In my standard Will, I define “Tangible personal property” to include all clothing, personal effects, jewelry, motor vehicles, household furniture and furnishings, household appliances, silverware, glassware, china, rugs, books, pictures and other works of art, stamp and coin collections, family memorabilia, and all other similar assets for personal or household use, which are owned at death, as well as the interest in casualty insurance policies insuring those assets against loss or liability. I specifically state that the term does not include any cash or securities (including common, preferred, and other classes of capital stock; warrants, options, or puts and calls; bonds, debentures, notes and other fixed income-bearing obligations, regardless of conversion privileges; and units of participation in common trust funds, investment trust stocks, and mutual fund shares) that are owned at death.

Most typical parents leave the personal property to the spouse and then to the children, to be divided among them as the children agree within a certain number of days (60-90 days is common) and if they can’t agree on who gets a few of the items, those articles in dispute are sold, and the proceeds added to the residuary estate. The distribution of personal property among a group of people can be difficult, because to some, photographs are priceless or worthless – and the same can be said of china, a piano, antiques, etc. As they say, beauty is in the eye of the beholder. While sometimes my clients say they want the items divided “equally” among the beneficiaries, this is of course impossible – you can’t chop up the desk into 3 equal parts to divide it equally among your three children.

Another way to distribute personal property to a group is to allow the oldest (or youngest) beneficiary to choose one item, and so on in a “round robin” fashion, until each member of the group has chosen which items he or she wants – and then the remainder can be sold and the proceeds distributed equally to the group members. A third way is to allow the executor (or some other named person) to decide the distribution. Still another method is to assign values to the more expensive items, and then have the group of recipients try to equalize the disposition. The important part is to make sure that your Will mandates the method by which the tangible personal property is to be divided, to avoid arguments and confusion.

Although personal property can be given to charities and spouses without payment of Pennsylvania inheritance tax, the tax is due on property inherited by others. The executor will arrange to have a professional appraiser prepare a written appraisal of the items of personal property, and attach that written document to the inheritance tax return. Professional appraisers usually charge a flat rate for this service.

As always, if we can assist you with any of your estate planning needs, just give us a call – we are always happy to help.

The post Disposition of Tangible Personal Property appeared first on Pennsylvania Estate Planning & Administration Blog.

If there is no possibility that any beneficiary (including as yet unborn grandchildren) will be under age 25 at the decedent’s death, then I usually just add a Disability Trust. This normally provides that if any beneficiary is incapacitated at the time of death, then his or her share is held in trust, to be distributed by a trustee for the health, education, support, maintenance and/or emergency needs of the disabled beneficiary. A person is considered incapacitated if a court declares the incompetency in a court hearing. However, one can also be treated as being under legal disability, incompetent, or incapacitated if so certified in writing by his or her personal physician. If the person recovers and becomes competent, then the money is released to the beneficiary outright. If not, the money remains under the control of the trustee until the money is depleted or the beneficiary dies.

If any potential beneficiary is or may be under a given age (usually 25 or 30 years of age) at the time of death, then I usually add a generic Minority and Disability Trust – that combination allows money being left to anyone who is potentially too young to exercise good judgment or to anyone who is incapacitated to be held in trust. As with the regular Disability Trust, the money may be used for the beneficiary’s health, education, support, etc. The trustee invests the money and distributes it slowly over time for the benefit of the young or disabled person.

I also usually add an “Accelerated Termination” provision to the Will, to go along with the Trust. This clause provides that the Trust may be terminated early (before the disability ends or before the beneficiary reaches the age or 25 or whatever is set forth in the Trust) if the Trust becomes too small to administer. We recently vacated a Trust for a 21-year old whose grandmother had left her $50,000 by paying that money directly to the college the student was attending. We also terminated a Trust that was left for a minor grandchild that was only $2,500, by depositing that sum directly into a bank account for the minor. Keeping small trusts active often makes little financial sense, especially because a Trust is obligated to prepare annual tax returns.

Trusts may continue for decades – so name an original trustee and several alternates. Choose people who will make sensible financial decisions, being fair but not overly generous, because the trustee should try to preserve capital if at all possible. There is no need to choose trustees who are geographically located close to you, since a trustee can function from anywhere in the country.

If you need any assistance with your estate planning needs or probate issues, give us a call.

