Philadelphia PA Estate Planning Blog

Many people think that estate planning is just for the wealthy, but the truth is, we all need an estate plan. If you don't have a plan, the government's plan (intestate laws) will control how your estate is administered.

Leaving an inheritance to a child, grandchild or a loved one is a gracious gift and is part of leaving a legacy in which you can be proud. But what if, after your loved one receives their inheritance, they get divorced?

In many Last Will & Testaments, testators will leave their assets outright to their children or loved ones. That means that the entire distribution or gift is theirs without any restriction. The beneficiary can add the inheritance to his or her own bank account or investment account.

If the beneficiary is married, we often see the inheritance or at least part of it go into a joint bank account or see it used towards purchasing a home with the spouse as joint owner. 

If ever there is a divorce, the beneficiary will potentially lose 50% of the inheritance that you left him or her. Over 50% of marriages end in divorce!

There are better ways to leave a gift to a loved one to ensure protection against divorce, creditors, bankruptcy, etc. that don't require sever restrictions on how and when the beneficiary can utilize the inheritance. By using certain kinds of trusts, you can ensure that you leave a positive legacy no matter what the circumstance is in the future. 

For more information about better ways to leave an inheritance, contact your attorney today. If you are in Pennsylvania, you can contact my firm at (215) 706-0200 for a complimentary consultation.

When planning your estate in Pennsylvania, it is important to understand the difference between probate and non-probate assets. Probate is the process through which a court determines how to distribute your property after you die. Some assets are distributed to heirs by the court (probate assets) and some assets bypass the court process and go directly to your beneficiaries (non-probate assets). 

The probate process in Pennsylvania includes filing a will and appointing an executor or administrator, collecting assets, paying bills, filing taxes, distributing property to heirs, and filing a final account. This can be a costly and time-consuming process, which is why some people try to avoid probate by having only non-probate assets.

Probate assets are any assets that are owned solely by the decedent. This can include the following:

• Real property that is titled solely in the decedent's name or held as a tenant in common
• Personal property, such as jewelry, furniture, and automobiles
• Bank accounts that are solely in the decedent's name
• An interest in a partnership, corporation, or limited liability company
• Any life insurance policy or brokerage account that lists either the decedent or the estate as the beneficiary

Non-probate assets can include the following:

• Property that is held in joint tenancy or as tenants by the entirety
• Bank or brokerage accounts held in joint tenancy or with payable on death (POD) or transfer on death (TOD) beneficiaries
• Property held in a trust
• Life insurance or brokerage accounts that list someone other than the decedent as the beneficiary
• Retirement accounts

When planning your estate, you need to take into account whether property is probate property or non-probate property. Your will does not control the distribution of non-probate property. Check the ownership of your property and your accounts to make sure jointly owned property will be distributed the way you want it to. It is also important to review your beneficiary designations.

Contact Jeremy A. Wechsler, Esq. to determine whether your property is being distributed the way that you want it to. Jeremy A. Wechsler assists families with probate and estate administration in Philadelphia, Bucks County, Montgomery County, Delaware County and Chester County. Our offices are located in Willow Grove, PA.

Procrastination and estate planning is common, but nevertheless unfortunate. Without a proper estate plan, you risk family conflict, more burdens on your family at a delicate time, and ultimately less money for your loved ones. I have heard many excuses for failure to plan during my years of practice, and described a few of my ‘favorites’ below.

Excuse 1: My Estate Is Too Small

A common excuse I hear often from folks is that they do not have enough money to worry about planning their estate. However, this is an awful misconception about estate planning. Whether it be four figures or seven figures, the conflicts are the same. Sometimes, a $1,000 will create more conflict than $1 million! The amount does not matter. Without a solid plan, the possibility of conflict grows exponentially. In addition, regardless of your net worth, you need a plan for incapacity and long-term care. Everyone needs an estate plan.

Excuse 2: Indecision

If you are having trouble deciding whom your Executor and/or beneficiaries will be, you are in good company. However, I often see people continuously delay planning because they are ‘stuck’ on one decision. My best advice is, make the best decision you can make in the moment. You can modify your estate plan in the future. Also, having a plan on paper will give you a better perspective, and give you time to consider future changes. Life is not static, and just as we are continually faced with new circumstances, your estate plan must reflect those changes.

Excuse 3: General Delay / Too Many Other Things To Do

Our 24/7 society where we are all juggling too many things makes it challenging to set aside time for estate planning. Unfortunately, I have seen too often people who have failed to plan, only to be suddenly faced with unfortunate circumstances. None of us have a crystal ball, and we have to be ready for the curveballs. Now is the moment to invest some time to begin your estate plan or review an existing plan.

