New Families

Looking for a great resource on estate and retirement planning? Jeremy Wechsler, your Estate & Elder Law Attorney, recently co-authored a new book with Peter R. Wechsler, his father and Your Retirement Quarterback. The book is an easy read but full of valuable information on estate and retirement planning.

Learn more about the book here: https://solvingtheretirementpuzzle.com

The Only Good Estate Plan is an Updated Estate Plan.

Lately, many of my newest clients have come to me with very old wills and powers of attorney. The plan is nicely done, folded and tucked in a nice envelope. The older the will, the harder it is for me to unfold. Once I dust it off, the will done on the typewriter is readable. 

In any case, it's a relief to me when these clients visit with me and actually become clients. My thought is, at least I can help this family update their plan, because most of the time, the plan no longer reflects their wishes, values, or the realities of their family situation. 

Many times, the kids were young when you first sat down to make your will. The needs were different. The choice of executor or power of attorney may be a sibling that you no longer feel comfortable with having serve in these roles. The estate size and value have changed, as well as the types of accounts and assets you own. Maybe there has been a second, or third marriage. You get the point! 

That's why the only good estate plan is an updated one. An old estate plan may have provisions in it that go against your current wishes today. 

If you have an old estate plan, I applaud you for doing some planning in the first place. Too many people fail to plan. But now, take the next step and make sure to keep that plan updated. I recommend checking your plan every 3 years, and updating it every 5-10 years. Those are rough guidelines. If there are any major changes in your family or circumstances, update the plan immediately.

Is it a good idea to write your own will? I can’t answer that question without being somewhat biased, because as an attorney, I know that there are complex and unique issues that each family and individual faces. Therefore, it does concern me when I hear of someone writing his or her own will without an attorney’s help.

My mission as an attorney is to build a long-term relationship with each client and provide superior service to him or her. The stack of paper in a binder or folder that I eventually hand to my clients is not what they find valuable. They just find it heavy! So the question is, where is the value in working with an attorney on my estate plan? My clients tell me that they find value knowing that they have a trusted legal advisor that has taken the time to learn about their needs, their goals, and the unique aspects of their lives. Unique lives translate into unique estate plans.

When I hear about do-it-yourself estate planning, I can’t help but get nervous for the folks that use those products. Here’s what concerns me about folks writing their own will:

1. Failure to protect your assets: As an attorney, I always talk to my clients about their kids and grandkids, and I make sure that an asset protection plan is put in place. I want to make sure the client’s kids or grandkids are protected from themselves and others, including their creditors, spouses (or ex-spouses), business partners, legal judgments, etc. I can assure you that you cannot design a one-size fits all form for an asset protection plan, which is more important than ever today.
    
2. Failure to create an asset preservation plan: A will and power of attorney is important but only the start for many estate plans. A major concern for retirees and people close to retiring is making sure an asset preservation plan is crafted, so that if you go into a nursing home, the house will be safe and some assets will also be safe from Medicaid spend down.
    
3. False sense of protection: Doing it yourself and convincing yourself you only need the “simple will” may give you a false sense of protection, when in fact your situation is more complex. By complex, I mean things like second marriages, kids with financial issues, real estate under water, uncertain financial future, family conflicts, etc. I can assure you that these types of issues won’t go away when you pass on—in fact, our experience shows they only magnify if they’re not dealt with while you’re still here.
    
4. Legal issues and problems with the documents: Let’s be honest, you don’t know what you don’t know when it comes to estate planning. Work with a trusted advisor that knows what you need. Would you pull your own tooth? Do surgery on yourself? Estate planning and asset preservation is best done with the help of a professional.

Are you going to spend more money on an estate plan with an attorney? Yes. But do you really want the “cheapest” plan? Worse, are you making matters more complex by doing it yourself and saving a few bucks?

I make my living by being passionate about helping families deal with their estate planning goals, fears and hopes to ensure they leave a legacy they can be proud of, no matter what happens and when it happens. Think about estate planning as saving your family time, money, aggravation, conflict, and from your estate being unnecessarily spent down on long-term care. Then, the real value of working with a professional will be realized.  

