What is Estate Planning?

Estate planning is the process of getting your personal and financial affairs in order in the event you become mentally incapacitated or die.  The basic documents of your estate plan will include a last will and testament, a power of attorney and a living will.

What is a Last Will and Testament and how does it work?

As a part of the estate planning process, a Last Will and Testament is typically drawn up. This document, commonly called a “will”, contains a written set of instructions to your family and loved ones as to how you want your estate to be distributed after your death.

A Last Will and Testament generally consists of four parts:

• Part one deals with how your final bills will be paid;
• Part two deals with how the cost of settling your estate and any estate taxes and/or inheritance taxes will be paid;
• Part three deals with who will get the balance of your estate, how they’ll get it, when they’ll get it and any gifts you wish to make from your estate.
• Part four deals with who will be in charge of overseeing the settling of your estate (the Personal Representative/Executor) and what powers they will have, and, if you have minor children, who will be responsible for raising the children (the Guardian);

What is a power of attorney?

This document permits you to name an agent who can assist you in making financial and healthcare decisions in the event you become disabled or incapacitated.

What is a living will?

In this document, you can inform your physician whether you desire for him or her to take heroic or extraordinary medical means to prolong your dying process if you are mentally incapacitated and cannot make a decision yourself, and you are in an end stage medical condition or you are in a permanent coma.

What is Probate?

Probate is the process of proving that the decedent’s will is valid. The Personal Representative, or Executor, begins the process by filing a petition for probate at the Register of Wills Office in the county where the decedent died.

Do I need a Probate?

Not always. If the decedent owned no probate assets upon death, it may not be necessary. Generally probate assets are titled in the decedent’s name alone. If the decedent owned only a joint banking account, and an IRA or life insurance policy with a designated beneficiary, these are non-probate assets and do not have to go through probate.

What is Estate Administration?

Estate Administration is the process of managing a person’s property after death. It involves collecting all of the decedent’s assets, paying all of their debts, including taxes, and distributing the decedent’s assets to the heirs and beneficiaries of the estate.

What is a Personal Representative or Executor of a will?

The Personal Representative, or Executor, is the person named in the Last Will and Testament to manage the Estate Administration process. The responsibilities include initiating the Estate Administration process, notifying all interested parties, managing assets, paying all of the estate’s debts and distributing the assets to the beneficiaries. In many cases the Personal Representative works closely with an attorney during the process.

Who Pays Your Estate’s Expenses?

In most cases, the personal Representative will not be personally liable for any estate expenses, including payment of taxes.

However, he or she, is responsible for paying all the estate expenses from the assets of the estate. If there are not enough assets to pay all the estate expenses, Pennsylvania determines the priority of the expenses to be paid.

How is Your Administration of the Estate Completed?

The administration of your estate can be completed either formally or informally.

Under the formal method, the personal Representative prepares and files with the court an accounting of the administration. Notice is given to all interested parties and they have the opportunity to appear before the court and object to the accounting. After the court issues its decree, the personal Representative distributes the assets to the beneficiaries. It’s important to know that this is not a speedy process and can take more than a year to complete.

Under the informal method, the Personal Representative prepares a Family Settlement Agreement and informal accounting. Once all the beneficiaries, and other interested parties, have signed the agreement, the personal Representative can distribute the assets and avoid the additional cost and delay of a formal accounting.

What Happens if You Die Before Making a Will?

All states, including Pennsylvania, have a legal process in place for determining who will inherit your property if you fail to make a valid will through the state’s “intestacy laws.”

What does it mean to have died “intestate?”

This simply means that you have died without having made a valid Last Will and Testament.

If this is the case, then the intestacy laws of Pennsylvania will determine who will inherit your property. While each state has different laws, they all follow the same general pattern – first your spouse and your children will inherit your property; if you don’t have a spouse or any children, then your parents will inherit your property; if your parents have predeceased you then your brothers and sisters will inherit your property; if not, then your property will go to your nieces and nephews.

Read what happened to Aretha Franklin when she died without a will.

When should you start estate planning?

It’s important to consider your estate plan earlier rather than later when you might not have the ability or capacity to prepare your Last Will and Testament.

Even if you have a modest estate, it’s important that you know the basics of estate planning, as well as get expert assistance in making plans. Young or old, wealthy or not so much, you can make life easier on your loved ones during a time of grief by being proactive. For this reason, we advise you to start the estate planning process as early as possible.

