Young Families

If you are the parents of or caring for young children or dependents, you need to ensure that you have a plan in place if something happens to you.

Most younger families don’t give ‘estate planning’ a lot of thought because they don’t think they have enough of an estate to worry. But estate planning is more than just about money. It’s about ensuring a smooth transition of all of your affairs if something happens to you at anytime.

A key concern we have for younger families is making sure Guardians are appointed, both in a Power of Attorney and Last Will & Testament. If you do not appoint guardians yourself, and something happens to you, the Pennsylvania Orphans’ Court will get involved and guardians will be appointed by a judge. 

Do you really want somebody you don’t know appointing a person to care for your children? Wouldn’t you feel better off if you decided that in advance?

Every family will have different goals when it comes to estate planning. This is just one of many examples where it’s more than just money as a concern.

If you haven’t yet planned for your family, please call my office today at (215) 706-0200 for your complimentary appointment.

Many people feel guilty about procrastinating about their estate plan. But procrastination is normal. Frankly, not many people want to consider their own demise. But you can't wait until it's too late to start your estate planning. Remember that it's not just about you, but it's about your family and legacy. The younger you are, the more options we have to protect your estate and the easier it is to plan.

Make sure you have valid Powers of Attorney, a will and/or a trust, and any other estate planning tools that your attorney deems necessary.

Term Life Insurance vs Whole Life Insurance - Why It Matters

Life insurance is a commonly used tool in estate planning, but often misunderstood or misapplied. It is one tool of many, and you should consider life insurance as part of a comprehensive plan.

Term life insurance is essential insurance that you rent for a period of time (typically 20 years). Term insurance is affordable if you’re young and healthy, and generally serves a specific purpose, such as premature death. You could instantly make up for income loss, supporting children, etc. Term insurance typically is used for younger people who need this affordable protection. The disadvantage of term insurance is that once your term expires, the insurance premiums skyrocket or the policy lapses. There is also no cash value or other benefits to these policies.

Whole life insurance is a policy that accumulates cash value and can offer a guaranteed death benefit. Certain types of whole life insurance policies can provide unique estate planning benefits, such as the ability to add an “accelerated death benefit” or long-term care rider. With this type of policy, life insurance is no longer just a benefit to your loved ones, but a benefit to you as well if you need long-term care (In Pennsylvania, nursing home costs are surpassing the $100,000/year mark easily). 

Life insurance generally passes inheritance tax free in Pennsylvania. Life insurance death benefits are also income tax free. Finally, you may use life insurance if you have a large estate to fund an Irrevocable Life Insurance Trust, so that the life insurance benefits aren’t included in the estate for tax purposes.

If you want to learn more about how life insurance may benefit you and your estate, contact The Law Offices of Jeremy A. Wechsler today for your consultation.

It's not uncommon to hear people confuse a will and an estate plan. A will can be part of an estate plan, but is not a complete estate plan.

The question is, what is a "complete" family estate plan? Here's my definition broken down into bullet points:

1. Provides a legacy that your loved ones will be proud of for years to come;
2. Ensures your property passes to whom you wish it to pass;
3. Protects the inheritance from outside forces, such as creditors, divorces and lawsuits;
4. Addresses incapacity and long-term illness planning; and
5. Saves your heirs every tax dollar possible, and saves them from making mistakes when inheriting your estate.

Estate Planning for Non-Traditional Families

Is your family of the “Leave It to Beaver” variety -- opposite-gender parents, the first marriage for each, one or more kids, all healthy and thriving? If so, your estate plan will probably be pretty straightforward. But if not, it's not as simple and you have a lot of company.

The percentage of married households in the United States fell from 55 percent in 1990 to 48 percent in 2010. Perhaps this number will begin to rise again with same-sex marriages being honored in more and more states. About 40 percent of all marriages end in divorce. Three quarters of people who divorce remarry -- accounting for a pretty large proportion of the 48 percent of American households that are married.

Nearly 1.5 million babies a year are born to unmarried women, more than a third of all births.This can complicate matters, especially when the father is not identified or, in the case of donated sperm, does not exist. It also can mean a greater need for planning when there is no obvious back-up parent if something happens to the mother.

If you are in a relationship, but not married, been married more than once, have children by more than one partner, or have beneficiaries who cannot manage funds for one reason or another, then it's more important that you do estate planning and your planning cannot be plain vanilla. Here are a few tips to consider:

• Give Your Partner Rights. There are laws in place empowering spouses and governing the distribution of property in the event of death. The so-called "rules of intestacy" provide that property will pass to spouses and children, or to parents if someone dies without a spouse or children. But no laws protect unmarried partners or unadopted children. There have been many cases of parents pushing aside the same-sex partners of their children upon death or incapacity. We can all use wills,trusts, durable powers of attorney and health care proxies to choose who should step in for us when needed and who should receive our property.
  
