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Media PA Probate & Estate Administration Law Blog

Pennsylvania estate administration

Estate and probate law varies from state to state, and income tax bracket might affect planning at the federal level. Many Pennsylvania families struggle to understand these laws because of the impact they have on the financial wellbeing of the family. Estate administration generally consists of assessing the estate for fair market value, selling whatever is necessary to satisfy final debts and disbursing any remaining proceeds to the decedent's survivors.

In the pre-probate phase, many estate administrators may need to obtain access to vital documents as soon as possible. These include passwords, the contents of safes or storage lockers, notifying the necessary state agencies and ensuring sufficient copies of the decedent's death certificate are available. However, if mechanisms are in place to allow the estate's assets to transfer automatically to survivors, this may not be necessary. Estate administration considers postmortem taxes as well as the likelihood of a will dispute. It is generally wise to file a final estate tax return with the IRS even if no taxes are owed. This may help prevent possible problems later.

The estate of Ernie Banks being disputed by family

As some Pennsylvania baseball fans may remember, Ernie Banks was known for his prowess with the Chicago Cubs. After a lifetime of helping others through charity work, Banks died at 83 in January. His estate is embroiled in a disagreement over changes Banks made to it three months prior to his death.

Reasons the estate plan is being questioned include a death certificate stating that dementia was a contributing factor toward Banks' death from heart disease. Also at issue is Banks' move to exclude his three children and his wife whom he was divorcing. Instead, he left his entire estate to his agent and caregiver. In this case, both his assets and use of his name are included.

Examining the important tax exemptions in estate planning

Delaware County residents may be interested on how to avoid certain taxes through proper estate planning. Without careful planning and preparation, the estate and gift tax that must be paid when these assets are inherited can be burdensome. However, three important tax exemptions might help to minimize this tax burden.

The first is known as the estate tax exemption. This allows someone who is passing on their estate to avoid estate taxes on the first $5.43 million of value in the estate. When that person is married, each spouse is entitled to their own $5.43 million in exemptions, bringing the total to $10.86 million in exemptions from estate tax. This total even applies if one spouse passes away first and doesn't use their entire half, allowing the surviving spouse to use the remainder of their spouse's exemption.

What is an irrevocable life insurance trust?

Many people in Pennsylvania understand the importance of having a life insurance policy. One of the most commonly purchased financial products, life insurance provides loved ones with crucial funds that can help to replace the policy owner's income and ensure that burial costs and other expenses are taken care of. Despite the benefits, a life insurance policy can create some estate planning issues that an irrevocable life insurance trust can help to solve.

Like other financial trusts, an irrevocable life insurance trust can be used to remove a valuable asset from a person's estate. Because the trust is deemed the owner of the life insurance policy, the original policy owner will have a smaller estate with less tax liability for their beneficiaries. Placing life insurance in a trust can also allow a person to have more control over who receives the proceeds of the policy and when they will receive them.

Blended families and estate planning

Financial planning for blended families in Pennsylvania can be more complicated than it is for other types of families. When two formerly single parents get married, there are often ex-spouses on both sides that are still in the financial picture. Parents in blended families may also have to make several changes to accommodate the needs of their new spouse and stepchildren.

Two parents who are deciding to blend their households may decide to combine all of their financial assets or keep some of their assets separate. As early as possible, spouses in a blended family should be honest with each other about their financial circumstances. If one spouse has a large amount of debt or a financial obligation like child support, this information may be crucial while deciding things like whether or not to have a joint bank account.

Tips to potentially avoid probate in Pennsylvania

The probate process can often be costly and time consuming. It is also a public process that allows anyone to discover details about what property a decedent owned and who it was intended to be distributed to. However, if real estate is the only property in an estate, the probate process may be avoided altogether. There are someoptions available to those who would like to avoid probate if possible when passing a home or other property to heirs.

The first option involves creating a trust and retitling the property in the name of the trust. When the trust grantor passes on, the person named as the beneficiary of the trust will be entitled to receive the property. The grantor gets to keep possession of the property and revise the trust at any time while he or she is still alive.

Understanding the benefits of creating a living will

Locals of Pennsylvania may not understand how important it is to create a living will, even if an individual is only 18 years old. This process could ensure that family members would not have to face making difficult decisions about a person's possessions in the event of their death. Many young people do not take advantage of a living will because they feel their life is just beginning and are not thinking about the possibility of death. However, an unforeseen accident or terminal illness could arise without warning.

Consider the situation of being hospitalized after a traumatic accident and needing life support to continue to live. Not informing loved ones about medical preferences could put them on the spot to let the doctor know how to proceed. A person who has not established end-of-life wishes will not have them implemented.

Updating estate plans after having children

New parents in Pennsylvania may be wondering how to adjust their estate plans. Parents can set up a revocable trust to protect a child's inheritance and appoint a trustee to administer it. If a child has special needs, parents can establish a special needs trust to ensure that the child will have the resources that he or she requires. A special needs trust will not necessarily disqualify the child from receiving government benefits.

An important step is to nominate a guardian in case the parents pass away or become incapacitated. In addition, parents should designate an emergency guardianship proxy who can care for a child or children if the parents are not able to do so. For example, if both parents are away on vacation and a child requires medical care, an emergency guardian can make medical decisions on the child's behalf.

Estate tax and the year of 2015

Many residents of Pennsylvania may benefit from knowing that the Internal Revenue Service has set new rules that guide how estate taxes work and how estate holders will need to file any exemptions. Since the year of 2011, the federal estate tax exemption has increased steadily with the signaling of inflation.

The estate tax specifically deals with the transfer of estate values that were in possession of persons now dead; these particular tax requirements are recognized as 'the death tax." Estate values may be diversified as life insurance, trusts and approved financial accounts.

Marriage may require new estate planning

Pennsylvania residents who are contemplating marriage in the near future know that planning is essential and helps to make the experience seamless. While that is true for a wedding, it is also true for financial planning after the ceremony is over. There are issues that require attention to enable future security for the couple and their family.

A new will is a good place to start. Decisions are based on whether children are involved, either from previous marriages or from the current union. If one spouse dies, it is necessary to determine whether the other spouse will inherit the entire estate and be responsible for determining how assets will be divided upon his or her death. Otherwise, the couple may decide on other forms of disbursement to care for children or other family members upon the death of a single spouse. In the event that the spouses die simultaneously, the distribution of their estate may be decided with a set amount going to each beneficiary. The couple may also choose to set up a trust, avoiding probate and saving taxes for beneficiaries.

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