Excuse 4: It Costs Too Much

A well-crafted estate plan is an investment for you and your loved ones. It can save on unnecessary government fees and taxes, as well as additional attorney fees later on. An estate plan may expose planning opportunities for your family to preserve assets in case of entrance into a nursing home, among other opportunities. Seek a qualified attorney that you feel confident will recommend a pragmatic plan for you. Avoid searching for the cheapest solution (i.e., a ‘simple will’). A will is just the tip of the iceberg. I analogize an estate plan to a car. A will is a single part of a plan, like a steering wheel. A car will not work with a steering wheel alone. Seek common sense solutions that fit your needs; that may include a trust or other tools. A good attorney will explain why he or she is recommending those items and explain the costs involved.

Conclusion: Make a resolution to start your estate plan in 2014, or if you have an estate plan, take some time to review it this year. Try to avoid these common excuses (and many others) that deter proper planning.

For a review of your current plan or if you are without a plan, please call my office at (215) 706-0200 to schedule your consultation today. 

If you have recently lost a loved one in Pennsylvania, you may be faced with the Pennsylvania probate process. In Philadelphia, Bucks County, Montgomery County and Delaware County (areas where we practice), probate generally works the same.

Probate is the process of the county Register of Wills appointing an Executor or Administrator. Whether or not an individual has a will, probate is still typically required.

Sometimes, probate can be handled without attorney assistance in Pennsylvania. However, many Executors or Administrators decide to hire a probate attorney to assist them with ensuring accounting is done properly, creditor issues are dealt with, inheritance taxes and estate taxes are filed properly, etc. Also, an attorney is needed if there are family conflicts, will challenges or estate contests.

You may feel overwhelmed when you realize you have to probate a will and settle an estate. If you need assistance, please call our office at (215) 706-0200. The Law Offices of Jeremy A. Wechsler regularly helps clients navigate the probate and estate administration process in Philadelphia, Bucks County, Montgomery County, Delaware County and other areas in Pennsylvania.

The key to successful probate in Pennsylvania is competent representation to ensure the Executor or Administrator does not face personal liability. Please call us today at (215) 706-0200 to schedule your initial telephone consultation to determine if we can assist you.

Plan for Long-Term Care Costs TODAY!

Ten years ago, federal estate taxes were the main concern for many families. Now that the exemption amount for estate taxes is over $5 Million per person (at least for now), most people do not need estate tax planning. The new estate planning is long-term care planning and asset protection for you and your loved ones. With nursing home costs and long-term care costs skyrocketing, are you putting you and your family at risk without proper planning?

The Law Offices of Jeremy A. Wechsler develops asset protection plans for families in the Philadelphia Pennsylvania area designed to ensure that part of your estate is never spent on long-term care. With soaring government deficits, you can be sure that the Commonwealth of Pennsylvania  will be more stringent on qualifying for long-term care benefits through Medicaid (Medical Assistance or MA in Pennsylvania).

Below are a few questions to ask yourself about your long-term care plan. 
If you answer yes to three or more, it’s time for a check-up.

• Are you older than 50 years old? 

• Have you or your spouse had health problems in recent years?

• Does your family have a history of health problems that have led them to seek long-term care?

• Do you have over $500,000 in investable assets and real estate?

• Do you have children or grandchildren that you wish to ensure receive an inheritance, even if you need long-term care for several years?

• Have you decided traditional long-term care insurance is too expensive but want to find other ways to plan for long-term care costs?

• Do you have a proper elder law power of attorney that permits proper gifting and other provisions that may be essential for long-term care planning?

• Do you need to update your Will or trust, or need updated living wills/advanced health care directives?

Now is the time to plan! Call me today at (215) 706-0200 to schedule your consultation before the end of the year.

Joint Accounts with Children: Convenient, But Dangerous

By Jeremy A. Wechsler, Esq.

Your Estate Planning & Asset Protection Attorney 

Many people believe that joint accounts are a good way to avoid probate and transfer money to loved ones, particularly for single or widowed clients.  But while joint accounts can be useful in certain circumstances, they can have dire consequences if not used properly. Adding a loved one to a bank account can expose your account to the loved one's creditors as well as affect long-term care planning. 

The first problem with joint accounts is that once money is deposited into the account, it belongs to both account holders equally, regardless of who deposited the money. Account holders can withdraw, spend, or transfer money in the account without the consent of the other person on the account. When one account holder dies, the money in the account automatically goes to the other account holder without passing through probate.