Top 7 Estate Planning Questions That Clients Ask

1. What if I don’t have a Power of Attorney, what happens?

You need to make sure you have a Power of Attorney, no matter what age you are. If something happens to you and you can’t make decisions for yourself, you need to make sure someone is appointed to handle your affairs. If you don’t, a guardian may need to be appointed for you. That means going through the courts, something that no one wants to be bothered with.

2. Is probate a big deal in Pennsylvania? Do I need a living trust?

Probate is not the scary process that it used to be, at least in Pennsylvania. Most people in Pennsylvania opt to have a will over a living trust because probate is rather straightforward. Sometimes, an attorney may need to be retained to help with probate affairs, but many times, a family can do it themselves.

3. Why do I need a will if most of my assets are joint or have beneficiaries?

Regardless of if your assets are jointly titled and have beneficiary designations, it still makes a lot of sense to have a will.

First, you may acquire new assets or move assets around during the course of your life. You may forget to re-title beneficiaries, or you may not title the asset jointly.

Second, there are bound to be assets that WILL pass through the will! It always happens. Plus, even if that doesn’t happen, a will is important for other reasons, such as making sure you have an Executor appointed.

Finally, if you are married, a will may not be as important upon the first-to-die, but upon the second-to-die, a will becomes essential because it’s likely that many of those joint assets are no longer jointly held, and will pass through the will.

4. Where do I store my documents, and should an attorney keep a copy?

We generally recommend you purchase a fire-proof records safe for your home and store your original estate planning documents there. They will be safe, but more accessible than a bank safe deposit box. As your estate planning law firm, we keep a copy of your documents on our secure LegalVault service, which also provides you and your health care providers access to your documents.

5. Can I write my plan myself or with a LegalZoom type of service?

Of course you can, but it’s probably not a good idea. Would you skip the doctor’s office and diagnose yourself if you’re feeling sick? Estate planning is best done with an attorney who understands how all of the pieces of the puzzle fit together. Estate planning includes wills, powers of attorneys, and trusts, but it also includes strategies while you’re alive, and strategies for the next generation. Even a “simple” plan is best done with an attorney, because as of our experiences show, even the simple plans require customizations.

6. How often should I update my plan?

Check your documents at least every three years to make sure they still seem current. We recommend that you update the plan when you see a need for a change, and update your powers of attorney every five years.

7. What are the taxes at death and how do I avoid them?

There are both federal estate and state inheritance taxes. Most people today don’t worry about federal estate taxes today, because only folks with more than $5 Million of assets are affected. 

Pennsylvania has a state inheritance tax, and any asset transferred upon death in Pennsylvania is possibly subject to inheritance tax, with very few exceptions. The tax rates are relatively small (4.5% to kids and grandkids), so most of the time, planning to avoid PA inheritance taxes is not worth it. However, every case is different and we can discuss estate and inheritance tax planning strategies with you that may make sense.

Is it time to update your LAST WILL & TESTAMENT? You don't know until you review it! We've put together a few tips this week for when it's a good time for you to pull the will out of storage and give it a review. 

1. THE WILL IS FIVE OR MORE YEARS OLD: You should review your estate plan at least every five years, even if you feel nothing has changed. It's a good habit to get into, so that you can be sure your plan works for you.

2. YOU DO NOT UNDERSTAND THE WILL: If you see parts of the will you simply do not understand, you may want to get it reviewed. Chances are, some of the sections or the language may simply be out of date.

3. YOU GET RE-MARRIED, DIVORCED, OR ARE NOW WIDOWED: The change in your marital status should prompt a will review and mostly likely require significant changes to your WILL.

4. YOUR KIDS WERE YOUNG WHEN YOU WROTE YOUR WILL: Now that the children are older, maybe out of college or even married with children, you probably have quite a few revisions to make in your will. 

