Philadelphia PA Estate Planning Blog

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.

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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.

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.

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 complimentary appointment, (215) 706-0200.

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.

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 complimentary consultation right now.

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 complimentary estate planning consultation, please call our office today at (215) 706-0200.

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 complimentary consultation at (215) 706-0200 or www.JawAtLaw.com. We are located in Willow Grove, PA in the Executive Mews Office Complex.