The post Minority and Disability Trusts appeared first on Pennsylvania Estate Planning & Administration Blog.

I like many people, open bank accounts for the sole purpose of saving for something special. It might be a special vacation, a birthday party, a new car, or whatever. Then after the occasion has passed, I often leave the account open with a little bit of cash, always hoping to add to the account at a later date. While that never seems to happen, oftentimes the bank imposes a service charge because of the small balance, and I eventually lose the money.

At your death, your Personal Representative, known as your executor or administrator (or if female, your executrix or administratrix) is required to obtain written information about each of your bank accounts, including how it was titled, when it was opened, and to find out the value at the date of your death. If you have several accounts with small amounts of money, obtaining this information can be a significant burden for your Personal Representative and a significant expense to your Estate. If your Personal Representative is a professional, your beneficiaries will be paying for his or her time as well as the costs in obtaining all of the account information.

It is very easy to avoid this problem and minimize the expense to the Estate – just sit down and make an inventory of all your small bank accounts. Take all of these piggy bank savings and consolidate them into one account, either new or existing. The same theory works with more substantial accounts. Just make sure the balances do not exceed the current maximums for FDIC (government backed) insurance on bank accounts. This amount changes periodically so you need to review the current regulations.

Check Your Beneficiary Designations

Check each life insurance policy, retirement plan and annuity to make sure each has a specific beneficiary so that the gift is actually received by your intended loved one. If there is no named beneficiary, the money will become part of your Estate, and will go according to your Will or according to the laws of the state in which you reside at death. If you have named a beneficiary who is alive at your death, the assets will go directly to that named beneficiary, and there will be no need to probate those assets. One added benefit for having a named beneficiary on your life insurance policy is that there will be no Pennsylvania inheritance tax on the proceeds of the policy.

Tell your Personal Representative Where you have Assets

Over our lifetimes we accumulate many things. It often happens that when someone dies, his or her Personal Representative does not know the full extent of the decedent’s possessions and has to spend considerable time and expense gathering that information. To alleviate this problem, you should consider preparing a Statement of Guidance.

The basic idea of the Statement of Guidance is to help your loved ones and Personal Representative sort out the details of your life when you can no longer provide the answers. It provides information such as where your assets are located, what debts you owe as well as where you keep the extra keys to your car, your safe deposit box, your insurance policies and other information the Personal Representative may need at the time of your death. You do not need to add more information than is necessary for the Personal Representative to gather the assets or ascertain the debts. For example, while you may want to add the account number, really all that is necessary is that you write that you have an account at Bank XYZ or that you have a credit card with Bank ABC. Armed with that information, the Personal Representative will be able to get the rest of the necessary information directly from the Bank at your death.

Our office provides a Statement of Guidance to our clients as an organizational tool.

Each of us has specific financial and Estate needs so feel free to contact us if we can help you with any of your individual situations related to your Estate planning or the Estate of a loved one.

The post Organize Your Assets to Benefit Your Heirs appeared first on Pennsylvania Estate Planning & Administration Blog.

In some circumstances, it makes more sense to define the gift as a percentage of your total estate instead of as a specific dollar amount. In that case, I could provide that 10% of my residuary estate would go to the Philadelphia Affiliate of Susan G. Komen for the Cure and the balance of my estate to my children.

Other clients only want to leave some or all of their money to charity if their entire family, spouse or partner and children die at the same time. I often add such a “wipe out” clause to a Will, especially when the family members travel together frequently.

What Charities Should I Choose?

When choosing the charities to leave your money to, give to the causes that you are most passionate about, reflecting on what makes you unique or what brings you the most joy or what has shaped your life. My passions include Girls Inc. of Greater Philadelphia and Southern New Jersey. I am one of three daughters, and my husband and I have two daughters and a granddaughter. Girls Inc. helps local girls strive to be strong, smart and bold – what an incredible mission! Another passion is the Philadelphia Jewish Archives Center – a group that archives the history of the Jewish people in our local area. While our Jewish heritage is important to my husband and me, even more significant is the impact of Jews on the local history of greater Philadelphia, where my husband and I have both lived for our entire lives. Another passion is the Jenkintown Library – I am an avid reader and a Montgomery County resident who has enjoyed borrowing books from there. As you can tell, our charitable interests make clear the things that are of great import to us – females, the greater Philadelphia area, religion, history and books.

