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Kennett Square Probate & Estate Law Blog

Facebook releases new estate planning tool

When a loved one passes away, those who are left behind are often thrown into a tumultuous and difficult period of time. It is necessary to make the final arrangements that will allow friends and family to say goodbye, and there are often other immediate needs to be attended to, such as securing care for children and pets or addressing immediate financial concerns. After a period of time, many Philadelphia families move on to consider less urgent estate planning matters, such as how to access and preserve digital assets.

Digital assets are items of value that an individual creates and stores online. Examples include photos, video content and written pieces. While not all digital content has monetary value, a great deal of what we put out into the digital realm has significant emotional value to our loved ones. Having the ability to access these resources can be a challenge.

Trusts can play a role in nursing care planning

When considering various estate planning options, most Pennsylvania families focus on how to pass assets to loved ones in a smooth and seamless manner. Many families fail to give proper consideration to the chance that a surviving spouse could end up requiring residential medical care, which can complicate matters of inheritance. In some cases, the cost of such care can completely deplete an inheritance, leaving little or nothing for children or grandchildren. When considering this estate planning matter, families should look into whether trusts can be a good fit for their planning needs.

When a loved one requires residential nursing home or rehabilitative care, many families turn to Medicaid to help cover those costs. Medicaid is an excellent resource, but coverage only becomes active after an individual or couple has depleted their own assets to a certain level. In the case of an inheritance, the wealth received after a spouse passes on might be completely lost before Medicaid coverage is possible.

This valuable estate planning tool could be lost

When a Philadelphia family has amassed a certain level of wealth, a great deal of effort is focused on trying to shield that wealth from excessive taxation, thereby preserving a greater share for future generations. One tool that meets both of those goals lies in limited family partnerships. According to recent comments made by government tax authorities, this estate planning approach could soon be eliminated, leaving many families scrambling for an alternative.

A limited family partnership is created to hold a family business. Under current rules, that business can consist of nothing more than the management of a family's securities portfolio. The individual or couple who owns the business can give children and grandchildren limited interest partnerships in the business. When it comes to evaluating those partnerships for tax purposes, a tax discount is given.

Why wealthy people neglect estate planning needs

Many Pennsylvania residents falsely believe that estate planning is only for the wealthy, and that families with moderate levels of income and assets have little need for such measures. According to a recent survey conducted by a major media outlet, even the wealthy among us fail to properly address estate planning needs. When it comes to the reasons behind this trend, some of the logic makes perfect sense, even if the outcome is flawed.

One reason why many with a net worth between $1 million to $5 million fail to create a solid estate plan is based on a type of "planning fatigue." In recent years, these individuals and families have gone through a wide range of shifts and concerns over how estate tax changes might affect the eventual distribution of their wealth. Each proposed or actual change in tax laws prompted a call from one's financial planner or estate planning attorney. After being concerned about the issue for a long enough period of time, many people simply threw their hands up in frustration and stepped away.

Advance health care directives for single people

When considering estate planning, many Philadelphia residents focus on how to best transfer wealth to their children and grandchildren. For single people, the focus is often on incapacitation planning. While everyone should center their estate plan on a properly drafted will, there are a wide range of other documents that can round out one's planning package. For singles, a medical power of attorney and advance health care directives should play a central role within the estate planning process.

When a serious illness or injury occurs, the medical staff tasked with providing both emergency and follow-up care will look for guidance in how to proceed. For married persons, one's spouse is usually the individual who will direct the course of care. Singles, however, present more of a challenge, as there is often no indication of who should be trusted to guide the decision-making process. This is why a medical power of attorney is important.

What are the grounds for challenging a will?

There are a couple of things to initially know about wills. The first is that they are absolutely vital documents that any adult needs to have. It doesn't matter if you are a young adult and you may not have the assets that someone older than you may have -- it is still important to have a will. The other thing to note about wills is that they are usually uncontested, and even if they are, most of the time the will remains intact and is administered as the deceased individual wanted.

With that said, there are certainly circumstances where a family member, loved one, or heir may contest a will successfully.

Why trusts are a good option for many women

Estate planning is always a highly personal venture. Individuals have a unique set of needs when it comes to creating a comprehensive estate plan, and no two outcomes are ever exactly alike. That said, women often have a different set of needs than men, and trusts can play an important role in the estate planning approach of many Pennsylvania women.

Statistics tell us that women tend to live longer than men. This means that many women will be widowed in their later years. The high divorce rate suggests that many women will also have children from more than one marriage, and perhaps a number of stepchildren as well. Creating an estate plan that allows for the desired distribution of assets to those family members is important.

Consider how basis factors into estate planning

With the passage of the 2012 American Taxpayer Relief Act, most Americans no longer have to center their estate plan around avoiding the estate tax, which can be as high as 47 percent of taxable assets. Currently, only those individuals in Pennsylvania who have an estate worth more than $5.43 million have to be concerned about the estate tax. For the rest of us, estate planning often focuses on how assets can be passed in such a way as to avoid income taxation.

For example, when an heir inherits a piece of property, he or she also inherits a basis in that asset. The basis is equal to the market value of the asset at the time of the individual's death. Any losses or gains that took place between the time that the asset was acquired and the time of death are ignored for the purposes of taxation.

Understanding beneficiaries within estate planning

One of the most detrimental mistakes that a Pennsylvania resident can make is misunderstanding how beneficiary designations fit into an estate plan. There are a number of misconceptions that people hold in regard to their estate planning documents, but the power of naming a beneficiary is one of the most common areas of confusion. Failing to properly incorporate these documents into one's overall estate plan can yield disastrous consequences.

Many people believe that the provisions laid out within a will are the most durable aspects of their estate plan. This, however, is simply not true. The beneficiaries who are named on a given account will inherit the wealth held within that account, regardless of what is stated in one's will.

Why generation-skipping trusts work for many

Many Pennsylvania residents have worked hard to amass their current level of wealth. The prospect of losing a sizable portion of that wealth to estate tax requirements can be distressing. A number of solutions are to be found for reducing estate tax obligations, including trusts that can also preserve wealth from seizure during divorce or other legal actions.

An example is found in a generation-skipping trust, which allows individuals to pass on wealth to their grandchildren while also allowing their adult children to benefit. The trust is funded in the same way as other types of trusts, and the assets placed into the vehicle become the property of the trust itself, not the individuals who funded it or those named as beneficiaries. This is an important feature of the trust, as it provides a level of protection against loss.

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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
Fax: 610-444-9532
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