Wealth Preservation, Trusts and Estates

The Answer May Not Always Be What You Expect

Simply “Probate” means at death an estate (the deceased person’s property) is administered and supervised by the court, often called probate court. The court will make sure the Last Will is administered correctly and if there is no will state law is followed by a court appointed administrator.

Many people ask us how they can “avoid probate” before they understand what it means and how long it will actually take. For example in Pennsylvania it is a fairly straightforward process, many cooperative families can “opt out” of much of the process, and it takes as few as several months and can be helpful in making sure the executor, the person who distributes the property, does what the Last Will says to do and that he or she is protected from subsequent claims and law suits.

Many people also do not know that most property transferred at death passes outside of probate through a non-probate mode of transfer. Here are some examples of things that do not go through the probate process and may not even be distributed according to the will.

1. Joint tenancy property both real and personal

The decedent’s (the person who has just died) interest ends at death. The survivor has the whole property.  Bank accounts, brokerage and mutual fund accounts, and real estate are often held in joint tenancy, particularly between married couples. At the death of the first, this property generally transfers directly to the surviving joint account holder or joint tenant on the deed no matter what the will says. These assets are still taxable for both State Inheritance Tax purposes and possibly for Federal Estate Tax purposes. And, who pays that tax is often a function of the tax clause in the will. Be sure to get good legal advise on this issue.

2. Life Insurance

Life insurance proceeds on the decedent’s life are paid by the insurance company to the beneficiary named in the insurance contract. However, while such policies are not taxed by Pennsylvania, they are taxed for Federal Estate Tax purposes.

3. Bonds & Contracts with payable on death (POD) provisions

Federal E and H Bonds, and pension plans often have survivor benefits as do tax-deferred investment plans such as IRA’s 401(k)’s, and brokerage accounts if there is a death beneficiary. While the beneficiary of such accounts receive the money directly, the proceeds may or may not be taxable for Income Tax and or Inheritance and Estate Tax Purposes.

4. Interests in Trust

When property is put in trust, the trustee holds the property for the named beneficiaries. The trustee in accordance with the terms of the trust instrument invests, holds and or distributes the trust property to the beneficiaries.

To read our trust guide How To Find The Right Trust For You click here.

Property in a testamentary trust does pass through the probate process but an inter vivos trust during the decedents’ life does not.  To read more about inter vivos gifts read Should I Make Gifts Now As Part Of My Estate Planning.Such trusts if revocable during your life are Taxable but irrevocable trusts may avoid taxation for Death Tax purposes.

Distribution of non-probate property does not involve a court proceeding.  The controlling contract, trust, or deed terms control the distribution of the property.

Distribution of probate property under a will or an intestate estate (someone who dies without a will) may require a court proceeding involving probate of a will or finding of intestacy followed by appointment of a personal representative to settle the probate estate.

Find out the best way to utilize both the probate and non-probate process in planning your comprehensive will and trust.

A successful comprehensive estate plan takes all of these factors into account when organizing your will or trust.

Whitney O’Reilly

Share and Enjoy

For Executors and Maybe Trustees

Losing a loved one is hard. But if you’re an executor or trustee hopefully this step-by-step guide to Estate Administration will ease the burden of knowing the business of what to do when a close family member or friend dies.

Whether or not your loved one has a will or trust their estate may be still have to go through the probate process in Pennsylvania.

Each estate administration varies in complexity and you may have more to do than these basic steps but this is a great starting point to get you familiar with what needs to happen after the death of a loved one.

1.      The Will- Find the Will, any living trusts, any amendments to the will or trust, and any previous wills.  It may be necessary to ask a sick or dying loved one where the Will is so that you do not have to find it when they are gone. If there is no will the state “intestate law,” will govern who acts as the administrator, and who inherits.

2.      Contact an Attorney- Call an estate planning and estate administration attorney to help you navigate through the process.  Even if there is No probate required there are many rules about what gets paid and what still gets taxed. You may have many meetings with the attorney so make sure you are comfortable with the attorney and their location. www.avvo.com is a great website where you can search for local, competent, and highly knowledgeable lawyers.

