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Philadelphia PA Estate Planning Blog

Tuesday, February 1, 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 complimentary 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 complimentary 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 4, 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 complimentary 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 complimentary appointment by calling (215) 706-0200.


Friday, December 17, 2010

Federal Estate Tax Now Certain

Good news for most of our clients: The Federal Estate Tax exemption for 2011 and 2011 will be $5 Million per person and $10 Million for a married couple. Any assets over that amount will be taxed at a 35% rate. That means the vast majority of people are not affected by the Federal Estate Tax.

If your assets are nowhere near the $5/$10 Million amount, and you have an old credit shelter/A-B trust when the exemption was much lower, you need to immediately have your estate planning documents revised.

Keep in mind that this is the rate for the next two years. As we get into 2012, it could get interesting.

Stay Tuned...


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 7, 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 6, 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.


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The Law Offices of Jeremy A. Wechsler assist clients with Estate Planning matters in Willow Grove, PA as well as Abington, Hatboro, Dresher, Horsham, Bryn Athyn, Huntingdon Valley, Fort Washington, Jenkintown, Glenside, Oreland, Warminister, Wyncote, Ambler, Elkins Park, Flourtown, Philadelphia, Warrington, Cheltenham, Gwynedd Valley, Jamison, Feasterville Trevose, Richboro, North Wales, Blue Bell, Lafayette Hill, King of Prussia, Collegeville, Oaks, Phoenixville, Oxford Valley, Langhorne, Penndel, Bristol, Fairless Hills, Bensalem, Plymouth Meeting, Furlong, Philadelphia County, Bucks County and Montgomery County.

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