Estate Planning

Wednesday, August 14, 2019

What is a Power of Attorney?

A power of attorney is an estate planning document that has a variety of uses. There are several types of these documents available, and each one performs a slightly different function. One or more of these plans may be a good idea to include as part of your estate plan.

What is a Power of Attorney?

A power of attorney gives another person permission and authority to make decisions regarding various aspects of your life if you can’t make those decisions yourself or if you just want to hand over control to a friend or loved one for any other reason.

A power of attorney gives someone else, who does not have to be an attorney, the ability to make decisions for you. You are essentially authorizing this other person to act on your behalf either generally or if certain conditions are met.

You must complete a document to give this power to someone else. This document may need to be notarized or go through another type of authentication process.

Types of Powers of Attorney

Several kinds of powers of attorney may be useful for your estate plan. These often overlap in many circumstances.

  • General Power of Attorney. This power of attorney is the most extensive option available. It gives the agent broad authority to make decisions and take action on your behalf. These are often used in situations where you become incapacitated or you are unavailable for any other reason. It is crucial that you trust the person you are granting this power to because this type of document can be prone to abuse.
  • Limited or Special Power of Attorney. This document applies to only very specific aspects of your life. For example, you may want to grant someone control over a property to maintain and manage it while you are out of the country. A document that fulfills this purpose may be limited in both timeframe and scope.
  • Durable Power of Attorney. Powers of attorney are generally only valid as long as you have mental capacity. However, a durable power of attorney will still be active if you lose your mental capacity. These can either remain in effect, or they can become active when you can no longer manage your own affairs.
  • Springing Power of Attorney. This type document only “kicks in” if certain conditions are met. The most common example is one where you lose mental capacity, and you have arranged for a loved one to take care of your affairs if this happens.
  • Healthcare Power of Attorney. A healthcare power of attorney gives someone the authority to make your healthcare decisions if you are disabled due to illness or an accident. This person will provide doctors with permission to operate, for example, and they may even make the decision of whether to “pull the plug” as well. It is critical that you let this person know your expectations regarding how you want your healthcare to move forward in these situations.

Someone who creates a power of attorney must be competent at the time to do so. That means that planning ahead is vital to creating a valid, legal power of attorney document.  

 


Tuesday, April 16, 2019

Estate Planning - Save on your taxes

Many people are under the misconception that estate plans are only necessary for those with substantial wealth. In fact, estate plans are important for everyone who wants to plan for the future. For those unfamiliar with the concept, an estate plan coordinates the distribution of your assets upon your death. Without an estate plan, your estate (assets) will go through the probate system, regardless of how much or how little you have. There are many reasons that everyone needs an estate plan, but the top reasons are:

1. Protecting You and Your Family

Most people associate an estate plan with death, but an estate plan also comes into play if you become incapacitated. Through a proper estate plan, you can designate who will be responsible for making your financial and medical decisions, the authority they will have, and restrictions you would like placed on their power.

2. Distributing Your Assets as You See Fit

Without an estate plan, your estate will go to the probate courts, and your assets will be distributed according to the state’s intestacy laws, which generally prioritize spouses, children and parents. In addition, not having a will or trust in place lends itself to the potential of disputes between surviving family members. The best way to ensure that your beneficiaries receive the inheritance you intend for them is by having a well-conceived estate plan.

3. Reducing Taxes

Whether married or single, having an estate plan can significantly reduce taxes owed upon the transfer of your assets to your heirs.. Without proper planning, any transfers from you to a beneficiary may be subjected to federal and state taxation. Trusts, one of the most well-known, but least understood, estate planning tools, present  excellent opportunities for reducing taxes associated with inheritance.

Through a system of trusts and transfers, you can reduce the overall tax burden associated with the inheritance. For those with substantial assets, more advanced tax planning strategies will be necessary. Regardless of your current wealth, you will likely be able to reduce the taxation of your estate’s assets with the help of an experienced estate planning attorney.

4. Providing for Your Family as You Believe Best

By combining the ability to distribute assets with other estate planning tools such as trusts, you can include conditions for each recipient. This ensures that the money you want to give your nephew for college will actually be used for college, even if that is still 10 or 15 years away.

As noted, estate planning is for everyone – not just the super-wealthy. Whether it’s avoiding a future family dispute, helping a loved one later in life, or reaching any other goals or objectives, having an estate plan is the best way to protect your interests.


Tuesday, January 8, 2019

Do you Need a Living Trust?

Wills and trusts can be extremely complicated, especially when they relate to one another or feed off of each other. You can certainly have both tools as part of your estate  plan. Depending on your unique financial circumstances and personal preferences, it may make sense only to have a will. Moreover, there are some things that a will cannot do that a trust can, and vice versa. Are there ever situations where a trust can completely replace a will? Probably not.

Why Would I Want a Trust Instead of a Will?

