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Kennett Square Probate & Estate Law Blog

Here are some common estate planning mistakes & how to avoid them

Our posts recently have been focused on the estates of deceased celebrities. It is worth noting that when celebrity estate planning makes news headlines, it is never because their estate plans were air-tight and that nothing was disputed. Rather, these are cautionary tales about why it is important to have up-to-date, clearly written estate plans in place.

Today, we'll discuss some common mistakes that people make when drafting an estate plan or considering one. Most experts would tell you that perhaps the biggest and most fundamental mistake in estate planning is thinking you don't need one. We all need an estate plan, regardless of age and personal wealth.

Michael Jackson, Marvin Gaye and managing an artist's estate

We are talking about Marvin Gaye's estate and the sad condition his finances were in when he passed away more than 25 years ago. Like Michael Jackson, Gaye left enormous debts behind. Unlike Jackson, Gaye left no will.

Gaye's situation was bad enough that the court appointed a bankruptcy attorney to handle the estate. By carefully managing the late singer's image and music catalog (including royalties), that attorney turned a mountain of debt into a nice inheritance for Gaye's three children.

Michael Jackson, Marvin Gaye and managing an artist's estate

When Michael Jackson died in 2009, he was just about broke. His reputation was trashed among allegations of child abuse, and his beloved Neverland estate was in disrepair and deeply in debt. The tour that Jackson was preparing for was going to be his ticket back to solvency.

It didn't quite work out that way. After his death, his legacy became his estate's ticket to solvency. By 2014, Jackson's estate had earned more than $600 million. The executors, named in his 2002 will, had done a masterful job.

What does being named an executor mean?

When putting together a will, it is considered good practice to include the name of an executor. This named person is the one who will be in charge of carrying out key functions, such as distributing assets to beneficiaries and taking care of any financial obligations, such as paying taxes or bills tied to the estate.

The "Will Executor Duties FAQ" gives a basic overview of what an executor is and what their roles and responsibility are. Please note that this is not an exhaustive list though. An attorney will be better situated to answer all of your will executor questions

Is it possible to refuse a bequest or inheritance? p2

We are circling back to our March 31 post and the discussion of turning down gifts, bequests or inheritances. As we said, it is possible. There is no law that says you must accept a gift, that you must accept your deceased uncle's bequest of a painting you suspect was looted by the Nazis or the trust fund set up by your robber baron great-grandfather.

Say you have inherited a painting that you strongly suspect was part of a collection confiscated by the Nazis during World War II. You may have a moral objection to its provenance, or you may not want the legal obligation that could come with the gift. You can say no.

Ensuring adequate liquidity an important task in estate planning

A bill currently under consideration in the Pennsylvania Senate seeks to protect family farms from having to pay state inheritance taxes under a measure that would ensure the Department of Revenue consistently applies a specific tax exemption to families who use family trusts or family corporations to manage their estate planning and ownership interests.

The measure is a clarification of a law passed back in 2012 which sought to address a common problem for family farms: sometimes heirs have to sell off the farm against their wishes in order to pay for inheritance taxes. After the 2012 law was passed, the exemption was not applied consistently to families who had property in family trusts or family corporations, but the proposal seeks to change that. 

Is it possible to refuse a bequest or inheritance?

In a recent article from Think Progress, an independent non-profit organization, climate scientists urge museums to refuse donations from fossil fuel companies and "funders of climate science obfuscation." In particular, the scientists advise that money from David Koch, co-owner of multinational corporation Koch Industries Inc. Koch, it seems, is a generous donor -- $67 million since 1997 -- to organizations that actively oppose climate change theories, practices and policies.

Koch is not just a donor. He is a frequent and generous sponsor of museum exhibits and holds seats on the boards of the Smithsonian's National Museum of Natural History and the American Museum of Natural History. Even if Koch is not using his involvement to further the denial of climate change, the scientists argue, his reputation as a denier undermines the credibility of the museums that take his money. Museums are meant to be disseminating scientific knowledge to the general public -- again, according to the scientists -- not publicizing the generosity and, ultimately, the views of a person or an organization that works hard to deny climate change.

Pennsylvania's revised power of attorney law took effect Jan. 1 - concl.

We are wrapping up our review of Pennsylvania's revised power of attorney law. All of these changes were effective Jan. 1, 2015. Some of them are a little confusing, and those of us who have recently drafted or executed a power of attorney document may want to consult with an attorney to make sure all the revised i's and t's are dotted and crossed.

The revision eliminates the limits on the agent's authority to give gifts or to amend the principal's estate plan. It is important to note, though, that only agents who are a) specifically designated by the principal, or b) an ancestor, descendant or spouse of the principal may make gifts to himself or name himself a beneficiary in the principal's estate plan.

What tools can I use to shelter my assets from probate?

Probate is not a word that many people are very fond of for many reasons. It is a complicated legal process, which in itself can cause anxiety. Amongst other factors are the time it takes to complete, the expense incurred by the estate before taxes or debts are even paid and the public nature of the process.

It is not necessary for everyone to avoid probate in Pennsylvania, but it can be very beneficial for some people. How do you avoid probate?

Pennsylvania's revised power of attorney law took effect Jan. 1 p3

Pennsylvania's power of attorney requirements changed at the beginning of the year. In truth, some changed in 2014, but everything included in the bill passed last year is now in full force. And while change can be hard in this area of the law, the good news is that these changes offer greater protection to both the principal and the agent.

In our March 9 post, we talked about the new requirement that two witnesses sign the power of attorney and that the document be notarized. Further, neither the agent nor the principal's spouse can be a witness. The old law also required that an agent sign an acknowledgement before taking any action as the attorney-in-fact.

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