is between Wills and Trusts. There are several key advantages to trusts, depending on your estate planning needs. One advantage to our readers who value privacy is that a well-crafted Revocable Living Trust, if properly written AND funded, can avoid the probate process. By avoiding the probate process, your written instructions, hopes, wishes and legacy have a better chance at being kept private. In contrast, a Will always enters the probate process, and thus, becomes a public document. All you have to do is google "Jackie Kennedy Will" to see what I mean. Anyone can access the former First Lady's Will! Sure, the chances of your Will leaking all over the internet are slim, but the point remains--your Will is available to all those that want to see it, whether or not you want them to see it. Living Trusts can never guarantee complete privacy. However, qualified attorneys can craft Living Trusts to better protect against intrusions. Remember that if you currently have a Will as the foundation of your estate plan, you CAN "upgrade" to a Trust.

Sunday, December 13, 2009

Ethical Wills

We just posted new information about ethical wills. Check it out under the Resources tab.

Saturday, December 12, 2009

The WealthCounsel Advantage

WealthCounsel is the premier estate planning organization in the United States. Quite simply, no other organization even comes close to the level of experience that WealthCounsel offers its over 1,000 estate planning attorneys. Asking whether or not your estate planning attorney is affiliated with WealthCounsel is crucial, because only WealthCounsel members have all of the latest techniques and tools for proper estate planning. As a member of WealthCounsel, our firm can design a living trust for you that is sound under the law, yet customizable to you and your family's needs.

Thursday, December 10, 2009

Trust Planning and 2011

Here is some food for thought: If Congress doesn't pass a permanent federal estate tax fix soon, we are looking at perhaps 2010 staying at the $3.5 Million exemption, as it is more likely that they'll pass a one year fix. That's already passed the House and I think the Senate will probably pass it too. But I get the feeling we're going to be back to a $1 Million exemption in 2011, because quite simply, the federal government needs revenue. They cannot sustain a $12 Trillion and growing deficit by lowering or eliminating taxes.

What does this mean for you? If you are worth at least $.5 Million or more, you must seriously consider trust-based planning. Proper planning with trusts, particularly for married couples, can reduce and (sometimes permanently) delay estate taxes, depending on how the trust is designed.

The key takeaway is that trust-based planning is something you ought to be considering now, even if you don't consider your estate to be valuable. Depending on your estate, your $.5 Million could easily grow during your lifetime and pass the taxable threshold. You should know that living trusts are not away to avoid income taxes or estate taxes. But, with proper planning, it is possible that we can make sure you don't pay more estate taxes than you have to, and we can use sophisticated tools to delay the payment of those taxes. The bottom line is, these are times of uncertainty. A will-based plan for any estate cannot account for the uncertainty as well as a proper trust-based plan can.

Tuesday, December 08, 2009

Eight Tips To Avoid Nasty Estate Surprises

Came across this article on USNews that concisely talks about how to avoid some common estate planning mistakes. Some ways to avoid the mistakes include finding the right estate planning attorney, picking the right executor and trustees, and make sure your title to your assets is clear. Check out the rest of the article

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Saturday, December 05, 2009

Estate Planning Statistic

Saturday, December 05, 2009

Ten Steps To Estate Planning

Just posted a new article to help those new to estate planning. Catch

Ten Steps To Estate Planning

under our Resources tab. If we can help you with your estate plan, please let us know by getting in touch with our office.