In our latest Wills, my husband and I left our estates to the survivor of us and then to our children. However, if we all die at the same time, we have included wipe out clauses in our Wills, leaving money to our siblings, living mothers and then to our “passions” – the charities that are so significant to us on a personal basis.

We have chosen “smaller” charities, where our bequest will help actual people or actual programs, instead of helping the charity build another building or provide the head of the charity with a larger salary. Since there are many charities supporting similar causes, in picking your charity, check into its finances to determine if it spends most of its money on service activities (the recommendation is that at least 65% of the expenses be for this purpose) or on administrative or other expenses.

There are many good causes deserving of support. You should discuss your wishes with an experienced estate planning attorney to make sure your Will gives what you want to both your loved ones and those charities supporting your “passions.” Send me an e-mail if you have questions about charitable giving in Pennsylvania.

The post Can I Give Money to Charities in my Will? appeared first on Pennsylvania Estate Planning & Administration Blog.

A lot of people I talk to in this or a reasonably similar situation ask, “Why should I make a Will? Won’t my spouse get everything when I die and then, won’t my kids get whatever is left?” The answer is that Pennsylvania, like all states, has a set of laws that determines what will happen if you don’t have a Will. Do you really want Pennsylvania making these important decisions for you?

Do you really want…

Although the laws in each state are different, in Pennsylvania, if you die without a Will, your spouse gets the first $30,000 from your estate and one-half of the rest of your estate. Your children will get the rest of your estate at age 18! Assume your estate is composed of some cash and investments, jewelry and other personal property, and a car and is worth $200,000 at the time of your death. That means that when your children turn 18, they will get a check for around $85,000 less the inheritance taxes of about $4,000. If you and your spouse both die and all of your chips get cashed in, it is even worse – you do the math – do you really want a check written to your 18 year old children for the total value of all the assets you and your husband own – with no one overseeing how it is spent? I don’t know how much you know about 18-year olds and their financial acuity – but they are usually not graced with the greatest financial wisdom. To the contrary, as my husband says, they lean toward spending their money on sex, drugs or rock and roll – and hopefully, not all three!

Making a Will Avoids These Calamities.

Instead of leaving the disposition of your estate to the politicians in the Pennsylvania legislature, grab control! First, the jewelry!

The wives in my practice usually leave their jewelry to their daughters (instead of to the bimbettes that their husbands or sons may marry after their death). Sometimes, but not often, the husband will leave particular items to his sons. Then the rest of the personal property (the pictures, furniture, books, etc.) is usually left to the surviving spouse and then to the children, to be divided between them. If they can’t agree on how to divide the things within 60 days, the articles that the children are arguing about get sold and the proceeds are added to the residuary estate. If the children are minors, the executor usually decides what is appropriate to keep and the rest is sold.

The money and other property without a listed beneficiary is usually left to the survivor. I often suggest that at the death of the survivor, the residuary estate should go to a “common trust” to be used for either child’s health, education, medical needs, etc. During the time the common trust is in place (until the youngest becomes 25 or even 30), the money is doled out in the same way that a parent of more than one child handles the family finances – fairly, not equally. For example, if one child needs a winter coat, you don’t buy two coats – you just buy one. The trustee will dole out the money separately to your two children, based on their individual needs. Then at the time the trust ends, whatever is left will be divided equally between the two children.

Your trustee should be someone who won’t let your children bully him or her into giving them money for no good reason and can say the ultimate parental curse word (“No!”). You will also need to appoint a guardian in case the natural parent dies. You should also appoint a contingent trustee and guardian in case the primary person is unable to serve.
If before the trust ends, the child dies but has children (that is, your grandchildren), usually those children inherit the deceased child’s share (held in a different trust, discussed below) and if when the trust ends, both of your children are alive, then your children will inherit equally whatever is left in the trust. By using this method, you have accounted for their individual needs.

We routinely add a “Minority and Disability Trust” that says if beneficiaries inheriting are under a legal disability or under age 25 or 30, their shares are held in trust and doled out based on their needs, for their health, education, medical needs, etc. until the trust terminates.

There is no substitute for good legal advice – so do not rely simply on Internet research and online forms – to do your estate planning. You wouldn’t perform surgery on yourself, right? Find a good lawyer to help with your estate planning. We will continue to post articles on different issues you might want to consider as you plan your estate.