3.      Gather Documents And Information- When you meet with the lawyer bring the Will and any amendments to it or previous wills. Also bring income tax returns (from the past few years if possible), bank account statements, retirement accounts, and any bills due. Also make a list of your loved ones valuables like real estate, CD’s, bank and investment accounts and insurance and annuities.

4.      The Probate Process- Your attorney will determine what assets must be probated. Things like jointly held assets, assets in a trust, IRA’s, annuities or life insurance and the beneficiaries named do not go through probate and are automatically distributed.

*Make sure the attorney tells you an estimate of the Pennsylvania inheritance tax and federal estate tax that may be due even on non-probate assets.

5.      Executor Duties- The executor is named in the Will. The executor will need to go with the attorney to the Register of Wills office, one is located in every county, and the original will and death certificate must be presented and any county fees must be paid depending on the size of the estate and other considerations. The executor has many duties and some have deadlines so make sure you get legal guidance to make sure the job is getting done.

6.      Advertising the Estate- The estate must be advertised for several weeks in two local newspapers. The reason this must be done is so that any creditor is notified and can make a claim on the estate. Also notices are sent out to all possible beneficiaries of the estate.

7.      Inheritance Tax Discount- The estate should consider paying the Pennsylvania inheritance tax or at least an estimate within three months to get a 5% discount. The full amount of the Pennsylvania Inheritance tax and the federal estate tax (if you owe this) is due within 9 months of your loved ones death. It is not always desirable to pay this so make sure to review this issue with your adviser to avoid paying tax on funds you may never receive.

8.      Estate Distribution- The executor with the attorney’s help will divide the assets and pay bills due on the estate. This must be done before you can distribute and close the estate. At the end of the estate you should protect yourself from liability by getting a court order OR a family settlement agreement.

* Family Settlement Agreements (FSA’s) cannot be drafted by anyone but a lawyer. However, this is one of the only ways to avoid personal liability other than through the probate court.

This is simply a beginner step-by step guide to Estate Administration, the process that follows after a person passes. There are many more detailed steps.

For more information click here to read our entire report  The Ten Most Common Mistakes Executors Make…and How To Avoid Them.

This may seem like a lot for someone, the executor, to do while trying to cope with the loss of family or a loved one and often times it can be very overwhelming. If you have been named an executor find out exactly what that entails to make sure you have the time and energy to follow the required steps involved.

A law firm is an excellent source of knowledge. Try to find one that offers  consultations and  fixed or hourly fees to make sure you understand the legal and financial and liability ramifications of being an executor and or what all is entailed in an estate administration so you can prepare yourself and or family and loved ones so there is less time to struggle with these steps and more time to grieve for the loss of your family or loved one.

We hope this Estate Administration 101 Guide has helped you understand your role as executor or trustee and or understand what happens after a loved one dies.

Share and Enjoy

IN RE: ALICE G. NOVOSIELSKI: PA Supreme Court Rules On Joint Account Case MARCH 25, 2010. The Supreme Court of Pennsylvania overturns the Superior Court on appeal. I think the Supreme Court got this one right. You can read the entire Novosielski Case here, but the general ruling is that accounts made joint by a decedent AFTER the signing of his or her Last Will and Testament will still transfer to the surviving joint account holder. The Superior Court’s earlier ruling that accounts made joint after a will was signed, and in contradiction of the terms of the will, could have been rendered invalid and the joint assets transferred according to the decedent’s will. The earlier ruling would have necessitated revisions of wills and close scrutiny of the timing of joint account creation. It also jeopardized the sanctity of the joint account contract between a financial institution and its customers. We, as PA Estate Planning and Probate Attorneys and PA Residents can breathe a sigh of relief.

Please feel free to contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss the preparation of wills, powers of attorney, trusts and living wills.

Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees, P.C. is a full service firm with Malvern, Phoenixville, West Chester Offices also serving Berwyn, Wayne, Newtown Square, Paoli, Exton, Downingtown, Devon, Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

Share and Enjoy

If you have ever been confused about when to use a will and when to use a revocable trust, you are not alone. I have just posted a video, and a great quick overview of that question of will or revocable trust on our estate planning site www.PaEstatePlanners.com.

Click here to watch the video and read the brief checklist on wills vs. trusts in Pennsylvania.

