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Meet Michelle Wheeler from our Probate Team

I essentially work with the executor/administrator/trustee and help them manage the assets and expenses of the decedent.  It’s like taking over a person’s financial life after they have passed.

If we need to probate, I prepare the court documents and set up the appointment to get the executor/administrator appointed.  Once that’s done there is estate/trust advertising, bank accounts to manage, securities (stocks, bonds, etc.) to sell or transfer, life insurance/annuity/retirement claim forms to file, an inheritance tax return needs to be filed 9 months from date of death (tax estimate paid within 3 months of death to get tax discount), bills to be paid, selling or transferring real estate, etc.  Once an appraisement letter is received from the Pennsylvania Department of Revenue for the inheritance tax (6-9 months or longer from the date the return was filed), we can make final distributions and close out the matter.  It is a lengthy and time-consuming process that can be frustrating.  I do my best to make the process as comfortable as I can.

Myths and Mysteries of the Probate Process:

  1. Even if all assets are in trust, joint name or have specific beneficiaries assigned, it’s the same process except for the estate administration. We still have to get date of death confirmation values on all assets, account for all debts and expenses paid and prepare a Pennsylvania Inheritance Tax return.  Unfortunately, it is not a quick process.
  2. Depending on the company the amount of paperwork needed to transfer, sell or claim assets can be overwhelming. Please be patient.  Once all claim forms are signed and filed, it can take 10 days to a few weeks for the claim to be reviewed once it is in the company’s computer system.  This is not usually a quick process.
  3. I need the following information to start working on a file: bank statements including decedent’s date of death, current deed on all real estate, investment/brokerage statements including decedent’s date of death, life insurance/annuity/retirement paperwork, copy of most recent personal income tax return, copies of bills paid and/or checks drawn.
  4. Stock certificates should be deposited with a broker or investment service. Stock certificates are like holding cash in your hand.  If the certificate is lost, there is a lost certificate fee to get it reissued.  Please keep your investment safe.
  5. If there is only a bank account with $10,000 or less in the decedent’s name alone on a date of death, a spouse, any child, father or mother, or any sister or brother (preference in that order) can close the account with a copy of the death certificate and the invoice showing the funeral is paid in full. No probate is necessary.

If you would like to learn more about avoiding the probate process, please give us a call at 717-845-5390.

 

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When Cohabitating Goes Wrong

This blog discusses cohabitating in the context of two adult individuals who live together but who are not married. They can be a partner, significant other, or simply friends. We will not be discussing the pitfalls of owning property jointly or other obvious pitfalls of cohabitation but rather we will be discussing the downfalls of not having estate planning documents to allow that significant person in your life to help make decisions.

In the Commonwealth of Pennsylvania, you must be married in order to have certain rights under the context of the healthcare statute. It also requires marriage to have rights under the intestate succession statute in the Commonwealth of Pennsylvania. However, many adult individuals will decide later in life to never get married for one reason or another.

This is certainly a personal choice and preference, but if you are not legally married you will not have the ability to go into a hospital to make a decision for your partner or significant other. Without having a Healthcare Power of Attorney in place that appoints an agent your partner or significant other would have no ability or authority to make decisions for you. Instead family members, who may or may not have been involved in your life, for years would be able to come in and make those decisions.  

Often times if there is a guardianship proceeding that has to occur (because you don’t have a Power of Attorney or Health Care Directive in place), the Court will often defer to family members rather than individuals who are cohabitating with the alleged incapacitated individual. While this is certainly not set in stone, my experience personally is that the Court will defer to family and blood rather than a significant other relationship in appointing a guardian.

It is certainly a person’s choice to not get married and not to take the next step for one reason or the other, but we highly encourage those individuals to make sure that they have, at a minimum, in place a financial Power of Attorney and Health Care Directive and strongly suggest having a Last Will and Testament as Well so that your wishes are known and can be carried out.  This will at least save some heartache in the end.

If you would like to learn more about avoiding estate complications, please give us a call at 717-845-5390.

