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Kennett Square Probate & Estate Administration Law Blog

Orphans' Court protects people who cannot protect themselves

Probate and estate matters are governed by state law. The federal government may tax an estate, but it does not handle will contests or, for example, guardianships. Pennsylvania does not have a probate court, per se. Rather, it has Orphans' Court.

We are one of two states to have an Orphans' Court, so the term may sound unfamiliar or even antiquated. The first step to understanding what the court does, though, is to understand that the term "orphan" has a broader definition than the one we are used to, the one in novels by Charles Dickens. Orphans in this case are people who lack protection; the Orphans' Court steps in to protect the rights, both personal and property, of Pennsylvanians who cannot handle their affairs on their own. Minors, incapacitated individuals, decedents, nonprofits and trusts are all included in the court's jurisdiction.

Do you know how a special needs trust could help your child?

Do you have a special needs child? A child with a disability that will keep him from managing day-to-day living? You know you are not alone. Looking ahead, though, you worry that your child will be alone and unable to care for himself. Whether the disability is congenital or is the result of an accident, all you know is that you will not be around forever to look after him.

A good trust attorney can help you ensure that your child is taken care of, no matter what happens to you. Your attorney will walk you through the options -- yes, there are options -- and help you decide which planning tool is best for your child.

PA law keeps 'finders' finders not keepers

Life insurance looks pretty straightforward on the surface. You purchase a policy and name a beneficiary, you pay the premiums, you die, and the insurance company pays the beneficiary.

The problem is that years can pass between the day you name the beneficiary and the day you pass away, and you may not have updated your beneficiary information in all that time. Your beneficiary, let's say it's your nephew, has moved a few times, and you lost touch in your last years. How does the insurance company find your nephew?

US House to estate tax: We'll repeal you in September

Only a few states have their own death taxes, and Pennsylvania is one of them. A good estate plan will take both the state's inheritance tax and the federal estate tax into consideration. If the U.S. House of Representatives has its way, though, the federal tax may be nothing more than an unpleasant memory.

In September, when Congress returns from its summer vacation, the House is expected to have a full vote on a bill that would eliminate the federal estate tax, eliminate the generation-skipping transfer tax and permanently change the gift-tax rate to 35 percent with a lifetime exclusion at $5 million.

Dear beneficiary: It seemed like such a good idea at the time ...

While we tell ourselves and our kids not to wait until the last minute to do something, the U.S. Supreme Court seems to hand out its big decisions right at the end of the session. It is impossible to know if the docket is the cause, if the court spends extra time deliberating and crossing t's on some cases or if, perhaps, the court enjoys building anticipation before the justices leave for the summer.

One of the decisions handed down near the close of the 2013 session involved retirement accounts -- specifically, inherited retirement accounts. The decision got us to thinking about how important it is to consider a variety of possible scenarios when planning retirement or devising an estate plan

Women outlive men, but are they as careful with estate planning? p2

We just saw an article about the gender wage gap. According to the White House, women in the U.S. -- and in Pennsylvania, for that matter -- make just 77 percent of what men make. That leaves roughly half the workforce 23 cents short for every hour they work. That wage gap, if nothing else, should be an incentive for women to be especially careful in their retirement and estate plans.

The goal, then, is to be careful with your savings and your retirement income. For the most part, we would rather not use up our retirement money on medical bills. But some of us face a real risk of a long final illness. Or we know that living alone could mean recuperating from an accident in a nursing home.

Women outlive men, but are they as careful with estate planning?

It is a mixed blessing, really, that women tend to live longer than men. On one hand, the extra years -- about six, according to researchers -- give women more time to spend with family and friends, a couple more elections to vote in and a few more Chester County's Fourth of July celebrations to enjoy.

On the other hand, though, women may have six more years of medical expense to bear, or they may have six years of living without their husbands and their husbands' retirement benefits. There are as many risks as there are opportunities, it seems.

Rich families disinherit children; give to charity, new business

A new study surveyed over 4,500 individuals and interviewed 16 "very wealthy families" from North America, Asia and Europe. Researchers with the study were attempting to determine what the most powerful people in the world plan to do with their fortunes. Surprisingly, a large number claim they will not be leaving their fortunes to their children. The article noted that this was particularly true of second generations of wealth considering the future of their children, the third generation. The mindset was that the first generation built the wealth; the second generation preserved it while the third generation was likely to lose it.

Instead of allowing their heirs to become part of this trend, these wealthy families are building estate plans that are designed to help their children succeed. Some noted that they are moving away from the traditional trust notion for fears that children who rely on funds from a trust lack self sufficiency. Some are leaving their fortunes to charities, while others are using the funds to establish a business that their heirs could have a "renewed sense of direction."

Among the wealthy are a few notable famous figures. Nigella Lawson, food critic and judge on ABC's hit show The Taste, was quoted as saying she would not leave her fortune to her children because doing so "ruins people". Former Police front man and musician extraordinaire Sting has taken a similar pledge, stating his children will not inherit his millions.

Protecting children's inheritance from divorce

With roughly one in two marriages ending in divorce in the United States, it may be wise to account for this contingency in an estate plan. The following tips can help if you have children that you want to ensure receive an inheritance and do not end up giving the inheritance to an ex spouse.

Generally, an inheritance given in one individual's name remains the asset of that individual during a divorce. This is true in most cases as long as the asset is not comingled with other property. This means the inheritance should not be put into a joint checking or savings account, but should be kept separate from all marital funds to help better protect it from getting split if the couple were to divorce in the future.

Tough times call for creative estate planning

In tough economic times, an individual may have to shelve inheritance planning for more immediate concerns, including having enough liquidity on hand to retire in comfort.

In that regard, a recent article profiled a number of companies that are marketing to this very concern for old-fashioned security in retirement. The product they are pitching is a deferred-income annuity.

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Larmore Scarlett LLP

Larmore Scarlett, LLP
123 E. Linden Street,
P.O. Box 384

Kennett Square, PA 19348

Phone: 610-444-3737
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