This brief video and article will walk you through the big issues related to the question of whether or not you need to spend the extra money for a revocable trust in Pennsylvania. There is also a video and a link to another great article on the trust question.

David M. Frees

For an appointment with David Frees for a revocable trust, a will, or a power of attorney in Pennsylvania please call Donna, Denise, or Beth. To make sure that you receive a discount and an initial consultation at no charge mention this blog and offer “DavidFrees 2010″ when you call.

You can also reach David at 610-933-8069

David Frees is a trust, estate, and asset protection lawyer with offices in Malvern, Phoenixville, and West Chester, Pennsylvania that serve many surrounding communities including Malvern, Devon, Berwyn, Wayne, Chester Springs, Phoenixville, and Exton as well as many others in the area.

Share and Enjoy

By David Frees Law Office: Phoenixville, Malvern and West Chester

You think retroactive taxation for estate tax purposes is a problem?

Well, according to Russia, we have bigger problems…. click here to read more about estate planning and the pending fall of the United States governmentt.

If you need more information about planning your estate or acting as a trustee or executor, we have many free resources. Appointments are also available with David Frees by contacting Beth MacNulty, Donna Brownback, or Denise Fox at 610-933-8069.

Attorney David Frees can also be reached by email at dfrees@utbf.com

Mention this blog to get a free report at the time of your appointment or to request that a free report on executors or estate planning be sent to you. You can also request these reports on line at www.PaEstatePlanners.com

David Frees has attained AVVO’s highest possible lawyer rating.

Share and Enjoy

Beneficiaries can use a qualified disclaimer to change distribution under a last will and testament after date of death and after probate in Pennsylvania (PA) and other states. 
A beneficiary can actually refuse all or a portion of his or her share of a decedent’s probate or non probate assets.  Click here for the technical requirements for a proper qualified disclaimer.  You might wonder, why would someone in their right mind refuse an inheritance?  There are actually great estate tax, inheritance tax and asset protection motives for discaiming assets in PA and throughout the U.S.  For example, if a wealthy individual is the beneficiary of his parents’ estate, he might choose to disclaim his interest so long as the contingent beneficiaries under the will are his own children.  This would allow for the estate assets to be distributed directly from grandparents to grandchildren and thereby skipping the son’s generation of estate and inheritance tax!!  This could result in tens of thousands or hundreds of thousands of dollars of tax savings.  I do not want to oversimplify this issue because there are many important considerations including, but not limited to, 1.  Making sure the contingent beneficiaries named or through intestacy are the desired recipients, and 2.  there is no generation skipping tax that results. This is an important post mortem estate planning option that should be discussed with your estate and probate lawyer in PA and other localities. Please call Douglas L. Kaune, PA Lawyer 610-933-8069 for additional information and consultation.
Wills * Trusts * Probate * Elder Law * Estates * Estate Planning * Asset Protection Planning
Malvern, Phoenixville, and West Chester Law Offices Chester, Montgomery, Delaware, Philadelphia, Berks and Bucks County PA

Share and Enjoy

By: David M. Frees III, Esquire Unruh, Turner, Burke and Frees with Law Offices For Your Convenience in Phoenixville, Malvern and West Chester

It is an honor to have been named as an executor of an estate, or as a trustee of a trust. The person who created the will or trust obviously had a great deal of faith and confidence in you as a person, and in your ability to get things done, quickly, efficiently, cost effectively, and to keep the peace among often competing interests at a difficult time in their lives.

But most trustees and executors are surprised to discover that those jobs are difficult, time consuming, and carry a great deal of exposure to personal liability. Now I do not mean, that be agreeing to be an executor or trustee, that you automatically become liable for the debts of the deceased. You do not.

However, there are many ways in which executors and trustees are exposed to liability for their actions and you simply must understand them before agreeing to undertake the job. Once you get started, it might be too late.

Please view this short video before being sworn in as an executor, or before agreeing to act as a trustee.

Click here for our report for Pennsylvania executors: The Ten Most Common Mistakes That Executors Make and How To Avoid Them.

For a private consultation with David Frees, in any of our conveniently located law offices, please call
610-933-8069.

For access to our free executor and trustee information and a courtesy discount on any fee arrangement, be sure to mention that you read this blog post when you call.