The post Why Make a Will? appeared first on Pennsylvania Estate Planning & Administration Blog.

What to do with the jewelry?

When I am interviewing a married couple, the initial question I ask the wife is “Who gets your jewelry – the bimbette your husband marries after your death or your daughters?” I guess you know the answer. Wives are really not at all interested in the next wife wearing her jewelry. It often seems that the less jewelry there is, the more important it is that the next wife never wear the first wife’s jewelry. Interestingly, if there are no daughters, the wife usually chooses not to leave her jewelry to her sons – after all, the sons might marry their own bimbettes some day. At least the wife knows that her husband has good taste – he married her, didn’t he?

Who gets a family heirloom?

If you received a special gift or inherited items from your now deceased relatives, you may want those items to “stay in the family” and not go to your spouse at your death. Often these items are not valuable in monetary terms but are incredibly precious in sentimental value. For example, my long deceased paternal grandfather personally sanded and caned a rocking chair for me. I probably could not get more than $50 if I sold it – but it is worth millions to me because I know he did the work on it by his own hand, over the course of many months. As much as I love my husband, there is no way that any woman he marries after I die will ever get her hands on that rocker so she can toss it out as trash.

How about money?

Grandparents often want to leave a sum of money to their grandchildren – usually for college. If you want to do this, specify that the gift only is made at the death of both you and your spouse – otherwise, the grandchild will get money at the death of the first to die, and then the same amount at the death of the second of you to die. Also, make sure that it is held in trust for the grandchild, so that a trustee doles it out carefully, considering the grandchild’s needs. Otherwise, the result may be like that of one of my clients – after her death, an IRA went directly to her grandchild who inherited $70,000 at age 20. Before he reached 21, he had blown all the money on what most of us would consider junk! It is hard to imagine that this young man “had” to make these purchases instead of saving the money – or even saving part of it – but that is precisely what he did.

If you want to leave money to charity, remember that your crystal ball is always cloudy – you don’t know how much money you will have at your death, so be careful when deciding the amount you leave. For example, suppose at the time you make your Will you have $1 million, and you make a specific bequest of $100,000 to ABC Charity and leave the rest of your money to your children. You stay healthy and live another 20 years so at your death your estate is valued at only $125,000. By the time the kids pay off your debts, there may be no money left for them to inherit. An alternate way that may work better is to leave a percent of the residuary estate – like 5% – to charity and the rest to the children.

An alternative to a specific bequest

Instead of making a specific bequest of money in your Will, you may simply designate a person as your beneficiary on a bank accounts, life insurance policy, IRA and the like. At your death, those people will inherit the money. In effect, making this kind of designation is the same as a specific bequest in a Will – the named person will inherit the account. Remember though that named living beneficiaries take precedence over wills – so if you name your daughter as the beneficiary of your life insurance policy, you can’t override that in a Will by saying that the life insurance goes to your son.

There are always many good reasons to make specific bequests of money and items – so consult with your estate planning attorney to make sure your wishes are carried out as you planned.

The post Specific Bequests in Wills appeared first on Pennsylvania Estate Planning & Administration Blog.

Similarly, the Defense of Marriage Act, (DOMA) which is a federal law, defines marriage as only a legal union between a man as husband and a woman as wife. DOMA permits states to deny marriage “type” relationships to same sex couples even though the relationship is recognized in other states. Not even the Constitution can protect a relationship which is legal in one state but not legal in another. A multitude of federal rights are afforded to opposite sex married couples that are denied to same sex couples, including estate and gift tax exclusions, social security benefits, benefits from certain immigration laws, access to federal civilian and veteran benefits, etc.

When considering financial issues, including estate planning, whether you are a same sex couple or an unmarried opposite sex couple, it is important to realize that your relationship does not have the legal impact of marriage in a variety of ways. Therefore, you may want to comingle your assets differently than a married couple.
For instance, utilize a joint checking account for mutual and shared bills, while maintaining separate checking accounts for individual or personal needs. Before purchasing a home, a car or even an investment property, figure out the best way to title the property so that you understand who gets the property if you or your partner die.

