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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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Planning For Retirement And Enjoying The Remaining Years

When it comes to planning for retirement, the most important person may, probably, be a financial planner or someone to make sure that you have enough money to enjoy those years the way that you want to.  However, equally as important is to make sure that you have completed your estate planning at the same time.  Oftentimes people think of estate planning as a death plan, but in reality estate planning is everything before that as well.  Incapacity can hit us at any time, and it’s imperative that you have your basic estate planning documents in place so that during those wonderful years, if you were unable to do something for yourself, somebody would be authorized to do it for you.  

Some basic items that we always recommend everybody to have in place is a Financial and a Medical Power of Attorney, as well as a Living Will.  These documents will allow you to make sure that your financial and medical decisions can be made for you if you are not able to make them.  It will avoid any fights with family members or anyone who you do not want to have access to your information and will also avoid the expense and the emotional heartbreak of a guardianship proceeding.  A Living Will will allow you to make your end of life decisions if you are “end stage medical”.  This is a period in time when two qualified physicians state in writing that there is no realistic hope of recovery, that a person will always remain vegetative, comatose, permanently unconscious, terminally ill.  If two doctors state this and that there is no realistic hope of recovery, a Living Will will allow you to decide whether you want heroic and lifesaving measures or whether you want them to withdraw treatment.  The most important piece is that the individual gets to decide for themselves, so that their loved ones don’t feel as though they had to make that difficult decision to pull the plug or to play “God”.  Finally, a Last Will and Testament will allow you to make the decisions about what will happen at your death and in the future, and along with your financial planner, who assisted you in making sure that you have enough money for retirement, they will, also, ensure that the assets are designated properly to go to the correct beneficiaries.  

Enjoying your time in retirement and enjoying those wonderful years will be much better knowing that you have protected yourself in case of an unforeseen incident or accident, et cetera.  The time to plan for that is now to allow you to enjoy each and every day to its fullest and not be worried about the worse-case scenario in case you didn’t plan. Enjoy those final years!

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

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My Loved One Will Stay Home Forever

This is a statement that we hear on a regular basis in our office when we talk about aging and potentially needing assistance for our loved ones in the future.  Most people, if asked, would choose or want to stay home as long as they possibly can.  We often are abruptly interrupted when we start talking about alternatives such as assisted living facilities or personal care homes or long-term care facilities.  

It is certainly admirable to want to stay home as long as possible and there are a lot of things that can be done to help ensure that that can occur.  The time to start discussing what it is going to look like for a loved one to stay home is now.  Take a look at the house and the configurations of the house to determine if it is suitable and adaptable to allow somebody to age there.  Is there a possibility of putting ramps in or having a stair lift installed to assist with getting up and down steps within the home.  Are there appropriate handrails or grab bars in bathrooms and other places.  We highly recommend that you ask a geriatric care manager to come to your home to assist with evaluating its adaptability and suitability for people as they age.  

If you find yourself in a situation where a loved one needs care now, we highly recommend that you look at non-medical options to have someone come into the person’s home to assist them with their needs.  Non-medical options are plentiful in the York and surrounding areas and allow families to know that their loved ones will have a companion during the day and potentially get reminders throughout the day about taking medication, going to the restroom, or getting meals.   Oftentimes all that people need is simple reminders and someone just taking a look to make sure that they are remaining safe in their home.  If the situation gets worse and the individual begins to need medical care we are also very lucky in our area that we have several medical options for care in the home.  I would highly recommend that you research both the medical and non-medical options in our area to see how plentiful and wonderful these companies are. 

As a person ages in place, and as their care needs increase, sometimes it is impossible to have somebody continue to remain in their home because it may become unsafe.  There are certainly a lot of options before this becomes a possibility but if a person begins to wander from the home or if the home is not able to be adapted to be safe for them we may have no choice but to move them into another type of setting.  However, with proper planning and assistance from outside companies and family members it is possible to age in place in your home for a long time.   We highly encourage you to have these conversations ahead of time so that you’re not having them in a crisis situation which makes the conversation much more difficult.  

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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My Spouse Died, Am I Liable for his/her Debts?

As estate planning and elder law attorneys we receive this question all of the time. As a general rule of thumb, the answer is no, you are not liable for the debts of another individual. However, there are some exceptions to that general rule, which is why it is essential to seek professional advice when a loved one passes, especially a spouse who had debt in his or her name alone.

For example, there are a few situations where a spouse would be liable for the debt of a spouse, and they are a few of the following:

  1. If a spouse co-signs on a loan for a spouse, then they also own the debt.
  2. If a spouse is a joint account holder of a credit card with their spouse, then they are also liable for the credit card as a joint owner.
  3. If a spouse has jointly owned property, and that property has liability, then the joint owner would as well.

These exceptions are obviously pretty clear, which all point to the situation where the spouse is either an owner or co-signed for the debt one way or another. 

However, in the State of Pennsylvania, there is a doctrine called “The Doctrine of Necessities.” Essentially, it provides that a spouse is liable to provide for the necessities of their spouse. While this is certainly not a doctrine that is used all the time, it is possible that a spouse could be held liable for their spouse’s debt that was incurred prior to death if it is deemed to be a necessity and is deemed that the spouse has a duty to support the other spouse.

Although this is rare, it is definitely something not to overlook and, again, is why we recommended that you seek legal counsel when a spouse passes away to make sure that everything is taken care of properly and that you don’t assume any personal liability for any inadvertent omissions. 

Please, if you have any questions or concerns about your financial future should your spouse die, contact us at (717) 845-5390 or fill in our contact us form and we’ll get back to you.

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