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What is the Worst-Case Scenario if I Don’t Plan?

What is the worst-case scenario if I don’t plan?  

This is a question that was raised to me several years ago by a client, and I answered her question by walking her through what would happen if she did not have a plan, and she became incapacitated from a financial perspective as well as from a medical perspective.  I also answered the question about what would happen if she died.  My client was married with three children.  Her husband had two children of his own, and she certainly loved them and treated them like her own for all intents and purposes.  

Unfortunately, she did not see the need to do planning ahead of time, and the worst-case scenarios that I set forth to her are exactly what happened.  She became incapacitated a few years later and had a stroke. While she was in the hospital, her children and her husband were disagreeing about the healthcare decisions that should be made on her behalf.  To further complicate things, the stepchildren showed up at the hospital also arguing that they should be involved in the decision process. 

There is a healthcare statue in the Commonwealth of Pennsylvania that does provide the next of kin and who would make healthcare decisions, but, ultimately, the hospital did not want the husband and his children along with the stepchildren to be fighting in the hospital, so they asked them to go to a guardianship hearing and have a judge adjudicate who would be the guardian of her healthcare decisions.  There were a decent amount of assets in her name alone, and, unfortunately, the husband was not able to access them because she did not have a financial power of attorney in place.  

He went to the bank trying to explain the situation but, ultimately, was told that he had to obtain a guardianship Order from the Court in order to be able to make decisions on behalf of his wife.  The husband ended up in court fighting with his children that he had with his wife along with his children to another relationship, fighting over who should be granted guardianship of her.  He ultimately won after having to hire an attorney and spent thousands of dollars in legal fees.  

She passed away and did not have a Will in place.  I think everybody, including her and him, incorrectly believed that the husband would get 100% of the assets.  I did explain to her the worst-case scenario under the Pennsylvania Intestate Succession Statute that the husband would be forced to get the first $30,000 and then have to split the remainder with the children that he had with his wife.  Because of all of the strained relationships that occurred under the fighting that they had in the hospital and in the Courtroom, tensions were high, and they did not get along.  The husband was devastated to learn that he only got the first $30,000 and one-half of the remainder.  He asked his kids to please gift the money back so that he could have it to live the rest of his life, and they laughed in his face and kept the money that they were entitled to under the statute.  

Unfortunately, this scenario is far too common.  As an estate planning and elder law attorney, I tend to live in the worst-case scenario world because that is what typically happens.  If you plan, you avoid all of these circumstances and situations from arising.  If you do not plan and you allow yourself to be subject to the government or the state’s rulebook, it may not go the way that you want it or the way that your family wants it.  
I think often about that day where I met with her and discussed the worst-case scenario.  Clearly, I didn’t scare her enough or do enough to make her realize how devastating that could be for her family.  I am saddened over the tension in the relationship now with the entire family and know that I could’ve easily eliminated all of those fights and arguments and the need to go to Court and spend thousands of dollars of money.  My goal now is to show the worst-case scenario and hope that it hits home with at least one person who will get their planning in place ahead of time so that this does not happen to them.  

If you would like to learn more about how you can plan properly to avoid these and many other complications, please give our office a call at 717-845-5390.

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Why is it Important to Understand or Learn Probate in the Commonwealth of Pennsylvania?

This is a question that we receive all of the time in our office.  The answer is because you could have personal liability as an executor and because there may be ways to avoid probate it if you understand it and plan ahead.

Probate is merely the Commonwealth’s rule book and the process that you must go through if there is an asset in a person’s sole name at the time of their death.  This excludes jointly held accounts and accounts with a beneficiary designation on the account.  Probate is not good or bad.  It is simply the process the Commonwealth requires us to follow in order to properly distribute assets to beneficiaries.  

