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Crap, My Beneficiaries Died Before Me, Now What?

Photo-1585580829906-2113552a6f48As an estate planning and elder attorney, we always encourage people to plan ahead in case something unforeseen were to happen.

 

In some cases, we plan ahead and unfortunately, the people that we have named die before us. If this happens, it is important to review your planning to determine whether or not you need to make any changes or whether or not your plan is sufficient as-is.

 

When an individual tells me that their beneficiary has passed, that typically tells me that they have named that individual as a beneficiary on a non-probate asset, such as a life insurance policy, an annuity, a retirement account, a payable on death account, a transfer on death account, or in trust for account. If this is the case, the first thing to do is to look to see if you provided for a contingent or successor beneficiary.

 

If you did provide for a backup beneficiary, then the person that you have named as the contingent will be the person who receives your money if you were to die. If you did not provide for a contingent or backup beneficiary, then the money would go through your estate.

 

Your estate means that if you have a Last Will and Testament the terms of that document would govern. Therefore, if the beneficiary that you have named is no longer alive and there is no contingent beneficiary, we will look to the Will to see who the beneficiary is under your Last Will and Testament. If it was the same person that was named in the non-probate asset, then we would look to see if the Will provides for a backup or any contingent beneficiaries.

 

If the Will does not provide for anyone else to receive the asset and did not provide for a word such as “per stirpes” then we may have to look to the laws of intestate succession in the Commonwealth of Pennsylvania. If it does say per stirpes, then that individual’s children would inherit the monies that that individual was entitled to.

 

If there is no designation such as per stirpes and the beneficiary is not alive, then we will look to the rules of intestate succession in the Commonwealth of Pennsylvania. The state will provide under this statute an order of who would inherit first, second, third, etc. The Commonwealth of Pennsylvania would not be entitled to any of the money unless there are absolutely no beneficiaries or family members that are alive, which is very infrequent if not virtually impossible.

 

If you are trying to determine who is going to take under the Pennsylvania intestate succession statute, I highly recommend that you seek professional advice for this hierarchy.  Seek out the advice of an attorney who specializes in estate planning and has extensive knowledge in estate administration, but also has done cases where there is no Will and the intestate succession statute has governed.  

 

While it sounds pretty simple, this is not a common occurrence.  So it would be important to have somebody who has the experience to understand what is going to happen.  The bottom line is that if we plan properly and provide for contingent beneficiaries and make a back-up plan in case they die, the fact that your beneficiary died before you should not become a huge issue.

 

I hope that this article also helps you understand the interplay and inner workings between probate and non-probate assets and how, if there is no contingent beneficiary named and the beneficiary of the non-probate asset is no longer around, it would then default to the estate of the individual.  The estate would be governed either by the terms under the Last Will and Testament or under the Pennsylvania intestate succession statute.

 

If you would like to learn anymore about this topic, please feel free to give us a call at 717-845-5390 or attend one of our upcoming workshops to learn more.

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I Am Named As An Executor In A Will. Is That A Good Thing?

Photo-1539541417736-3d44c90da315I often find in my estate planning and elder law practice, that every child, or every family member, wants to be named as an executor in their loved one’s documents.

 

However, I often find that nobody actually knows what that means, and has absolutely no idea how much work it entails. I think people believe it is a rite of passage, or an honor to be named, which it can be, but it also comes with a lot of work, and some significant responsibility. 

 

The person who is named as the executor in a Last Will and Testament is considered to be a fiduciary and is held to a higher standard than an ordinary individual or beneficiary. If the executor does not carry out his or her duties and obligations appropriately,  if the appropriate taxes are not paid or the beneficiary’s interests were not protected like they were supposed to be the executor can be held personally liable in the Commonwealth of Pennsylvania. 

 

Furthermore, it is imperative that the person who is being named as the executor is a very organized individual, who is able to handle balancing and managing a checkbook and also multi-tasking. The relationship of a person to another individual does not make them the right choice or the right candidate for the position.

 

If you are named, my recommendation would be to start understanding now what that entails, and what you will be asked to do down the road. If you are not comfortable serving, I would advise that you let the person know so that they can make alternate or contingent plans in their estate planning. 

 

If you find yourself named as an executor, I would highly recommend that you seek advice from an attorney who has lots of experience in this area. Oftentimes, people are lulled into thinking that acting as the executor and opening the estate is a very simple process, and that an attorney is not needed.