The main reason that people prefer trusts instead of wills is that trusts  do not have to be probated, which can be an expensive and time-consuming process. It can also be difficult for your loved ones in some situations. A probated will is also a matter of public record, which may not be desirable for some people. For these and  and other reasons, some individuals choose to use an estate planning tool that will avoid the probate process -- a living trust.

In some situations, using a trust can also reduce or eliminate estate taxes, and a trust is especially helpful if you own real property in several states. Placing all of that property into the trust allows your loved ones to avoid opening probate in each of those states.

To set up a living trust, you simply draft the trust documents and then fund the trust. Preparing the materials alone will not ensure that your property avoids the probate process. You must then transfer property into the trust, or  “fund the trust” to obtain this benefit.

The Connection Between Trusts and Wills

While trusts can be extremely useful, there are  limitations. As a general rule, your living trust cannot  and should not replace a will. If nothing else, your will provides a “catch-all” for any property that is not in your trust. That way, you can still dictate who gets what instead of relying on state intestacy laws to divide your property.

It may not be practical to put some assets into a trust. For example, moving items that are not titled, , such as jewelry or furniture, is difficult or sometimes impossible. Additionally, you cannot name a guardian  for your minor children in a trust document; this can only be done in a will. Finally, some retirement plans do not permit trusts to be owners. You may be able to set out the trust as the beneficiary of the plan, but changing ownership often is not possible. Setting the beneficiary as a trust rather than a spouse, however, may have complicated tax consequences that need to be considered.

Can a Trust Replace a Will?

If you are wondering whether you can establish a trust and forego a will, the answer is likely no. Living trusts and wills pair nicely together, and both are beneficial tools to be included in your estate  planning.


Friday, June 29, 2018

How a Prenuptial Agreement Can Protect Your Estate


There are many circumstances that can impact an estate plan, not the least of which is divorce. While ending a marriage is complicated, it is not only crucial to arrive at a fair and equitable distribution of the marital assets, but to preserve your estate as well.

While the laws vary from state to state, it is important to understand the difference between separate and marital property. Generally, separate property includes any property owned by either spouse before the marriage, as well as gifts or inheritances received by either party prior to or after the marriage.

Marital property, on the other hand, is any property that is acquired during the marriage such as houses, cars, retirement plans, 401(k)s, IRAs, life insurance, investments and closely held business, regardless of who owns or holds title to the property.
Read more . . .


Friday, June 8, 2018

Estate Taxes, Inheritance Taxes, and Trump's Tax Plan


While the terms "estate tax" and "inheritance tax" are often used interchangeably, they are not synonymous. Let's try to clarify the difference.

Estate Tax

Estate tax is based on the net value of the deceased owner's property.  An estate tax is applied to these assets when they are transferred to the beneficiary. It is important to remember that an estate tax doesn't have anything to do with the beneficiary or that person's resources.
Read more . . .


Monday, April 23, 2018

What is a Revocable Living Trust?


There are many benefits to a revocable living trust that are not available in a will.  An individual can choose to have one or both, and an attorney can best clarify the advantages of each.  If the person engaged in planning his or her estate wants to retain the ability to change or rescind the document, the living trust is probably the best option since it is revocable. 

The document is called a “living” trust because it is applicable throughout one's lifetime.  Another individual or entity, such as a bank, can be appointed as trustee to manage and protect assets and to distribute assets to beneficiaries upon one's death.
Read more . . .


Tuesday, November 14, 2017

Gifting to Step-Children in your Estate

Today, blended families have become increasingly common, and many individuals have step-children, that is, children of a spouse or partner. In situations where step-children have not been legally adopted, however, they do not have a legal right to an inheritance from a step-parent. For those who wish to leave step-children part of their estate , it is necessary to include them in an estate plan.

The easiest way to leave gifts to step-children is to name them in a will. As with any other gift, they can be given a percentage of the estate, or specific gifts. If there are other children involved, it is important to avoid confusion by naming each child and step-child by using their individual names, rather than terms such as "descendants," "heirs," or "children."

There are also a number of estate planning tools that can be utilized to include step-children in an inheritance. If the objective is to avoid probate, for example, a revocable living trust can be established in which a step-child is named as a beneficiary. Moreover, it may be necessary to provide for a disabled step-child who is eligible for public benefits by establishing a special needs trust. Lastly, a step-child can also be named as a beneficiary in a life insurance policy or a pay-on-death financial account.

While there is no legal obligation to leave step-children an inheritance, it may be the best choice for those who have a close relationship, or played a significant role, in raising them. However, this will reduce the amount of assets available to other children and beneficiaries. Because blended family relationships are complex and subject to emotional challenges, it is important to explain these decisions with all family members.

By engaging in an open and honest dialogue, you can minimize the potential for strife and the possibility of a will contest. In particular, it is important to clarify why you gave each recipient a gift, the selection of your executor, and your thoughts about the family.  Lastly, you are well advised to engage the services of an estate planning attorney who can help ensure your wishes regarding step-children are carried out.