David M. Frees III, Esquire has a 9.8 AVVO rating of superb. Click here to read more about David M. Frees III on AVVO.

Share and Enjoy

Everyone wants to avoid probate.

The probate system is viewed as slow, expensive, and too public.

But sometimes, if you’re an executor, you really want and need the probate system and the orphan’s Court judge.

The truth is, that most of the estates where the executor hires us to do the administration, and to keep them out of trouble, we are also able to keep them out of the probate system and the probate court.

We often settle estates, where the beneficiaries are cooperative by using a family settlement agreement. This saves the family and the heirs time, and money and at the same time protects the executor from being sued later.

But, there are five times when the executor to be fully protected and to avoid liability needs AND WANTS the Probate Court.

When should you use the probate court? When does it actually make sense to go through the probate process for your own protection? Read this article on the Five Times When You Really Want To Probate A Will. Oh, by the way, for reasons that I cannot fully explain, there are some reports appearing at the top of the page. If you’re interested in when to avoid probate and when to actually use probate, just scroll down to the article. It is worth it.

David M. Frees III
610-933-8069

Call Donna or Denise for an appointment or Telephone consultation with David M. Frees III

www.PaEstatePlanners.com

Share and Enjoy

Who Will Initiate Probate: Probate is the court adjudicated process that an Executor or Administrator follows in the estate of someone who dies in Pennsylvania (PA). The Executor is a person or trust company named in a will. The Administrator is a person or trust company appointed by the Court where no will exists, Where there is a will that does not name an Executor or where the will names an Executor(s) who refuses or fails to act. Generally, the intestate beneficiaries or their appointees will have the first option to act as Administrator if one of the above circumstances were to arise.

What You Need To Start Probate: The basic requirements are the original will where one exists, original death certificate, Petition for Probate and Estate Information Sheet often prepared by the Attorney/Lawyer for the estate, check for probate fees paid to the Register of Wills, renunciations if necessary and witness affidavits if the will was not notarized.

Where Probate Takes Place: The Executor is appointed at the Register of Wills Office in the county in Pennsylvania where the decedent resided at death. Locally, one of the following courthouses would likely have jurisdiction: Chester County: West Chester, Montgomery County: Norristown, Delaware County: Media, Philadelphia County: Philadelphia, Bucks County: Doylestown, Berks County: Reading.

Once the Executor/Administrator Has Been Appointed: The remainder of the estate administration and probate requirements for PA will have to be followed. Among the requirements will be notice to the beneficiaries, periodic status reports to the court, gathering information for preparation and filing the PA inheritance tax return and federal estatate tax return (where necessary). Obviously each estate is different and the work necessary for completing the estate administration will vary from case to case. We will provide you with follow up postings about the probate process and ways to avoid potential problems and issues once you are appointed as the Executor/Administrator.

by Douglas L. Kaune, Esquire
Estate Planning & Administration, Wills, Trusts, Asset Protection, Elder Law
Unruh, Turner, Burke & Frees, P.C.
Phoenixville, Malvern, West Chester PA
Pennsylvania Attorney
dkaune@utbf.com PH: 610-933-8069

Share and Enjoy

Because the estate’s entire tax liability is generally due to be paid to the IRS and the Pennsylvania Department of Revenue within 9 months of a person’s death, executors can find themselves without sufficient liquidity to pay for such inheritance taxes and estate taxes.

These taxes are also often due just when the executor is paying for lifetime tax liabilities, funeral expenses and various administrative expenses.

How do you plan for such tax payments to avoid interest and penalties?

I recently did two articles covering these issues.

To read more about paying for federal estate taxes and Pennsylvania inheritances taxes, click these links:

Paying Inheritance and Estate Taxes Part One

Paying For Inheritance and Estate Taxes Part Two

David M. Frees III, Esquire
610-933-8069
See David M. Frees’ Superb AVVO rating

David M. Frees III

David Frees Chairs the Trust, Estate, and Wealth Preservation Section of
Unruh, Turner, Burke and Frees

His practice focuses on estate planning, wills, trusts, asset protection,
and in representing the owners of family businesses, and the directors and officers
of public and privately held corporations.

Share and Enjoy