Estate Planning

Many people think of estate planning as writing a will, but there’s more to it than that. Through estate planning, you ensure that all the types of property you own pass at your death to whom you want, how you want. “All the types of property that you own” includes property that typically passes by will (for example, property owned in your name and property owned jointly with someone other than your spouse), as well as property that passes outside of your will (for example, life insurance, 401(k) plans, IRAs, and property owned jointly with your spouse).

We’ll also look at whether you want property to pass to your loved ones outright or “in trust.” A trust is a plan you create that specifies how the property can be used and names a “trustee” to take care of the

responsibilities of property ownership. Trusts are often used when you want successive people to have use of the property (for example, “to my wife for life, then to my children”), when minor children would otherwise receive the property (because minors can’t legally own property), or when you want to make sure your gift doesn’t affect the benefits or services available to your loved one.

Estate planning also involves other considerations. We can plan to minimize estate taxes, where those are a factor. If you have minor children, we can make plans for who will raise them, and plan to provide that person with money to help. Together, we’ll identify and address your concerns.

Estate Planning Frequently Asked Questions

What are the common estate planning documents?

Estate planning usually involves four major documents: a will; a financial power of attorney; a health care power of attorney; and an advance health care declaration (also known as a “living will”).

  • A will is a document that says what you want to happen to property you own at the time of your death.
  • Powers of attorney are documents whereby you (the “principal”) appoint a person or people (your “agent” or “agents”) to act on your behalf. An agent under a financial power of attorney has authority to manage your financial affairs. An agent under a health care power of attorney has authority to manage your health care, including granting consent for medical treatments and admitting you to a care facility. A power of attorney can give the agent power immediately or can give the agent power only if certain conditions occur as described in the power. Similarly, the agent’s power to act can be broad or narrow, depending upon how the power of attorney is drafted.
  • An advance health care declaration is a document in which you express which medical treatments you want (or don’t want) if you are terminally ill or permanently unconscious: for example, CPR, a feeding tube, or a mechanical ventilator. It’s only effective if you are incapacitated and unable to make decisions for yourself.
What are the benefits of creating an estate plan?

Estate planning allows you to plan for illness or incapacity and gives you more control over what happens in the future.

  • Will: Having a will allows you to specify what happens to your assets at your death. In your will, you’ll also appoint your estate’s “executor.” This is the person you entrust with winding up your affairs, including collecting your assets, paying your debts, and distributing your assets according to the directions you provide in the will. Finally, if you have minor child or children, this document will include a provision appointing your child’s “guardian.” This is the person you choose to have legal custody of your child in your absence.
  • Powers of attorney: Powers of attorney allow other people to act on your behalf during your lifetime. Even while you are mentally competent, having a power of attorney can make it easier to manage your affairs, especially if age or illness affect your strength or mobility. For example, if you were in a serious car accident and needed skilled rehabilitation care, your agents could find the best possible facility, complete admissions paperwork, and make arrangements to pay your mortgage and other bills while you recovered. If you become mentally incapacitated, powers of attorney can be instrumental in making sure that someone is managing your affairs and that decisions made for you reflect your priorities.
  • Advance health care declaration: An advance health care declaration helps you clarify and express your goals for medical treatment. When a person is terminally ill and isn’t able to make decisions, family members often are asked to decide between allowing a loved one to die naturally or prolonging the person’s life using painful and invasive treatments. Absent your input, family members might feel uncertain about what you would want and might feel guilty about declining all available treatment – even when this treatment dramatically reduces your quality of life and only prolongs the process of your death. Or, you may have wanted all available treatment, no matter what, but doctors might assure your family members that you “would never want to live this way” and persuade them to decline treatments. An advance health care directive can help solve these miscommunications, providing a record of your treatment preferences to serve as a guide for your end-of-life care.
What happens if I die without a will?

If you die without a will, your property will pass according to Pennsylvania law. Who receives the estate’s net assets depends upon who survives you. For example, if you are married at the time of your death and you haven’t had any children and your parents died before you, your spouse would receive your entire estate (after your debts were paid). If you are survived by your parents, your spouse, and your children, under the law, your spouse would first receive $30,000 of the estate’s assets (after the estate’s debts had been paid). Your spouse then would receive one-half of any remaining funds, with your children splitting the remaining half.

Although Pennsylvania’s law for people who die without wills tries to distribute assets the way the legislature thinks that most people would want, it’s only a guess. Shares of your estate can easily go to someone you didn’t intend and wouldn’t have chosen. These gifts also can be problematic if the recipient is a minor or is incompetent, because a court may have to appoint a guardian to ensure the money is spent appropriately. Finally, gifts to persons with disabilities who receive SSI or Medical Assistance can make the recipients’ resources exceed the limits for eligibility for those programs, making the recipients ineligible for benefits crucial for their well-being. All of these issues can be addressed through a properly-drafted estate plan.

What’s a “revocable trust,” and should I use one to avoid probate costs or taxes?

A trust is a legal entity that divides the obligations and benefits of owning property. The “trustee” is charged with the legal responsibilities of the trust’s property, while the benefits of the property flow to the trust’s “beneficiary.” In the trust document, the person making the trust (referred to as the “settlor” or “grantor”), gives money to a “trustee” to hold for the benefit of the trust’s beneficiary. The trustee has a legal duty to manage the trust funds according to the terms set out in the trust document. Typically, the terms of a “revocable” trust allow the grantor to revoke the trust and take back the trust’s money.

In states where probate costs are high, people sometimes put their belongings into revocable trusts during their lifetimes. Since trust assets aren’t subject to probate, a revocable trust avoids probate fees being assessed on the value of the trust’s assets. The settlors can revoke the trust at any time, and usually retain a significant amount of control over the trust’s property.

Here in Pennsylvania, revocable trusts aren’t necessary in order to avoid high probate fees. Probate fees here are quite low. In Montgomery County, as of March 2017, probate fees on the first million dollars of an estate are $462.00, and $330.00 for each additional million. Putting assets into a revocable trust doesn’t result in any tax savings, either.

There are other types of trusts that can be relevant to estate planning; in particular, trusts established under your will to receive assets of minor or disabled beneficiaries. Usually, though, it’s not necessary for a person to establish a trust during his or her lifetime.

How long does estate planning usually take?

Estate planning is a process, and it shouldn’t be rushed, but the total time commitment is fairly small. For most people, estate planning involves the following steps:

  • We meet for an initial consultation to discuss your circumstances and your plans;
  • I generate document drafts for you to review;
  • We discuss by phone any needed changes or corrections;
  • We meet and you sign the documents;
  • I have the documents notarized and return them to you for safekeeping.

Generally, it takes about two months or so from the initial consultation until planning documents are signed and returned. However, individual circumstances vary. Some circumstances require a shorter or longer timeline.