Pa Last Will Updates – Intro
- Life Scenarios Changes
- People Change
Wayne Pa Last Will Updates – Notes
Please pay attention to your:
- Life Changes
- Scenario Changes
The best gift you can give your loved ones is to have your Pa Estate Planning complete.
Unfortunately, to a great extent, misinformation about critical terms such as Pa Inheritance Tax, Federal Estate Tax, Pa Probate, avoiding probate, simple will, and Pa Living Trust, tends to lead to misunderstandings of Pa Estate Planning.
These misunderstandings, in turn, tend to lead to mistakes in Pa Estate Planning.
These mistakes, again, in turn, tend to lead to unintended results after one’s death.
In an effort to eliminate such misinformation, misunderstandings, and mistakes, this article will hopefully serve as a review – in very simple terms – of the basic, core issues of estate planning and its basic documents.
There are four primary Pa Estate Planning documents that tend to form the foundation of most good estate plans. These documents are a
Although each document has a different purpose, each document designates someone who is responsible for carrying out the wishes set forth in the document.
I refer to these people – those in charge – as “The Bosses.
Each document has a boss who is in charge of carrying out the terms of that particular document. Under Pennsylvania law, the proper terms for the bosses are:
Although a technical knowledge of these terms can be useful, it is not the point of this article. The focus is to illustrate that an Agent, a Surrogate, an Executor, and a Trustee are just the bosses of that respective document.
Each boss has powers, and these powers can be summarized very simply.
Again, and although a technical knowledge of the parameters of these various powers can be useful, it is not the point of this article. The focus is to illustrate that a Pa Agent, a Pa Surrogate, a Pa Executor, and a Pa Trustee can generally possess broad powers to act for you under that respective document.
Although all four of the documents require bosses that possess certain traits or characteristics in order for that document to be as effective as possible, I have experienced that two traits should be inherent in all of the bosses of all four of the documents
Although the bosses of each of the documents should also possess additional traits for that particular document to be effective (all of which shall be addressed later), unless your boss is able and willing to act on your behalf, your desires and wishes may not be followed.
There are four primary documents that tend to form the foundation of most good estate plans. A succinct review of each, and the misunderstandings of each, follows.
A Pa Power of Attorney can grant your boss (Pa Agent) the ability to control all of your affairs. It is a very powerful document; it can permit your Pa Agent the broadest of powers to do anything which you could have done (i.e., give all your money away), but yet, inherent in these broad powers, is the reality that your Pa Agent may actually do anything which you could have done (i.e., give all your money away).
A Pa Power of Attorney can be durable (effective after you are incapacitated), current (effective now), or springing (effective upon the happening of a future event (i.e., the decision by your treating physician that you can no longer act for yourself).
A common misconception is that a Pa Power of Attorney eliminates your ability to act for yourself. Quite to the contrary, and until you are deemed incapacitated, a Pa Power of Attorney should properly be viewed as a shared authority – you still retain all of the powers and decision making ability that you possessed before you executed the Pa Power of Attorney.
With respect to additional traits that your boss should possess (in addition to being able and willing), I have found that your boss (Agent) should also be:
A Pa Advance Directive for Health Care can grant your boss (Pa Surrogate) the ability to execute your end of life decisions and decide whether life-sustaining measures should be used. The common misconception of this document is when it will become operative.
There are two triggers that must occur before your Surrogate is even given the option of acting: the first is that you must be unable to communicate your own decisions, and the second is that you must have been diagnosed with a terminal condition or as being permanently unconscious.With respect to additional traits that your boss should possess (in addition to being able and willing), I have found that your boss (Surrogate) should also be:
A Pa Last Will can grant your boss (Pa Executor) the ability to administer your Estate.
The most common misconception that surrounds a Pa Will is the process called Pa Probate and the seemingly universal theme that it should be avoided at all costs.
Again, and virtually to the contrary, the word probate is merely the Latin infinitive verb that means to prove, and, although some states do have onerous probate procedures (where the avoidance of probate may be a prudent strategy), Pennsylvania is not one of those states. In fact, probating a Will in Pennsylvania is very simple.