When deciding on your estate plan, consider preparing a Will. For same sex and unmarried couples, the intestacy laws will not protect the property interests of the surviving partner, so you have to put your wishes into writing if you wish for your partner to inherit.

Some of the issues that unmarried couples may want to approach in Estate planning include:

1. Funeral instructions are important to delineate if the testator (the person who is drawing the Will) wants to have arrangements made by an individual who is not a family member. Although funeral homes do not always accept funeral directions from a person who is not family, the wishes of the testator should be contained in the Will as a means of direction for all concerned.
2. If there is an expectant heir who the testator wants to exclude from inheriting upon death, include a clause to reflect that the omission of that expectant heir is intentional, so that there will be no legitimate argument that the omission was an oversight..
3. Trusts should be considered as a vehicle to protect property left to minors, incapacitated adults or where there is a hostile relationship with one’s partner’s family.



4. In some situations, partners who are able to marry may want to do so in order to allow their partner to avoid the Pennsylvania inheritance tax, which is currently 15% of the net estate where there is no family relationship between the deceased and the heir. Since Pennsylvania does not impose any Inheritance Tax on money or other property received from a deceased spouse, the financial impact on monies left to loved ones who either are or are not your spouse can be significant.
5. It is equally important to make sure to appoint your partner as your primary “agent” to sign your checks, pursue litigation for you and otherwise handle your personal business affairs if you become incompetent as part of a Power of Attorney. Similarly, appoint your partner as your primary Health Care Agent in a Health Care Power of Attorney so that he or she can obtain your medical records, authorize surgery for you and so on. Finally, prepare an Advance Health Care Declaration (also known as a “living will”) so that your partner can act as your surrogate to decide your wishes with regard to making decisions for you if you are “brain dead” or suffering from end-stage Alzheimer’s.

Regardless of whether you are straight, gay, male, female, young, old, or anywhere in between, Estate planning is something that we all need to consider. If you have any specific questions about your unique situation, please contact us to assist you.

The post Estate Planning for Same-Sex and Otherwise Unmarried Couples appeared first on Pennsylvania Estate Planning & Administration Blog.

There is not always the need to appoint a Personal Representative to probate the decedent’s estate, even if the decedent had no Will at the time of death. Whether a Personal Representative is needed depends on the kinds of assets that exist since certain assets do not need to be probated. For example, a house that is held by a husband and a wife as tenants by the entireties goes directly to the survivor without probate. Similarly, a life insurance policy leaving the proceeds to a named, living beneficiary goes directly to that person, without the Register of Wills office getting involved in the transaction. We will discuss the issues surrounding probate and non-probate assets more in later posts.

However, if at death, there is no valid Will but there are assets that do not go directly to a named person, or if there is a Will but the named Personal Representative is not willing or able to serve, then in order to distribute the decedent’s assets to the family, someone needs to be appointed as the decedent’s Personal Representative. Similarly, if there is a need to bring a lawsuit on behalf of the decedent, someone has to be appointed to serve as the Personal Representative if there is no valid Will. This person, appointed by the Court is referred to as the “administrator” or “administratrix.”

Who is appointed by the Register of Wills?

In Pennsylvania, the legislature has set forth in 20 Pa.C.S.A. §3155 that the following people may be appointed by the Register of Wills to serve in this role, in this specific order:

1. The people who are entitled to the bulk of the estate under a valid Will
2. The surviving spouse
3. Those people who would be able to inherit the estate under the “intestacy” laws (there is a list of people who Pennsylvania has determined should inherit if there is no Will – spouse, children, parents, aunts, etc.)
4. The major creditors – those people or businesses to whom the decedent owed money
5. Other “fit” people

Generally speaking, the court will not appoint an administrator/administratrix until at least thirty days after the decedent’s death.

Once appointed, the Personal Representative has the same duties and responsibilities as if named by the decedent in a Will. The Personal Representative is responsible for gathering up all the decedent’s assets, paying the decedent’s valid debts and then distributing what is left according to the provisions of the Will or the intestacy laws. This process often takes a year or more to complete and carries with it significant responsibility. The Personal Representative is expected to protect the estate assets at all times and so is not allowed to invest the estate’s money in high risk assets. If such investments are made and money is lost, the Personal Representative could be liable to the beneficiaries for their financial losses.

