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.

Does Your Will Dictate What Happens To All Your Assets?

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

Do You Have A 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

Share and Enjoy

However, just read this article on what happens when there is no will (or even a few paragraphs) and you’ll know why you need a will. Literally, everyone was fighting and even the lawyers were potentially suing one another – before an estate was even started.

The quick answer: Update your planning and make sure that you at the very least have a valid will. Anything less is an invitation for legal and tax problems that can often be completely avoided.

David M. Frees III, Esquire
610-933-8069
David’s practice is limited to representing executors and trustees and to
helping clients with estate planning, wills, trusts, and asset protection.

If you have questions involving other areas of the law ranging from
corporate issues to real estate or even about anything personal such as
an employment or injury claim we will help you, at no charge to find the right
lawyer within our firm or even outside of the firm.

Share and Enjoy

Share and Enjoy

Joint bank accounts are often established by individuals with the hope of creating an account with one or more of the following beneifits:
probate avoidance, reduced inheritance taxes or as a convenient way to allow family member to write checks and pay bills.

Unfortunately there are numberous Medicaid/Elder Law Planning, estate planning and asset protection pitfalls that await those who have established joint accounts. Some common problems resulting from joint accounts are pointed out in this Elder Law Answers Article. Take a look at this article and be careful how you title your bank accounts!

This Post was Written by:
Douglas L. Kaune, Esquire
dkaune@utbf.com
610-933-8069

Share and Enjoy

Share and Enjoy

One of the most frequently neglected parts of the estate planning process is the proper use of beneficiary designations on life insurance, IRA’s, 401k’s, annuities and other similar assets. Failure to properly prepare and update a beneficiary designation can significantly change the disposition of assets someone intends to be carried out by his or her last will and testament.
I recently represented the Executor of a Chester County PA estate. I have changed the facts, but have maintained the essence of the issues for our discussion. The decedent was survived by a 18 year old son. One month before the decedent died, he signed a will designating a trust for his 18 year old son as the sole beneficiary of his estate believing that this was all of the “estate planning” he needed.
Unfortunately, five years before his death, the decedent submitted a beneficiary designation for his $600,000 life insurance policy naming his then 77 year old mother as a primary beneficiary. I have been told that the expectation was that the decedent’s mother would “watch over” the money for her grandson. The decedent’s mother predeceased him and was not available to collect the insurance proceeds. The contingent beneficiary, the decedent’s brother, is now in line to collect the proceeds from the policy. He has informed the family that he is having financial difficulties and has no intention of sharing the insurance proceeds with the decedent’s son or anyone else for that matter. WOW! This has sent shock waves through the family and significantly diminished the security of the decedent’s son. Although likely contrary to the decedent’s true intention and morally questionable, the decedent’s brother is legally entitled to keep the $600,000 in insurance proceeds and the surviving son does not get one cent.
This case is a flashing neon sign for everyone to check their own beneficiary designation forms and make sure that they are properly integrated into the estate planning process. The decedent should have created a new beneficiary designation form naming the son’s trust under the will as the beneficiary. This would have allowed the trustee to claim the proceeds and then manage the assets for the son until a later date. A will is not always enough!!

Share and Enjoy

Share and Enjoy

Douglas L. Kaune
dkaune@utbf.com
610-933-8069

Share and Enjoy

Share and Enjoy

Douglas L. Kaune or dkaune@utbf.com

Share and Enjoy

Share and Enjoy