5 Tips to Start the Estate Planning Process:

1.     Take inventory of your assets and liabilities.

Compile a list of the value of your home and other real estate, cars, jewelry, artwork, etc. Gather recent bank, brokerage, and other account statements. Make a list of all insurance policies, their cash values and death benefits. Finally, list all liabilities, including mortgages, lines of credit and other debt.

2.     Define your estate planning goals.

To whom do you want your assets distributed, and in what proportions? Who should manage your affairs if you become incapacitated? Who should distribute your assets upon your death? Who will make health care decisions on your behalf if you become incapacitated? Answering these and other difficult questions before you meet with an elder law attorney can save you both time and money.

3.     Have an elder law attorney draft your documents.

Since laws regulating estate settlement vary from state to state, we recommend that you meet with a highly experienced attorney to prepare your estate plan. The compassionate, caring, and experienced attorneys of Gummer Elder Law help seniors and their family members navigate the difficult and complex requirements necessary to plan for their future.

Our services protect you with the preparation of Wills, Power of Attorney, Living Wills, and Trusts. Also, our Elder Law Attorneys can assist with Guardianships, Medicaid (Asset Protection) Planning, Probate, Estate Administration, and Nursing Home and Long Term Care matters.

4.     Follow through on your plan.

If you set up a trust, fund it promptly. If you fail to do so, the agreement won’t take effect, and your assets may not pass to your beneficiaries as you have intended.

5.     Reduce your overall estate with charitable gifting.

Charitable gifts will reduce your gross estate.

Please take the time to explore our website and become familiar with the practice of Gummer Elder Law. Contact us with any questions about estate planning or any other inquiry as it relates to the practice of elder law.

If you are ready to begin the estate planning process review the checklist below.

How to Make a Great Estate Plan

Make a will

Most Americans over 45 haven’t drafted a will. Some people say they haven’t had time, while others don’t think they need one.

But when you die without making a will the Commonwealth of Pennsylvania will say who gets your  assets.

Give someone power of attorney

It’s not a pleasant thing to think about, but there may come a time when you can’t make medical or financial decisions for yourself.

In situations like that, it’s a good idea to have set up health care directives, including a living will and a medical power of attorney that allows your agent to make medical decisions on your behalf.

You can also set up a financial power of attorney arrangement that will give someone you trust the authority to handle your financial affairs in the event you are unable to do so.

Also, consider discussing your wants and plans with them so they have an understanding of your wishes.

Learn why it’s important to pick a power of attorney ahead of time.

Look after your children

If your children are still minors, you should name an adult (trustee) to manage any money and/or property they might inherit. This can be the same person you name as a guardian in your will.

Fill out beneficiary forms

Another part of estate planning is designating a beneficiary for your retirement plans. This will allow your heirs to access this money and avoid probate court. Most states allow you to register your stocks and other investments to transfer to your beneficiaries after your death.

Apply for life insurance

If you have younger children or will owe substantial debts and estate tax when you die, having a life insurance policy can provide a financial cushion.

Know how estate and Pennsylvania inheritance taxes work

For most people, estate taxes are not a concern. The federal government will only impose a tax on your estate if it’s worth more than – for 2021 — $11.7 million. Married couples can transfer twice the exempt amount tax free.  However, your estate will be subject to Pennsylvania inheritance taxes unless your beneficiaries are your spouse or a charity.

Have a funeral plan

Establish a prepaid funeral with your funeral director or set up an irrevocable burial account at your financial institution to pay for your funeral and any related expenses. Your estate planning should also include clarifying your wishes regarding burial, cremation, and organ donation.

Keep track of your documents and passwords

Your elder law attorney or the person you name as your agent and/or personal representative may need access to certain documents. These include your will, any trusts you’ve created, insurance policies, information on your bank accounts, retirement plans, debts, and funeral arrangements.  Since access to many of these documents requires passwords, ensure the responsible person can obtain your passwords to all accounts.

If all of this sounds overwhelming, don’t worry. Estate planning isn’t something you need to do on your own. The attorneys at Gummer Elder Law are ready to assist you.

Contact us today, and we’ll assist you to ensure  your financial legacy is secure.