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Think Outside The Will – What Else Makes A Great Estate Plan For Pa Residents? Part 1

Estate Planning, Wills, Trusts and More

What Does A Pennsylvania Resident Really Need 
In A Great Estate Plan? 

By:  David M. Frees III, JD

When you think about doing the right thing and taking care of your spouse, children, friends or loved ones, you probably say to yourself: “I’ve really got to do a will.”

And, while no well adjusted and responsible adult should be without a will, the will – standing alone – is not the beginning and the end of most good estate plans.

So, what else do you need?

The answer can vary significantly based on your personal net worth, whether or not you’re a parent or grand parent, and whether you own real estate or business interests.

However, there are certain documents that should be considered in every case – even if you decide that they are not for you.

For example, almost everyone considering a will should also ask themselves and their adviser if they need a:

revocable or irrevocable trust,
financial power of attorney,
medical power of attorney, 
medicaid planning trust,
and/or a living will
non-probate beneficiary designations and joint accounts

as part of an effective estate plan.

This article and subsequent installments will examine each of these “out side of the will” planning tools and when and how they can be used.  However, the use of these techniques is highly specific to the facts of your own situation and you should discuss them with your adviser.

Having said that, knowing, in advance, more about these topics and how they apply to you will make you a smarter and
better consumer of estate planning services – and, it might save you some money.

Interestingly, some of these documents can protect or harm you as well as your family and in some cases, having a trust
might actually not be worth the time, trouble, and expense.

So let’s take a more detailed look at each device and how and why they might be used.

Revocable Trusts:  In Pennsylvania, the use of a revocable living trust may not be worth the extra money.

While smart lawyers and clients use revocable trusts in many situations and in states where probate fees are high or the probate system is cumbersome, neither of those are the case in Pennsylvania.  In fact, the majority of lawyers who have
estate plans in Pennsylvania dispose of their estates through wills.

So why are trusts so popular and when would they be used?

Revocable trusts are more expensive than doing a will alone. So as a consumer you want to know that getting this type of trust is worth the additional fees and costs.

In addition, in order to work properly to avoid the probate fees, the trust has to be “funded.”  In other words, you need to transfer assets into the trust.  These assets are exempt from probate fees in Pennsylvania – often quite minimal – but they are still taxable for inheritance and estate tax purposes and can be reached for nursing care and to satisfy other debts.

However, the revocable trust is often worth the additional fees over and above a will when:

-You’re elderly and want a friend, family member or professional trustee or trust company to manage assets and to pay bills

-You have assets and real estate in multiple states and want to avoid multiple probates

-You are omitting an heir or leaving unequal amounts and may have a challenge (trusts are generally harder and more expensive to challenge than a will)

-You have life insurance that you don’t want to pass through a will where it might be claimed by a creditor – this might require or mean that an irrevocable trust is better for you but that depends on the size of your estate.

So thinking outside of the will means considering a revocable living trust as part of your plan and making sure that it is worth the additional fees in your particular circumstances.

In the next installment of this article, we will also consider these outside the will techniques and documents:
irrevocable trust, financial power of attorney,
medical power, medicaid planning trust,and/or a
living will non-probate beneficiary designations and
joint accounts 

Thanks for taking the time to make yourself smarter about your financial affairs and estate planning.



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