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Do You Need a Trust?

This question is by far the most asked question that we receive in our office. However, there is absolutely no standard or right answer for everyone. Trusts are typically used for either probate avoidance purposes, tax avoidance purposes, or asset protection. Trusts are often used for disability planning but generally, that is not the sole reason for people’s use of trusts.

Currently, the federal estate tax limit provides an $11.7 million exemption per person. This means that an individual currently will not pay federal estate tax unless their estate, per person, goes over $11.7 million or $23.4 million for a husband and wife. This law is set to go back to $5 million in 2025, set for inflation which predictions are that it will end up being around $5.8 million. Even with the reduction in 2025, most people in our local community will not need to do a trust for tax purposes. Certainly, there are rumors each and every day about Congress changing the laws and lowering the exception amounts, but until that happens, I would not make plans for something that may or may not occur. History tells us that all of the rumors that we are hearing, probably none of them will actually look like the actual law if it is ever enacted, and we have always taken the position to plan for the law as it is in effect, and if and when it changes, then we can pivot. With that said, there is not a high percentage of people who will need to do trusts for tax purposes as we sit here today in May of 2021.

Probate avoidance is usually a situation where there are properties in several different states across the country. While every state has different laws as to whether a person needs to open an estate in their specific state, generally speaking, if the property is in a person’s name alone at the time of their death, the state will require them to go through that state’s probate process. We find that many people like to avoid probate in these situations so that they do not have to hire attorneys in each state to finalize for their families. In a situation where a family does not have properties in multiple states, generally, probate avoidance is not something that people are overly concerned about unless they’re in a state that the probate process is very burdensome and overwhelming, which currently, it does not happen to be in the Commonwealth of Pennsylvania.

Asset protection is one reason that people will often do trusts in the Commonwealth of Pennsylvania, to avoid potential creditor issues and long-term care costs. These are a very specific animal of trusts and the rules are very unique to these trusts alone since they are not being set up for tax purposes. It is our recommendation that you speak to a professional well-versed in these types of trusts before completing one. They are very unique and there are very simple rules; however, it is very easy to make mistakes in this area. An elder law attorney well versed in these types of trusts will be able to provide advice as to whether this type of trust makes sense for you. There is no one size fits all answer to the question of “do I need a trust?”. It is important to get very clear on your personal goals and what your goals are for your family. Once you have a very clear picture of that, then a professional will be able to advise you, based upon your current situation, as to whether it makes sense. We would certainly be honored to assist you through this process, and we offer weekly workshops which will give you insight into the thought process in regards to whether trust is right for you. We look forward to seeing you in the future.

If you are looking for advice in regards to estate planning, please call our office at 717-845-5390 or click the link here and we will contact you.

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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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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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I Don’t Trust My Trustee. What Can I Do?

It is important to understand that a trustee is a fiduciary and is held to a higher standard of duty.  It is imperative as a beneficiary of a trust that you read every word of the trust and understand the circumstances under which the trustee is to distribute money to you as the beneficiary. 

If you do not understand the agreement, seek legal counsel so that you’re sure you understand the terms under which the trustee should/may/can/must distribute money to the beneficiary.  As you can see from all the different words that I used, every trustee has different discretions depending on the four corners of the trust document.  There is no one size fits all, so it is imperative that you read and understand the terms of the document and what discretion the trustee has.

Once you understand the document if you still feel as though you’re not getting transparency from the trustee you can always request accounting.  If the trustee does not comply with the request for the accounting of the trust you can then file an action in the Orphans’ Court in your local county to force the trustee to provide you a copy of the accounting to understand what money has been distributed from the trust and under what circumstances.  If you have reviewed the accounting and are still not satisfied that the trustee is fulfilling in his or her fiduciary duty, I would look to the trust document to determine if there is a trust protector.  

Many trusts nowadays will incorporate in them a trust protector who is often another law firm or professional fiduciary who can assist the beneficiaries.  It would also be imperative to read every word of this section to understand what the trust protector can and can’t do and also seek counsel if you still do not understand the specific terms of the documents.  

Because there are so many different styles and types of trusts it is virtually impossible to provide a specific direction to beneficiaries who feel that the trustee is not acting in their best interest, but the steps provided herein provide a starting point for the beneficiaries to feel that they have a voice and a say.  In certain circumstances the trustee may have sole and absolute discretion to do whatever he or she wishes, but even in those circumstances understanding what monies have been paid out and your rights under the document is very important. 

Please seek assistance from an attorney who specializes in trust and understands the “in’s and out’s” of trust documents in order to be able to provide advice on what you can and can’t do within the terms of the trust.

If you would like to learn more about trusts and how they can benefit your family, please give us a call at 717-845-5390.

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Having “The Conversation” or “The Talk” With Your Adult Children About Their Inheritance

It is very rare for us to assist a family with their estate planning that we are not asked from the parents whether or not they should talk to their adult children about their estate planning and about the inheritance.  For years, I always recommended to clients that they have the conversation up front early and often with their kids.  I always believe in full transparency and no surprises.  Particularly in a situation where you may be providing for charities, other outside individuals, or maybe are not providing for your children equally.  

I would always recommend to the parents that they try to let the children know that they plan to have the conversation and when.  Giving the children a chance to come to grips with the fact the mom and dad are going to be talking to them about death and potentially the future.  I always recommended that they do it around the period when there is not a lot going on in the children’s lives such as buying a new home, having a new child, or some major life event.

For years I would hear from clients who were so glad that they did have the talk with their kids and maybe even had several conversations.  Although kids are typically skittish about talking about death, once you have the conversation they’re grateful to have an insight into your thoughts, ideas, and where you are headed.  I have very rarely found children who didn’t want to carry out the wishes that mom and dad intended.  Typically, the problem that we run into is if mom and dad did not tell the children clearly about what they intended the children end up fighting over the intent of the parent.  Having the conversation ahead of time typically eliminates the issue with fighting about intent later. 

I recently had several clients come back to me and tell me that the conversation did not go well and that the children and their relationship changed because of it.  I tried in several of the conversations to dig a little deeper to figure out exactly what happened and where things went wrong, but unfortunately I was unable to get enough detailed information to ascertain where the issue arose, what the issue was actually all about, and why it has changed the relationship. 

Due to the fact that I was unable to truly dig to find out what happened in the context of the conversation, I am hesitant to still not recommend having an open and honest conversation. My one client specifically said that he wished he would not have had the conversation ahead of time and it would’ve been better just to allow the documents to speak for themselves and allow him to die. I understand where he is coming from, especially since he believes that having the conversation changed the relationship.

I still believe that it is better to know that up front, and to be open and honest and know where you stand. The bottom line is that it is your estate planning, and you do not need permission from anybody, including your children, about doing it. Having the talk with them is more to make their lives easier after you are gone, and honestly is about them and assisting them moving forward, and also making mom and dad feel good. I do feel bad that a couple of the conversations didn’t go as planned, but maybe it opened up other issues that were there anyway, that were going to come up and maybe now better than later. 

We wish you nothing but the best in having the conversation with your kids about the inheritance and your estate planning. It is always a good idea to have your attorney have the conversation with them as well to have a third party providing the information. We often have this conversation at no additional charge for our clients to help guide the conversation.

Please contact our office if you would like to discuss your estate planning or have us assist you in discussing these issues with your children.  For any questions or help having this difficult conversation with your family, contact us at (717) 845-5390.

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