5. NEW GRANDKIDS: You may wish to leave grandkids a direct inheritance, or not. But either way, you should make sure your will is reviewed when you have new grandkids. If they come into the inheritance early for some reason, you want to ensure that proper plans are made.

6. YOUR WEALTH HAS CHANGED FOR THE BETTER OR WORSE: Significant changes in your wealth should prompt a review of your will. There may be new strategies, depending on what types of assets you have and what your goals are.

Do you need a review of your Last Will & Testament? Call us to schedule a no-obligation Will review at (215) 706-0200. We'll take 30 minutes of your time and tell you whether you may need an update or not.

This week, I reached into my grab bag for a few best practices in estate planning. Everyone must have an estate plan because without one, you risk leaving your affairs a mess for others. Here are a few tips and ideas:

1. KEEP IT CURRENT:
   Keep your Powers of Attorney up-to-date. In the event of a disability, you want to ensure financial institutions and medical providers will accept these documents without reservation. Update them every 3-5 years.
    
2. DON’T LET PROBATE SCARE YOU:
   In Pennsylvania, don’t let the probate process scare you into writing big expensive estate plans to avoid probate. Probate is a relatively easy process in Pennsylvania compared to other states.
    
3. FOLLOW THE THREE C’S:
   In your estate plan, be CLEAR, be CONSISTENT, and be CAREFUL. Make sure you’re working with an attorney who only practices estate planning so you can rest assured knowing your plan meets this criteria. Make sure the language is clear, that nothing in the plan conflicts, and that you think through what you want your plan to say.
    
4. HOPE FOR THE BEST, PLAN FOR THE WORST:
   Estate planning is about as exciting as going to a dentist for many people. No one wants to do it, but it must be done. While you’re planning, make sure you plan for the worst-case scenario. For example, leaving your son a large inheritance and the chance that he could have creditor problems or he gets divorced and his ex-wife wants half of the estate. Yes, there are strategies we can put in place to protect an inheritance from these types of situations.
    
5. GIFT PROPERLY:
   Want to downsize, help your kids while you’re still living, or take care of the grandkids? Writing a check may make them smile, but there are other ways to make gifts, such as setting up life insurance policies inside trusts (great for asset protection) and creating a pension for life for your kids. If you want to gift, make sure you explore your options with qualified professionals. Doing so may provide multiple benefits to you and your heirs.

Is the Revocable Living Trust, sometimes just called a Living Trust, the ultimate estate planning tool? It depends who you ask, and what state you’re in.

In Pennsylvania, Living Trusts aren’t used commonly as an estate planning tool. Instead, practitioners in Pennsylvania, as well as clients, tend to favor Wills as the fundamental estate planning tool.

Here are five myths about Living Trusts in Pennsylvania:

Myth #1: Living Trusts save, reduce or avoid taxes:
A Living Trust is NOT a tax reduction or avoidance strategy. You simply cannot avoid estate or inheritance taxes by using a living trust. It used to be that more people were effected by the federal estate tax, and that married couples could reduce their estate tax by using credit shelter trusts. But you could do the same thing in a Will!

Myth #2: They prevent estate challenges:
A Will is easier to challenge than a Living Trust, because a Will is probated and is public. However, just because a Living Trust isn’t probated, doesn’t mean it can’t be challenged in court. It just takes a little more time, effort and money to do so.

Myth #3: They avoid probate because probate should be avoided:
Pennsylvania probate is pretty simple, and a run-of-the-mill estate can be probated by the Executor him or herself without the help of an attorney. So probate shouldn't necessarily be avoided at all costs and you shouldn't be scared of probate in PA. Yes, living trusts avoid probate, but your living trust must be 100% funded with ALL of your stuff to do that! Even missing ONE small bank account means your loved ones will have to go through probate. Anyway, probate is not a big deal in Pennsylvania, unlike in other states such as California (yes, living trusts are popular there because probate is a COURT supervised process!).

Myth #4: A Living Trust will make things easier at the end of my life:
Not really… It is probably takes just as much work to probate the will, settle the estate, etc., as it does to manage an ongoing trust. Trusts need to comply with many rules, tax returns must be filed annually for trusts, and more. A living trust will usually require the help and services of a professional.