Also very important is the fact that a Will only disposes of the assets (1) that you own in your individual name alone and (2) that possess no beneficiary designations (i.e., no tags). Consequently, items owned jointly with another are controlled by property law (not Will law) and will pass to the joint owner(s) at your death, and items that have beneficiary designations will be controlled by contract law (not Will law) and pass to the designated beneficiaries at your death. With respect to additional traits that your boss should possess (in addition to being able and willing), I have found that your boss (Executor) should also be:
A Pa Trust can grant your boss (Pa Trustee) the ability to monitor and manage your Pa Trust. The types of Trusts can be viewed simply as being either (1) revocable (which are created during your life and which become irrevocable upon your death), (2) irrevocable (which are created during your life and become irrevocable upon their creation), and (3) and testamentary (which are created under your Will and which become irrevocable upon your death
Vital is the fact that they can be extremely useful for individuals with Special Needs (i.e., autism, addictions, minors, etc). With respect to additional traits that your boss should possess (in addition to being able and willing), I have found that your boss (Trustee) should also be
Another area of misconception in the Pa Estate Planning area involve the taxes that are imposed on the value of your assets on the date of your death.
Basically, two death taxes can be imposed on Pennsylvania residents: the
Unlike the income tax, which is very descriptive in its title – as it is imposed upon your income – the phrases “Federal Estate Tax” and “Pa Inheritance Tax” are misnomers in that may tend to belie the actual fact that these are taxes imposed by virtue of your death.
The Federal Estate Tax begins at a wealth threshold.
If you possess less than the wealth threshold at your death, the federal estate tax will not be applicable. If it is applicable, the tax is imposed on a percentage scale according to the amount of wealth (i.e., potentially 47% of the value of your assets above the current $1,500,000. 00 wealth threshold). This threshold has been, is, and is scheduled to continue to increase. In 2005, the threshold is $1,500,000. 00; in 2006, 2007, and 2008, the threshold is $2,000,000. 00; in 2009, the threshold is $3,500,000.00; in 2010, the Federal Estate Tax is scheduled to be eliminated; but in 2011, the Federal Estate Tax is scheduled to return with a threshold of $1,000,000.00.
The Pennsylvania Inheritance Tax has no wealth threshold and starts immediately. It is imposed on a percentage based on the relationship of the beneficiary
In conclusion, there are four basic pointers for all who are faced with estate planning.
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A loved one’s legacy can ease the pain of loss by reminding heirs of a departed family member’s enduring love.
But when questions arise about the validity of a will or the management of estate assets, uncertainty can arouse animosity and prevent closure.
If you, as a beneficiary, suspect that a will does not reflect the wishes of the deceased, you have a right to challenge the proceedings in court. Similarly, if you believe an executor, trustee or estate administrator is mismanaging estate assets, you have standing to raise that issue.
On the other hand, an executor or estate administrator is entitled to a vigorous defense against accusations of incompetence or unlawful conduct.
I provide highly professional representation for aggrieved beneficiaries and accused fiduciaries in estate disputes.
There are several bases for challenging a Pa Last Will. These include:
Many probate disputes stem from suspicions that a particular individual took advantage of the declining health or dementia of the deceased to insinuate himself into the will to the detriment of the rightful heirs.
The court looks very harshly on this type of elder exploitation.
However, it is important to note that disappointment is not grounds for an heir to challenge a will.
All challenges must be supported by reliable evidence.
The executor of a will or the administrator of an intestate estate is a fiduciary with a legal duty to manage estate assets according to the testator’s wishes and for the benefit of the beneficiaries. The fiduciary must perform at a professional standard so that assets are not lost due to waste, fraud, misallocation or mismanagement. Beneficiaries may challenge deliberate or negligent misconduct and demand a full accounting. I have vast experience on both sides of trust and estate controversies. I have close associations with forensic accountants who can render accurate assessments of asset management and help us assemble evidence to prove or rebut allegations.
