Pennsylvania Estate Planning Blog

Thursday, September 02, 2010

Bring Estate Tax Back in 2010??

There was an interesting article in yesterday's Wall Street Journal by Robert Rubin, the former treasury secretary. Rubin advocates bringing back the estate tax in 2011 at a $3.5 million exemption (the 2009 levels). Many people agree with Rubin on this. Where many will part ways with him is his push to retroactively apply an estate tax in 2010, and bring it back for the remainder of this year. It's unlikely to happen, but we'll keep an eye on it. Check out the article with this link.

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

Thursday, August 26, 2010

Changes in Pennsylvania Powers of Attorney

Are your powers of attorney documents up to date?

Powers of attorney that are over ten years old in Pennsylvania are likely to be considered invalid, because there were major changes in the law around 2000.

Regardless of changes in the law, it is important that your powers of attorney documents don't go "stale." You want to make sure that institutions, hospitals, etc. will view your power of attorney as valid. Banks, governement agencies, etc will be hesitant to accept powers of attorney over 10 years old.

Experience tells us that powers of attorney documents, which allow someone to manage your affairs if you can't make decisions for yourself (due to disability or incapacity) are more important than a will or living trust (your death wishes). Over half of us will, at some point, experience extensive disability and we will need someone to guard over our affairs.

If you do not have a power of attorney and you become disabled, you run the risk of needing a guardian appointed by a court. Guardianship proceedings, even if uncontested, are burdensome and expensive. Guardians are then under regular court supervision. A well drafted and updated power of attorney avoids all of this. Compared with guardianship proceedings, drafting powers of attorney is simple and economical.

Everyone in Pennsylvania should have a financial power of attorney and medical power of attorney, with end of life instructions.

The law in Pennsylvania is going to change again soon, and powers of attorney language regarding gifting and retirement accounts will become more stringent, to the benefit of most Pennsylvanians. Keep a watch on this blog for any updates.

Meanwhile, please contact us to have your powers of attorney either drafted or updated today. We can be reached at (215) 706-0200 or info@jawatlaw.com.

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.

Friday, August 20, 2010

Veterans Pensions vs. Medicaid

As a disabled veteran (does not have to be from a wartime injury) or a veteran over 65, you are possibly eligible for a veterans pension. Also, your surviving spouse or unmarried child may also be eligible for similar benefits when you pass away. The pension varies per month, but can range from a few hundred dollars to over $1,500. 

However, even if you do qualify for veterans benefits, it may not always be advantageous to apply for them and receive them. The particular problem is for our vets who will want to qualify for Medicaid. If there's a good possibility of you going into a nursing home at anytime in the next few years, and you are hopeful for Medicaid to pick up the tab, veterans benefits may be a hindrance to that goal.

You should speak with a qualified estate planning attorney or elder law attorney to determine whether the benefits make sense for you, and if you even qualify. Many times, you will only qualify after you transfer a certain amount of assets into an irrevocable income only trust. This in effect reduces your countable resources, which must be below $80,000 for veterans benefits purposes. There is no look back period for the transfer, however (unlike Medicaid).

For more information, please contact our firm 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.

Tuesday, August 17, 2010

Veterans Pensions

There are millions of veterans who have served our country honorably and have dedicated and risked their lives to provide security and peace for the rest of us.

Yet, many veterans who have served do not know they may be entitled to veterans pension benefits, also known as improved pensions. It's estimated that less than 25% of qualified veterans receive their benefits.

Who can claim these benefits?

• The veteran
• The surviving spouse of a veteran
• The unmarried child of a deceased veteran

Veterans may qualify if:

• over 65 years of age or older,
• or veterans with a disability at any age
• Served 90 days or more with anything other than a dishonorable discharge
• At least one day in an active war zone.
• There are then income and resource requirements (see below).

The benefits can be anywhere from $6,000-$20,000 per year, depending on the needs and circumstances.

You can seek a qualified attorney who practices before the U.S. Veterans Administration to assist you in filling out the application. An attorney cannot charge for this work.

However, further planning may be needed to make sure the application is successful. 

What type of additional planning? The rules specify that you can have only so much income and countable resources. If you go over the amounts, you will be disqualified for the benefits. However, the VA allows transfer of existing assets to an irrevocable trust and other methods so that you reduce the size of your estate. 

You should seek an attorney to help you determine whether you are eligible, and what other planning is necessary.

As these benefits become more popular, the time from the application to receiving the benefits is only increasing. It can sometimes take 6-9 months to start receiving benefits.

Our office is qualified to assist you or your family in applying for benefits. Contact us today at (215) 706-0200.