  
• But Don't Give the New Spouse Too Many Rights. All too often, despite the best of intentions and good will, when parents remarry the new family doesn't bond. The children from prior marriages or relationships don't become friends with one another or with the new spouse of their father or mother. Frequently, the death of one spouse means that all of the assets of both families end up with the surviving spouse and ultimately pass to his or her children and grandchildren. Frank discussions about what the new couple wants and planning to make sure it plays out as planned can prevent a lot of misunderstanding and resentment. Again, wills, trusts, durable powers of attorney and health care proxies can permit the new couple to choose the outcome they prefer, rather than just let life (and death) happen and the chips fall where they may.
  
  
• Don't Be Afraid to Talk Pre-Nup. While most people entering a first marriage have no children and few assets, this is not the case with a second or third marriage. Before getting married again, the couple needs to talk about what they have in mind in terms of mutual financial support of one another and of their children from prior marriages and relationships. Then they need to put their understanding in writing so that down the road there are no misunderstandings or different memories of what they agreed. If memorialized in a prenuptial agreement, it will also be legally enforceable. If circumstances change, the couple can always modify their agreement.
  
  
• Use Trusts. Wills are generally straight forward and blunt instruments. When you pass away, your property passes to the people you name. Wills do not easily permit more flexible planning. For instance, you may want to permit your new spouse to live in your home for as long as he wants, but for it to ultimately pass to your children and grandchildren. A trust permits you to plan for this scenario, giving your spouse rights, but someone else -- the trustee -- the power to manage the property and protect it for the next generation. Or a couple could pool all of their resources in a single joint trust for their benefit during their lives, with the funds remaining after they have both passed away to be distributed equally to the children they each bring to the new relationship or marriage.
  
  
• Goals First, Planning Second.  No planning can take place in a vacuum or based on assumptions without asking questions. Anyone considering planning for themselves and for loved ones, whether in a traditional or non-traditional relationship, needs to start by listing her goals. Is her primary concern providing for herself? Leaving an inheritance to children? Protecting a spouse or partner? Or a pet? Making sure children are independent, but have a safety net if necessary? Of course, most of us don't have just one goal, but we should start by writing them all down. Then we can see if it's possible to achieve all of them, or if we need to prioritize. Ultimately, the estate plan should reflect these goals and priorities. While this is true of anyone doing estate planning, it is more important the more family and non-family bonds one has because the plan will have to balance and prioritize more interests.

The bottom line is that our laws for distribution of property and rights in the event of incapacity are based on a vision of a marriage between one woman and one man with one or more children. However standard this ever was in reality, it is much less the norm today, almost certainly applying to fewer than half of American adults. For those who don't fit the one nuclear family mold, planning is both more important and more interesting. Don't put it off.

Is a simple will really so simple? Jeremy Wechsler shares with you his thoughts about what a simple will really means, and why it is a disservice for you and your family. Read more in this blog post.

Pennsylvania's DOMA law (Defense of Marriage Act), despite was struck down in May 2014 by a federal court in Whitewood v. Wolf. For same-sex couples, Pennsylvania now has marriage equality, which makes the state more welcoming to same-sex couples.

Whitewood v. Wolf has the following implications for same sex couples in Pennsylvania:

• Same-sex couples in Pennsylvania can now get married in Pennsylvania. Pennsylvania does not recognize common law marriages.
• Pennsylvania will now recognize an out-of-state marriage between two men or two women.
• Same-sex marriages in Pennsylvania are now legal, which has significant implications for Pennsylvania Inheritance Tax purposes. In Pennsylvania, legally married couples pay 0% to transfer assets to each other upon death. Prior to Whitewood v. Wolf, same-sex couples, even if they were married, had to pay a 15% inheritance tax.

Pennsylvania is one of many states to have their DOMA law struck down in the last year. Governor Corbett has decided not to challenge this ruling, effectively making it law. The PA Legislature could always attempt to pass a new law, but the likelihood of this seems slight.

There are strategies that same-sex couples and same-sex families who reside in Pennsylvania can employ to create a better estate plan, taking advantage of all the tax savings available to you. For more information, contact my office today at (215) 706-0200. Jeremy A. Wechsler regularly assists same-sex couples in Pennsylvania, including Bucks County, Philadelphia and Montgomery County, and can help your family maximize tax planning strategies. 

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.

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.