The second problem with joint accounts is that it makes the account vulnerable to all the account owner's creditors. For example, suppose you add your daughter to your bank account. If she falls behind on credit card debt and gets sued, the credit card company can use the money in the joint account to pay off your daughter's debt. Or if she gets divorced, the money in the account could be considered her assets and be divided up in the divorce.

Third, joint accounts can also affect Medicaid eligibility. When a person applies for Medicaid long-term care coverage, the state looks at the applicant's assets to see if the applicant qualifies for assistance. While a joint account may have two names on it, most states assume the applicant owns the entire amount in the account regardless of who contributed money to the account. If your name is on a joint account and you enter a nursing home, the state will assume the assets in the account belong to you unless you can prove that you did not contribute to it.

In addition, if you are a joint owner of a bank account and you or the other owner transfers assets out of the account, this can be considered an improper transfer of assets for Medicaid purposes. This means that either one of you could be ineligible for Medicaid for a period of time, depending on the amount of money in the account. The same thing happens if a joint owner is removed from a bank account. For example, if your spouse enters a nursing home and you remove her name from the joint bank account, it will be considered an improper transfer of assets.

There is a better way to conduct estate planning and plan for disability. A power of attorney will ensure family members have access to your finances in the case of your disability.  For a comprehensive review of your plan and more sophisticated strategies, please contact my law office for a complimentary consultation at (215) 706-0200.

As we quickly enter the holiday season and end of year, a lot of people ask us about charitable donations. Forbes magazine recently released ten tips for smart charitable giving.

Check out the link to read these ten tips. Several of the tips discuss making sure you keep proper records and itemize items properly.

Charitable giving can be a benefit to you, your family and charitable organizations. But charitable donations must be given carefully. Sometimes, the use of certain trusts like Charitable Lead Trusts or Charitable Remainder Trusts can make sense for large gifts and strategic estate planning.

LINK: https://www.forbes.com/sites/kellyphillipserb/2013/11/01/making-your-gifts-count10-smart-tips-for-charitable-giving/

In order to qualify for Medicaid (MA or Medical Assistance in Pennsylvania), you can't have more than $2,000 in assets in Pennsylvania. Many people forget about life insurance when calculating their assets, but depending on the type of life insurance and the value of the policy, it can count as an asset.

Life insurance policies are usually either "term" life insurance or "whole" life insurance. If a Medicaid applicant has term life insurance, it doesn’t count as an asset and won't affect Medicaid eligibility because this form of life insurance does not have an accumulated cash value. On the other hand, whole life insurance accumulates a cash value that the owner can access, so it can be counted as an asset.

That said, Medicaid law exempts small whole life insurance policies from the calculation of assets. If the policy's face value is less than $1,500, then it won't count as an asset for Medicaid eligibility purposes. However, if the policy’s face value is more than $1,500, the cash surrender value becomes an available asset.

For example, suppose a Medicaid applicant has a whole life insurance policy with a $1,500 death benefit and a $700 cash surrender value (the amount you would get if you cash in the policy before death). The policy is exempt and won't be used to determine the applicant's eligibility for Medicaid. However, if the death benefit is $1,750 and the cash value is $700. The cash surrender value will be counted toward the $2,000 asset limit.

If you have a life insurance policy that may disqualify you from Medicaid, you have a few options:

Surrender the policy and spend down the cash value.
Transfer ownership of the policy to your spouse or to a special needs trust. If you transfer the policy to your spouse, the cash value would then be part of the spouse's community resource allowance.
Transfer ownership of the policy to a funeral home. The policy can be used to pay for your funeral expenses, which is an exempt asset.
Take out a loan on the cash value. This reduces the cash value and the death benefit, but keeps the policy in place.
Before taking any actions with a life insurance policy, you should talk to your attorney to find out what is the best strategy for you.

Are IRA's taxable at your death for PA Inheritance Tax purposes?

What if we told you that there is a financial product available that does the following:

• Transfers wealth tax-free to your spouse and/or your heirs (that includes Pennsylvania inheritance tax, federal estate tax, federal income tax and state income tax).
• Ensures that any income loss as a result of your death does not affect your spouse or family negatively.
• Provide safety of investment from market risk or market loss.
• Provide you with long term care coverage if you need it.

Certain life insurance policies can achieve all of those goals! Yes, not everyone can get covered or is eligible, but you'd be surprised how insurance companies are rapidly changing and covering more individuals under these types of policies.

One of the greatest benefits of these policies is providing you with long term care coverage if you ever require it. Your death benefit would be used towards your long term care costs. That means no traditional long term care policy is needed, and your estate won't be diminished if you need care, leaving nothing for your family.

Interested in learning more about this type of life insurance? Call us today at (215) 706-0200 to schedule your complimentary consultation.