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Philadelphia PA Estate Planning Blog
Thursday, January 28, 2010
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).
Thursday, January 28, 2010
We are excited to announce that our radio show will move to 8:30 AM to 9:30 AM every Saturday. Our show will now be an hour long, giving us double the time to talk about estate planning and retirement planning issues. Look for more special guests and in-depth discussions.
You can tune into our radio show by turning your radio dial to AM 1340, or listen online live at www.Am1340WHAT.com.
Sunday, January 24, 2010
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
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
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
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 6, 2010
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: https://moneywatch.bnet.com/retirement-planning/article/estate-tax-what-you-need-to-know-for-2010/378294/
Saturday, January 2, 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 Retirement Asset Protection 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.
Friday, December 25, 2009
Happy Holidays from your Philadelphia Estate Planning Law Firm. Our family wishes yours the very best during this warm season. We look forward to a great 2010, and helping our current and future clients with all of their estate planning needs. All the best!
Wednesday, December 23, 2009
Our office has been following the latest developments on the Federal Estate Tax, as this important tax could be significant for a large number of individuals and families. Depending on what Congress does, your Will or Living Trust will need to be updated accordingly. With the end of the year rapidly approaching, the possibility is much greater that Congress will not act on the Federal Estate Tax before January 1, which would mean that there would be no estate tax in 2010. However, good estate planning attorneys know that it is possible Congress could enact the tax retroactively after the first of the year. However, my sources who are experts in Constitutional Law say that may be ripe for a Supreme Court challenge. We shall see. But meanwhile, we will keep you updated on the latest developments...
Monday, December 21, 2009
Most people who know anything about probate want to avoid it. Even in Pennsylvania, where probate is relatively streamlined compared to other states, probate avoidance is still highly desirable for most people. If you must go through probate, how does it work in Pennsylvania?
First, the original will and any amendments or codicils must be presented.
In Montgomery County, our principal county of practice, a petition form must be filed as well as an 'Estate Information Sheet', another form. The form goes to the Register of Wills, an office of the Orphan's Court that handles probating wills.
In addition, a valid death certificate must be presented.
Montgomery county has an extensive list of filing fees -- this is where it can get tricky, even though probate is streamlined in Pennsylvania, there are of course costs associated with probate. Fees include attorneys fees, the fees for the county and state, and perhaps the cost of more emotional pain at a time when you do not need it.
How can you avoid probate? By using a living trust based estate plan rather than a Will, and funding your living trust, you can avoid probate because your assets are no longer tied directly to you, but they are put in a trust. The beauty of this is that you still control your trust (hence the term, 'Revocable' living trust). Only after you pass, does your trust become irrevocable and gets its own Tax ID number.
If you want to learn more about probate avoidance, please call our office at 215-706-0200 or email at info@jawatlaw.com.
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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