Myth #5: I need a living trust to shelter assets from nursing home costs:
A living trust would NOT be a good tool to use if you want to shelter some of your assets from being spent down by nursing homes. You need to use a Medicaid Asset Protection Trust, which is IRREVOCABLE, and establish and fund this trust when you’re still healthy. A living trust used in a situation like this would be a disservice to you and your family.

LIVING TRUSTS MAKE SENSE IN SOME SITUATIONS, BUT NOT ALL SITUATIONS.  Estate planning is an individual process that's unique for everyone. A qualified attorney can help guide you to what estate planning tools you need.

Want more information on what estate planning tools make sense for you? Call us today at (215) 706-0200 to schedule your complimentary visit.

Our blog entry this week focuses on five topics that have been hot button issues for clients over the last few months. Estate planning continues to evolve and therefore, we must continue to “think different."

Estate Planning in General: Estate planning today isn’t what it was 5 or 10 years ago. For most families that I see today, saving estate tax dollars is not an objective, because there are simply no taxes to begin with! But just because the tax problem went away (at least for the time being) doesn’t mean you shouldn’t plan. Our clients come to us to make sure their kids and grandkids will be taken care of properly, and that their estate is setup and optimized properly to achieve those goals. In other words, there are many more reasons to engage in estate planning than simply to save taxes.

Powers of Attorney: To put it bluntly, we are living longer. A Will by itself won’t suffice anymore. A Will is a death document, and only kicks in upon your passing. As we live longer, we have more time where we may be incapacitated or incompetent to make decisions. Therefore, powers of attorney, appointing someone to take over your affairs, continue to become more essential.

Long-Term Care: Long-term care costs are rising. See last week's blog entry on the latest average costs in Pennsylvania for long-term care. It is essential that middle class families plan for long-term care costs. There are strategies that can be employed to save at least part of your estate from costs that could ravage your estate.

Non-Probate Assets: More and more, people are acquiring assets that don’t pass their Will, such as IRA’s, 401(k)’s, life insurance, and annuities. In general, any asset with a beneficiary designation form avoids the Will and avoids probate. But it doesn’t mean you shouldn’t plan or protect those assets with trusts or other devices, and it doesn’t mean you should ignore them when planning your Will and estate.

Gifting: 2011 and 2012 present great opportunities to make large gifts without incurring gift taxes. You can optimize your estate plan and take care of your kids or grandkids with life insurance, pensions for life, and other great tools. Gifting may be more limited come 2013, so now is the time to act.

Fall is typically our busiest time for estate planning. Make your appointment now and reserve some time with me today if you want to optimize your estate plan. Call my office today at (215) 706-0200 or schedule an appointment online on our web site.

Is your attorney thinking about your case or his/her bottom line? How do you know for sure? When it comes to estate planning, and drafting your will, trust, powers of attorney, etc., you want to make sure you’re getting a plan that is based on your best interests.

Here are a few points to consider, red flags, and questions to ask to make sure your hiring an ethical attorney.

1. Are you meeting with the actual attorney who will be drafting your documents? If not, that is a red flag, and the firm/company could be breaking the law.
   
   
2. Ask if the attorney actually drafts the documents or not. Sometimes it is ok for a paralegal to draft part of the document, but some attorneys do not draft at all, which is a problem.
   
   
3. Ask if you’ll get to review the documents or not before you sign them. Also, will the attorney take the time to answer questions you have about the documents?
   
   
4. Has the attorney actually provided reasoning behind why he or she is putting in place a particular plan? If the attorney recommends a trust, why? If a will, why? You should know exactly why you are getting certain documents and plans.
   
   
5. The attorney should learn about your family, the dynamics, unique circumstances, and more. If they don’t inquire about your family and try to learn about you, that’s a red flag.
   
   
6. Don’t be afraid to ask questions. If the attorney doesn’t want to spend the time with you to answer your questions, you should probably see someone else.