Many times people appointed as a Personal Representative by the Register of Wills have little or no experience with handling estate matters, and often do not know where to start. They are unaware of important deadlines that must be met and other rules that must be followed to handle the estate properly. We often are contacted by people who have started the process and then stopped, as the details became overwhelming.

If you are appointed the Personal Representative for a decedent and have no experience in these matters, we strongly recommend that you consult with an attorney who routinely handles estate administration for advice and assistance.

If you are involved in the administration of a decedent’s estate, you are welcome to contact us if with any questions you may have. We will continue to write about the many pre-death and post death issues that face every Personal Representative in administering the Estate of a decedent.

The post Who Becomes the Personal Representative if There is No Will appeared first on Pennsylvania Estate Planning & Administration Blog.

While many people believe that deciding who gets what items and who should inherit your money is all that needs to be decided in preparing your Last Will and Testament, the choice of your Personal Representative is also quite important, since until the Personal Representative properly completes the job, your heirs won’t get their money and problems may arise with the taxing authorities and other entities. So choose your personal representative wisely!

What does the Personal Representative do?

The Personal Representative’s job starts right after death, when he or she goes to the Register of Wills office in the county of your death to “probate” your Will. Tell your Personal Representative knows where your original will is located so there is no delay in getting it filed with the Register of Wills. Although the whole concept of probating a Will has gotten a lot of bad press in recent years, the process, at least in Pennsylvania, is relatively painless and not very expensive. The Personal Representative usually has to appear in person at the Register of Wills office to formally start the process.

At the Register of Wills, the Personal Representative will take an oath of office and then be given (or mailed within a few days) documents called “Shorts,” which is an abbreviation for “Short Certificate.” These are just pieces of paper to be given to each financial institution or holder of assets in order to get the assets from that place into an “Estate Account.” The Personal Representative will use the Estate Account to first pay off the decedent’s debts, and, after the debts are paid, distribute the balance to the heirs in accordance with the Will.

Who should I choose to be my Personal Representative?

When deciding who should be your Personal Representative, choose someone who is extremely organized. Our firm has represented clients with many bank and brokerage accounts (in some cases 20 or more), who own one or more houses with mortgage loans, have a number of credit cards and have named several people to get various percentages of their estate. The Personal Representative has to write to each institution requesting the date of death value of the account, and then keep track of the documents received from the various institutions. The Personal Representative also has to contact each creditor, verify the debts are owed, and ultimately deal with the beneficiaries. The amount of work involved can be tedious, burdensome and frankly, overwhelming.

It is not unusual for us to receive a call from a Personal Representative who has tried to do the job without professional help and then coming in, dragging along trash bags filled with paperwork for us to sort through, because the task is beyond that person’s abilities. Being a Personal Representative has often been described as having a part-time job for about a year. While the Personal Representative is usually entitled to a “commission” for handling your estate (often 5% in Pennsylvania) , the money is not paid until the work is all done.

Choose someone who has the time to do the work and who lives within 50-100 miles of you (to decrease traveling time). As I often tell my clients, the Personal Representative does not have to be Albert Einstein – but he or she must recognize the many fine details of handling an estate. Recently one of our attorneys who is serving as the Personal Representative for a client who had no close family or friends found what appeared to be a two year old un-cashed $7,000 check. Because she knew the right questions to ask, she contacted the issuer of the check, verified that it had never been cashed, furnished copies of the death and short certificates, and got a new check issued for $7,000 payable to the estate.

Other considerations in choosing a Personal Representative

Under certain circumstances, the Personal Representative has to post a bond before being appointed by the Register of Wills. See 20 Pa.C.S.A. §§ 3171-75. Of course, even if a bond is posted the money will be refunded (less a percentage to the issuer of the bond) when probate is over – but that may be a year from beginning to end.

Some other thoughts

Each state in the United States has different rules governing pre-death and post-death issues. If you move, consult with an attorney in your new state to ensure that your current documents are effective. Also, since the laws change often as do your family circumstances, remember to update your documents regularly.

Over the next few months, we will post additional articles or various pre-death and post death matters that we hope you will find helpful and informative. But feel free to contact us if we can answer any questions in the meantime.

The post Choosing the Person to Handle Your Estate: What Does the Personal Representative Do and How Do I Choose the Right One? appeared first on Pennsylvania Estate Planning & Administration Blog.