 

While I agree that the original meeting at the courthouse and getting the grant of Letters Testamentary are not difficult things, that is merely the first step, from that point forward there are a myriad of requirements of notices to not only beneficiaries and heirs, but also creditors. There is a Pennsylvania inheritance tax return required to be filed as well as potentially a fiduciary income tax return. Being named is only the first step, and that is by far the easiest. 

 

Due to the fact that an executor is a fiduciary and is held to a higher standard and can be held personally liable to creditors and to other beneficiaries, I highly recommend seeking the advice of counsel. Not any counsel, but counsel who is familiar with the inner workings of the estate administration process in Pennsylvania, including but not limited to, the priority statutes, understanding who gets paid first, second, third, etc., which can certainly cause issues if the estate does not have a lot of money or happens to be an insolvent estate.

 

While it can be an honor to be named as an executor, we urge you and encourage you to understand all of the expectations that it comes with and what you can do ahead of time to be prepared. If you find yourself named, plan seek the counsel of a qualified individual to walk you through the process so that you do not have to worry about any potential liability or any potential pitfalls of which you may be unaware.

 

If you would like to learn more about being an executor in the Commonwealth of Pennsylvania, please give our office a call at 717-845-5390 or come to one of our upcoming workshops to learn more.

 

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Why Young Individuals Need Planning as Much as Older Adults

Photo-1536010305525-f7aa0834e2c7There is definitely a false belief that estate planning and elder law are only for individuals who are elderly and who have amassed a ton of wealth.  Certainly, individuals in that category absolutely need to plan, but that does not mean that younger individuals should not also put a plan in place ahead of time.

 

When an individual reaches the age of majority, which is 18 in the Commonwealth of Pennsylvania, they are presumed to be able to make decisions for themselves and not need the assistance of anyone at that point.  Oftentimes, young adults don’t realize that once they turn 18, getting a financial power of attorney, medical power of attorney, and Last Will and Testament can be absolutely necessary. 

 

Many of our clients are college students, going away without mom or dad for the first time, and somewhere within the first couple years they either end up at the hospital or they end up asking mom and dad to call the school to ask questions about billing or something else.  To their surprise, their parents are no longer able to just make decisions because they are over 18 and are expected to be adults. 

 

We recommend to all college students going off to school to enter into a power of attorney providing the authority for the parents to be able to make their healthcare and financial decisions if need be.  If nothing else, allowing the parents to be able to call the school or other institutions and ask questions.  This is often overlooked by many parents and can cause a lot of heart break and stress if their child is injured or in need of assistance.

 

Although most college students and young individuals have not amassed a ton of wealth, having the document in place specifying who is going to receive the assets and who will be the individuals responsible for carrying out those wishes (executor) can often save lots of heart break.  Yes, it is true that the Commonwealth of Pennsylvania has a statute called intestate succession which does provide what would happen to assets if an individual dies, but oftentimes it is not what a person would want. 

 

The intestate succession rules are archaic and old and do not necessarily follow the wishes of a current situation.  For example, we recently had a situation where the parents who are estranged had to administer the estate of their daughter who passed away.  The emotional toll that it took on the parents and the family for them having to put up with each other was certainly probably not what the daughter wanted and had she had her wishes in place it would have eliminated not only the heartache of losing a child but them having to fight and remind each other every day of why they were divorced in the first place.

 

We also recommend that young adults have documents that are properly put in place (so that others can get access to digital assets).  Digital assets often include photos and videos, electronic media, stored data, and apps, etc.  Young adults are typically ones who have proportionately more of these than others, and if the power of attorney or the Last Will and Testament does not provide for that, it can cause lots of time delays and issues.

 

Hopefully, this article was able to express the need for individuals to have planning in place, particularly young adults who often don’t think that it is necessary. If you would like further information or would like to learn more about the content in this blog, please contact our office at 717-845-5390.

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What is a Pour-Over Will?

Photo-1516901408257-500ed7566e6aMost of us have heard about a Last Will and Testament, but have you ever heard of a pour-over Will?  Pour-over Wills are used often in connection with living trusts.  

 

There are several different types of living trusts, but ultimately trusts are a vehicle that will avoid probate and often provide other benefits such as asset protection or other things, depending on what type of trust it is.  The goal of a trust is to make sure that they assets are “funded into the trust.”  In our office we like to say that it is putting your boxes into your wagon. 