Wednesday, October 18, 2017

Create an IRA trust and leave a lasting legacy for children and grandchildren


 

 Join us at a seminar to learn how to: 

Achieve wealth accumulation 

Maximize income tax deferral 

Create divorce and creditor protection 

Provide a pension for a pensionless generation 

 

Tuesday, Oct. 24, 2017 7:30 to 9:00 am 

Breakfast Served 

Concord Country Club, Brandywine Room 

1601 Wilmington Pike, West Chester, PA 19382 

 

Begin Planning Now For a Lifetime. 

Read more . . .


Thursday, June 8, 2017

The Medicaid Asset Protection Trust

Estate Planning: The Medicaid Asset Protection Trust

The irrevocable Medicaid Asset Protection Trust has proven to be a highly effective estate planning tool for many older Americans. There are many factors to consider when deciding whether a Medicaid Asset Protection Trust is right for you and your family. This brief overview is designed to give you a starting point for discussions with your loved ones and legal counsel.

A Medicaid Asset Protection Trust enables an individual or a married couple to transfer some of their assets into a trust, to hold and manage the assets throughout their lifetime. Upon their deaths, the remainder of the assets will be transferred to the heirs in accordance with the provisions of the trust.

This process is best explained by an example. Let’s say Mr. and Mrs. Smith, both retired, own stocks and savings accounts valued at $300,000. Their current living expenses are covered by income from these investments, plus Social Security and their retirement benefits. Should either one of them ever be admitted to a skilled nursing facility, the Smiths likely will not have enough money left over to cover living and medical expenses for the rest of their lives.

Continuing the above example, the Smiths can opt to transfer all or a portion of their investments into a Medicaid Asset Protection Trust. Under the terms of the trust, all investment income will continue to be paid to the Smiths during their lifetimes. Should one of them ever need Medicaid coverage for nursing home care, the income would then be paid to the other spouse. Upon the deaths of both spouses, the trust is terminated and the remaining assets are distributed to the Smiths’ children or other heirs as designated in the trust. As long as the Smiths are alive, their assets are protected and they enjoy a continued income stream throughout their lives.

However, the Medicaid Asset Protection Trust is not without its pitfalls. Creation of such a trust can result in a period of ineligibility for benefits under the Medicaid program. The length of time varies, according to the value of the assets transferred and the date of the transfer. Following expiration of the ineligibility period, the assets held within the trust are generally protected and will not be factored in when calculating assets for purposes of qualification for Medicaid benefits. Furthermore, transferring assets into an irrevocable Medicaid Asset Protection Trust keeps them out of both spouses’ reach for the duration of their lives.

Deciding whether a Medicaid Asset Protection Trust is right for you is a complex process that must take into consideration many factors regarding your assets, income, family structure, overall health, life expectancy, and your wishes regarding how property should be handled after your death. An experienced elder law or Medicaid attorney can help guide you through the decision making process.
 


Tuesday, February 14, 2017

What are the roles of an Executor/Administrator?

Responsibilities and Obligations of the Executor/ Administrator

When a person dies with a will in place, an executor is named as the responsible individual for winding down the decedent's affairs. In situations in which a will has not been prepared, the probate court will appoint an administrator. Whether you have been named  as an executor or administrator, the role comes with certain responsibilities including taking charge of the decedent's assets, notifying beneficiaries and creditors, paying the estate's debts and distributing the property to the beneficiaries.

In some cases, an executor may also be a beneficiary of the will, however he or she must act fairly and in accordance with the provisions of the will. An executor is specifically responsible for:

  • Finding a copy of the will and filing it with the appropriate state court

  • Informing third parties, such as banks and other account holders, of the person’s death

  • Locating assets and identifying debts

  • Providing the court with an inventory of these assets and debts

  • Maintaining any assets until they are disposed of

  • Disposing of assets either through distribution or sale

  • Satisfying any debts

  • Appearing in court on behalf of the estate

Depending on the size of the estate and the way in which the decedent's assets were titled, the will may need to be probated. If the estate must go through s probate proceeding, the executor must file with the court to probate the will and be appointed as the estate's legal representative.

By doing so, the executor can then pay all of the decedent's outstanding debts and distribute the property to the beneficiaries according to the terms of the will. The executor is also is also responsible for filing all federal and state tax returns for the deceased person as well as estate taxes, if any. Lastly, an executor may be entitled to compensation for the time he or she served the estate. If the court names an administrator, this individual will have similar responsibilities.

In the end, being name an executor or appointed as an administrator ultimately means supporting the overall goal of distributing the estate assets according to wishes of the deceased or state law. In either case, an experienced probate or estate planning attorney can help you carry out these duties.


Thursday, September 29, 2016

Do your College Age Children have a POA and HIPAA Release?


It is one of the biggest days of your life and theirs. It is the day you finally send your child off to college.  On that day you will probably realize that they aren't a kid anymore, and so will the law.  When your child becomes 18 you are no longer able to access their medical records.  So if they have a drastic accident or illness during their collegiate years, you may not receive communication from medical personnel and will be legally unable to help them.


Read more . . .


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