A personal representative, also known as an executor (or executrix if they are female), if they are named in a Will, or an administrator if they are taking authority under the intestate succession under the statute, are personally liable to the beneficiaries and to the government to properly administer the estate, make certain all debts and expensive of the decedent are paid, pay all inheritance tax and other taxes owed and to distribute the remainder of the assets to the beneficiaries pursuant to the Will or the intestate statute.  A personal representative must understand the entire process and all of the legal requirements that the Commonwealth imposes, such as notices to heirs, notices to creditors, advertising of the appointment of a personal representative and filing with the Orphans’ Court, Register of Wills certifications and notices as items are completed or when the estate is complete.  There is also a requirement for a Pennsylvania inheritance tax to be prepared and filed and, in some cases, a fiduciary income tax return as well.  If any of these steps are not properly completed and a beneficiary, a government entity, or a charity receives less money than what they were entitled to there can and will be personal liability imputed on the personal representative.  

It is essential to understand this liability to make a decision as to whether to hire an attorney to assist in the process.  There is very little upside to not hiring a professional but a lot of potential downsides to not doing so, and therefore, typically, it is a much smarter decision to engage an attorney to assist you.

Probate can be avoided by either making an asset jointly owned or designating a beneficiary for that asset.  However, before somebody makes an asset jointly owned or designates beneficiary for an asset they should understand the legal implications of doing so as there may be considerations beyond probate in doing so.  Remember jointly owned assets or assets with designated beneficiaries don’t avoid inheritance tax, only probate is avoided.

If you have any questions concerning probate or whether you need to probate please call the office at (717) 845-5390 or visit our website at www.bellomoassociates.com

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When Avoiding Probate Wasn’t Necessary Or The Right Answer

We recently did a blog that talked about how national companies and mainstream media often talk about avoiding probate at all costs and the advantages with it.  I warned in that article that probate is not a bad thing in the Commonwealth of Pennsylvania.  In fact, the process itself is very straightforward and fairly inexpensive.  Many of our national companies and spokespeople come from states where the rules are very difficult and expensive, and make it sound like every state follows the same process when, in reality, each state has different rules, and overall, Pennsylvania is a very easy state to go through probate and is overall fairly inexpensive.  

Several people have asked us to provide more in-depth answers as to what are the tools to avoid probate.  In the previous article, I avoided getting into that conversation because I simply wanted to address the fact that we don’t necessarily need to do that in the state of Pennsylvania and that we recommend that you seek counsel to advise you on the pros and cons of such decisions.  I will take a minute in this blog to discuss some of those options briefly but still recommend that you speak to an attorney to discuss whether it is applicable for you in your specific particular situation.

Here are a few options or ways that people can avoid probate:

Create a trust.

Joint ownership.

Outright gifts.

Beneficiary designated accounts.  

Trusts are certainly very viable options and can provide a lot of benefits.  Some of these benefits can include avoiding probate in several different states, as well as potentially asset protection.  In some rare instances, some people need advanced tax planning, in which case a trust can serve as a way to reduce the federal taxable estate to avoid paying higher taxes to the government.  Each particular trust certainly has pros and cons and the rules are different for each one.  Depending on whether you are doing a trust simply for probate avoidance, for asset protection, or for tax planning, each trust will have its own rules and will be governed by a different set of restrictions and limitations.  Fully understanding the restrictions and limitations and weighing that with whether or not the benefits outweigh the negatives is something that each person should do individually and should do with an experienced trust planning attorney. 

Joint ownership.  It is very easy to encourage people to add family members as joint owners on their accounts.  Oftentimes, people will say that they’re doing this for “convenience.”  I believe that it is important to understand some of the negatives that can come out of joint ownership – property ownership, such as if the child were to die first, there would be tax implications in the Commonwealth of Pennsylvania to the parent for adding their child at a 4.5% tax rate.  It is a very difficult conversation to be the person who calls the parent who lost a loved one who has to tell them that they are very sorry for their loss and to remind them that they’re going to have to pay inheritance tax on the joint owned account when it was the parents’ money in the first place, and why do they have to pay tax on their own money?  Once you add a joint owner to an account, there are implications of that transfer that very few people discuss or are aware of.

If you would like to learn more about estate planning and elder law, please give our office a call at 717-845-5390.

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