Many people hesitate to hire an attorney because they wish to keep a family dispute within the family.
However, the court may treat your suspicions lightly if you raise them without a professional presentation and a firm basis in the law that an attorney can provide.
Moreover, a seasoned attorney who has been through such negotiations before is likely to produce a settlement that satisfies all parties and allows the proceedings to move forward at less cost to the estate.
Conflicts among beneficiaries or between beneficiaries and fiduciaries can be very destructive without experienced and knowledgeable legal counsel. John B. Whalen, Jr. Esq. provides capable representation for beneficiaries and fiduciaries throughout Pennsylvania. Call today or contact me to schedule a consultation.
With respect to additional traits that your boss should possess (in addition to being able and willing), I have found that your boss (Pa Executor) should also be
The most common misconception that surrounds a Will is the process called probate and the seemingly universal theme that it should be avoided at all costs.
Again, and virtually to the contrary, the word probate is merely the Latin infinitive verb that means to prove, and, although some states do have onerous probate procedures (where the avoidance of probate may be a prudent strategy), Pennsylvania is not one of those states.
In fact, probating a Will in Pennsylvania is very simple.
Also very important is the fact that a Will only disposes of the assets (1) that you own in your individual name alone and (2) that possess no beneficiary designations (i.e., no tags).
Consequently, items owned jointly with another are controlled by property law (not Will law) and will pass to the joint owner(s) at your death, and items that have beneficiary designations will be controlled by contract law (not Will law) and pass to the designated beneficiaries at your death.
When an individual acts in a fiduciary capacity such as a Pa Executor of a Pa Last Will or a Pa Trustee of the financial assets of another person or entity, they have the responsibility of keeping accurate financial records.
Those records should show how money was spent, invested or distributed while under the fiduciary’s care and control. Proper accounting can bring to light the mismanagement or bad investment of funds should an issue arise with an interested party.
There can be a number of interested parties who may want to examine the financial records and approved fiduciary accountings. They are entitled to receive copies of all the materials such as profit and loss statements, expense reports and tax returns. You may request documentation if you are:
Certain procedures must be followed when reports are prepared to explain how the assets in an estate or trust were managed. Approved fiduciary accountings require the separation of principal and interest. You can not commingle funds that are considered principal with those that are considered income.
The main reason for keeping principal and income in separate accounts is that the beneficiaries of income in a trust or estate may be different than the beneficiaries of the principal in the same estate or trust.
A trust or an estate is considered a separate legal entity from an individual who may be a beneficiary of that trust or estate. Therefore, it is incumbent upon the fiduciary administering the estate or trust to file a federal tax return under certain conditions.
The IRS requires a trust to file a tax return if it has any taxable income or has gross income of at least $600, regardless of whether it is taxable or not. Estates must file Form 1041 if they have gross income of $600 or more. A fiduciary must also file a return if any of the beneficiaries of the estate or trust is a non-resident alien.
Form 1041 is similar to the 1040 return used by individuals. The form is designed so estates and trusts can report income, deductions, gains, losses and any other pertinent financial information. Before funds or assets can be distributed, any tax liabilities of the estate or trust must be satisfied.
Once all of the assets of an estate or trust have been distributed or otherwise settled, it is customary that the fiduciary is released from further responsibility. That may be done by signing a release form through the court or an agreement with the beneficiaries of the estate or trust.
Individuals make income; Estates make income
Individual income is called just that Individual Income
Estate (and Trust) income is called Fiduciary Income
In general, income and deductions for Individuals and Estates is
Decided in the same manner
Calculated in the same manner Reported in the same manner
Individuals must file Individual Income Tax returns
Estates (and Trusts) must file Fiduciary Income Tax returns
For further reference, the IRS website states that:
The U.S. Income Tax Return for Estates and Trusts (Form 1041) is used
to report the income, deductions, gains, and losses of estates and trusts,
as well as distributions to beneficiaries and income tax liability.