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Kennett Square Probate & Estate Law Blog

Including a caregiver in estate planning efforts

Not every Philadelphia resident has close ties to his or her family. In many cases, events have transpired over the years that led to permanent estrangement, or a severing of the familial bond. In such cases, an individual may wish to center his or her estate planning around a caregiver. This is especially true for older people, who may be very grateful for the care and concern shown to them by an individual who was either hired to provide care or just assumed a caregiving role based on an acquaintance or friendship.

In such cases, it is imperative to take precautionary steps to ensure that the chosen heir is able to receive his or her inheritance. There are laws in place to protect people against fraud or coercion in these matters, and overcoming those protections can be a challenge. These safeguards are a positive thing, for the most part, but they do not encompass every set of circumstances.

Beware: Estate planning can benefit a former spouse

No matter how kind or generous, benevolent and forgiving, there are few Philadelphia residents who wish to provide an inheritance for their ex husband or wife. Without the proper estate planning measures, however, that is exactly what could take place. Many people are unaware that the provisions laid out within their will are not sufficient to prevent a former spouse from receiving wealth from a beneficiary designation.

A number of different types of accounts require the holder to name a beneficiary. Examples include life insurance policies, bank accounts, investment accounts and retirement savings. When a party is named as the beneficiary of such an account, he or she will be given the wealth held within after the holder passes away. This transfer takes place outside of the probate process, and in a very short timeframe following the death.

No Kids? There are still plenty of estate planning needs to cover

When most Philadelphia residents think about estate planning, they focus on the transfer of wealth from one generation to another. This is the primary estate planning goal for many families, but it is not the only area of focus that exists. For couples who do not have children, a different approach needs to be taken, one that focuses more on the projected and potential needs of the couple.

One area of estate planning that is often overlooked involves advance care planning. Very few people relish the idea that they might end up in an assisted living facility, and plenty of discussions center on how that is simply not going to happen, no matter what. In reality, however, individuals without kids often have no one to look after them as they age, which can lead to a number of outcomes that are undesirable.

Creating equality in estate planning outcomes

From the time children are small, parents strive to assure each child that he or she is loved just as much as the other children in the household. Philadelphia parents will address issues of equality throughout the time that children grow from toddlers into adulthood and often even beyond that threshold. When it comes to estate planning, equality often remains a priority. The reality, however, is that achieving complete equality is never really a possibility.

Consider a family in which there are three adult children. One child went to an expensive private college, while the other earned a scholarship and earned a degree at a state school. The third child struggles with addiction issues and has been placed in rehab facilities on several occasions. All three children have received assistance from their parents over the years at varying levels.

Estate planning for Pennsylvania farm families

Farmers often have a unique set of needs when it comes to planning their estates. For many, keeping their farms in their families are top priorities. At the same time, children are not always interested in continuing the family farming tradition. This can make it challenging to divide wealth equally, while also ensuring that the farms can continue to operate. Pennsylvania families have a number of estate planning options when addressing this issue.

Dividing real estate or business assets equally is a nearly impossible goal. For one thing, wealth that is held in a family farm is often far from liquid. This makes it difficult to allow some heirs to remain on the farm, while others take their share of the wealth and move on. This basic fact can lead to a great deal of contention between surviving loved ones.

Should gifts be made to heirs in advance of an inheritance?

Many Philadelphia families are aware that they are able to pass down $5.43 million in wealth without incurring federal estate tax. Beyond that amount, additional wealth is subject to taxation. As many wealthy people age, they begin to consider if gifting is a wise strategy to pass on wealth to heirs while avoiding estate taxes. Not all gifts are equal, however, and it is important to understand how the current rules apply.

For example, many people wish to give a family member a piece of real estate as a gift in order to remove that property from their taxable estate. However, when that piece of real estate is sold, any increase in value that took place between the original purchase price (the "cost basis") of the gift and the sale is subject to capital gains tax. Any improvements made to the property will increase the cost basis, which narrows the gap and leads to lower capital gains tax.

End-of-year estate planning moves to consider

As the last few days of 2015 approach, many Philadelphia residents are considering whether they need to take any steps to address their financial needs. In terms of estate planning, the end of each year is a great time to review the existing plan and make any necessary changes. The following choices are just some of the options available to ensure that estate planning remains on track as 2016 approaches.

Many families want to ensure that they do not exceed the federal estate tax limit, which currently sits at $5.43 million. Any wealth beyond that amount is subject to an estate tax, which can be as high as 40 percent. An effective way to reduce the value of one's estate is to make annual gifts to family members. There is no limit to the number of gifts that can be made, but each individual can receive no more than $14,000 in a calendar year. Charitable contributions are also an effective means of reducing an estate.

Avoiding conflict surrounding trusts and inheritance

Many Philadelphia residents will spend a great deal of time and effort constructing their estate plans. The end results will be comprehensive plans that makes use of wills, trusts and other vehicles to facilitate the transfer of wealth to their intended heirs. Unfortunately, far too many people fail to adequately communicate with their loved ones about those plans, which can lead to a great deal of tension and strife amongst surviving family members.

The best way to ensure that inheritance matters are handled properly is to talk about one's plans with the intended heirs. This is the time to provide a basic outline of how assets will be distributed, as well as the details of any trusts or other planning tools. It may be necessary to talk about why those decisions were made, which can be a difficult conversation. However, having those talks now can make things far easier for loved ones when the time comes to implement those plans.

Estate planning document storage options

Many Philadelphia residents recognize the need to store their estate planning documents in a secure location. Determining what that location might be, however, is not always so simple. Fortunately, there are a variety of options available that give families flexibility in choosing where to store estate planning documents.

Keeping these papers in a location within the family home is a common choice, but there are risks involved in that option. For one, there is a chance that in the rush of activity that follows a death, the paperwork could be removed by an estranged or otherwise disgruntled family member. There is also a risk that the entire estate planning package could be lost in a fire, flood or other destructive event.

Philadelphia millennials and estate planning issues

Pausing from the hustle and bustle of daily Philadelphia life to talk about mortality and legal issues is something many young adults might not be doing on a regular basis. However, those of the millennial generation will want to consider the fact that not pursuing estate planning issues may lead to unintended consequences for family members down the line. It is not just a topic for the elderly or wealthy.

Young adults who want to think ahead and make certain that they are providing for the financial security of their loved ones in the event of their own deaths may want to seek legal guidance in order to execute an estate plan. Dying without one in place typically leads to one's assets being distributed through a probate court. Therefore, if a person has definite intentions about whom he or she would like to leave an inheritance, then documenting those wishes while still of sound mind is a logical choice to make.

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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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