 

However, oftentimes assets will be left out of the trust for a myriad of reasons.  To be completely honest, the main reason is probably just because people forget to put them in the trust and over time when they buy something new instead of having it put into the wagon they just leave it in their name alone out of forgetfulness.  

 

A pour-over Will essentially says that all assets that are left in a person’s name alone at the time of their death should “pour over” into the trust.  The will does still have to be probated because the asset was in the person’s name alone, but ultimately the assets will pour into the trust and then will be subject to the terms of the trust.  We used this as a catchall or fallback provision so that we are sure that the trust terms will govern the distribution in the future.  

 

Pour-over Wills are often much shorter than your traditional wills because their purpose is simply to get assets over into a trust, subject to the terms of that trust.  Therefore, pour-over Wills are simple and easy to understand because of their purpose. 

 

If you have a trust and your trust provides for all of the distributions to you and your family after you die, talk to your attorney or professional to determine how assets that are left in your name are going to be handled.  Assuming that there won’t be any is probably not the best option or course of action.  Talk to your professional to determine if a pour-over Will is right for you.   

 

If you would like to have additional information or to discuss this further, please give us a call at 717-845-5490.

 

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Who Will Raise Your Kids and Make Sure That They Are Taken Care of Financially if You Are Gone?


Photo-1534982841079-afde227ada8fThe thought of passing away and not being able to raise your kids is certainly one that none of us hope that we ever have to experience or endure.  However, the thought of our children being involved in a legal dispute over who’s going to raise them and having them go in and out of court after the loss of their parents is even more haunting and disturbing. 

 

If you want to be in control of who is going to raise your kids and who is going to make sure that they can distribute the money to them to take care of them financially, it is imperative that you take efforts to name a legal guardian for your children.  Otherwise, a judge will be the individual to decide who will ultimately raise your children, often amidst litigation and argument among numerous family members.

 

We are often asked in our office who is the best person to name as the legal guardian for children and who should be the trustee of said children to distribute the money to them. 

 

Although there are certainly no perfect answers, we wanted to provide some thoughts, ideas, questions and comments in order to be able to help narrow your options and assist you with this decision.

 

  • Who in your life shares the same values as you and is as patient to raise your children?

 

  • Based upon the individuals that you are thinking of, how many children do they have on their own and would adding your children to their family be insurmountable?  Do they have the stamina to be able to raise all of the children – not only their own but yours?

 

  • If you are not related to this person by blood, would you still consider this person to be the right choice to raise your children?  We often find that people will look typically to other siblings or family  members, not because they think that they are the right choice but simply because they are blood and believe that they have to do that.

 

  • Have you talked to the person or people that you are thinking of naming?  Are they willing to undertake the responsibility of being a legal guardian to raise your children?  We recommended that you contact those individuals to verify that they are willing and able.

 

  • Does the age of your potential person cause a problem?  For example, are they under 18 or are they of an age that they are slowing down and not able to take care of themselves, let alone other individuals?  We often find that children want to name their parents as the guardians and forget that as their parents get into their later years, it is difficult for them to raise children, particularly young children who are very ambitious and very strenuous.

 

  • Does the person or people that you are thinking of have a deep enough connection with your children or a significant personal relationship with you and your family?  

 

  • Do the people that you are thinking of live locally to where the kids would not have to change school districts?  If not, have you discussed this possibility with your children if they are old enough to understand and how they would react to that or, have you discussed with potential legal guardians the possibility of them moving to your hometown in order to get your children out of high school or at least of an age that moving them would not be problematic?

 

  • Do the people that you are thinking of have the financial means to undertake such an endeavor?  It is imperative that you plan ahead to provide, in case you are gone, and we would recommend that you talk to a financial planner to discuss ways to provide for your children, such as life insurance and other vehicles.  That would allow the guardian to be able to get access to money on behalf of the children, which is certainly important.

 

Whether or not the trustee and the guardian are the same people is a personal choice.  Some people believe that you should separate the person who is raising your children from the people who are in control of the money on behalf of the children, such as a checks and balance situation.  Others feel that if you trust the individual with your kids, you should trust them with the money.  Although I personally do not believe that there is a perfect answer for all people, I think that it is definitely something that everyone should think about, and oftentimes, the people who you are thinking of will dictate the answer.

 

These are a few questions and thoughts and ideas that people should think about in regard to who to name as the legal guardian and trustee for their families.  If you would like to have additional information or to discuss this further, please give us a call at 717-845-5490.

 

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