Essential Estate Planning

Estate planning.  Estate.  Planning.  Many of us read the words “estate planning” and experience a whole slew of emotions.  You may think “I’m too young to need an estate plan” or “I’m not rich so I certainly don’t have an estate.”  Odds are, you’re wrong on both counts.  

If you’re lucky enough to have been spared the experience of a tragic loss yourself, you probably know someone who hasn’t been as fortunate - a friend or family member whose loved one’s life was cut short by a terrible illness or horrific accident.  Unfortunately, none of us is guaranteed tomorrow, and the best way to protect your loved ones in the event of an unexpected tragedy is to have a plan.

If you own any assets, you have an estate, the legal term for the property a person owns.  Yes, estates may include real estate and bank accounts, but they also include collectible items, jewelry, vehicles, and the like.

In Pennsylvania, an estate may pass to a person’s heirs by two paths: intestate or testate succession.  Intestate succession is how a person’s assets pass to their heirs if a person dies without a will.  Each state has its own intestacy laws, and your property will pass to your next of kin without your having any input.  If you want to be sure that your favorite person receives the family heirloom that’s been passed down for generations or your most prized possession, you need to be proactive in estate planning.

While some may shy away from estate planning because they still feel invincible or think they have another 60 years to live, others may be hesitant to start the process because it feels overwhelming.  Let me tell you, it does not have to be that way.  Even the most basic of documents can help ease the stress your family will inevitably experience.

An essential estate package consists of five documents: a Last Will and Testament, a Durable Power of Attorney, a Durable Healthcare Power of Attorney, a HIPAA Release form and a Final Disposition Instruction sheet.  

Last Will and Testament

Your Last Will and Testament is exactly what it sounds like – it’s the document that conveys what your will is – how you want your estate to be handled, how you want your property to be distributed, and exactly what your wishes are.

Powers-of-Attorney

A Power-of-Attorney, more commonly known as a POA, allows you to give someone else the power to act on your behalf.  Should you become incapacitated or unable to make decisions for yourself, a Durable Power-of-Attorney grants your Agent the authority to handle day-to-day tasks for you, such as paying your bills, buying/selling real estate, etc.  A Healthcare POA, however, allows your Agent to make important medical decisions on your behalf in the event of you become incapacitated.  The most important aspect of a Healthcare POA is that it gives you a voice when you may be unable to speak.  While most loved ones may know your end-of-life decisions, a Healthcare POA ensures that your wishes are carried out. 

HIPAA Release

Today, your privacy may be one of your most valued possessions, and it may also be one of the hardest to protect.  With the enactment of laws specifically written to protect your private medical information, you should grant your Agent access to your information.  Your Agent will most likely need this information to help carry out your directives and make the decision best aligned with your wishes.

Final Disposition Instructions

Have you made pre-funeral arrangements somewhere?  Do you want to be cremated because you’re claustrophobic and can’t stand the thought of your body lying in a casket?  Or maybe you’re terrified of fire and would rather be buried in a casket than be cremated?  Either way, do your loved ones know without a doubt what you want?  Do you want a funeral?  A viewing?  These are some really tough questions to think through.  Pause and consider this: if these are difficult for you to think about, how hard do you think these decisions will be for your loved ones to make when they are grieving your loss?  Final Disposition Instructions give your Agent all the answers, and once again, allows your Agent to carry out your wishes. 

Essential estate documents are invaluable because they take the guessing out of a terrible situation.  Having your wishes in writing prevents a loved one from having to make an impossible decision without your input and possibly second-guessing that decision down the road.  If your Agent is carrying out your wishes, the impossibly hard decisions may become easier to make, knowing it was what you wanted.  

If you do not have these five documents in place, call The Skeen Firm (724-550-6970) today to schedule an appointment.  It’s never too early to ease the inevitable burden on your loved ones and ensure that your voice is heard.  

SECURE Act - Searching for a Stretch

The SECURE Act, short for Securing Every Community Up for Retirement Act of 2019, took effect in January 2020. Congress’ intent in passing the SECURE Act was to expand retirement options, particularly 401(k)s through small businesses and for part-time employees. Further, it opens avenues to protect retirement income by offering annuities through 401(k) plans. This means….Other improvements include postponing the required minimum distribution (RMD) age to 72. It also allows traditional IRA owners to make contributions indefinitely. All of these changes are geared to help Americans grow and preserve their retirement accounts. 

For all the good the Act brings, it did eliminate what was colloquially known as the Stretch IRA. What exactly was the Stretch IRA? The Stretch IRA was a strategy used to expand the distribution timeline and reduce the tax burden of a non-spouse that inherited a Traditional IRA. Using the previous guidelines, a non-spouse inheriting a Traditional IRA would take distributions at a rate based on their life expectancy and not the original account owner’s. 

Stretching out the distribution timeline allowed the new owner to essentially defer taxes, while simultaneously allowing the investment to grow. This strategy was radically altered under the SECURE act, which requires a non-spouse inheriting an IRA to distribute the full value within ten years of the date of inheritance. Doing so creates a multitude of tax consequences and ultimately benefits the government in new revenue generation. Please note, this does not impact those non-spouses inheriting before January 1, 2020. It also will not apply to a list of excepted recipients, including spouses, children who have not reached the age of majority, disabled or chronically ill, or similarly aged recipients. No matter what your current situation or designation, there are still workarounds and innovative ways to tax plan for your estate, regardless of estate size. It is more important now than ever to review your beneficiary designations, asset blends, and overall family plan. 

Contact us today at 724-550-6970 or info@theskeenfirm.com if you have questions regarding your estate plan and how the SECURE Act will benefit or impact your particular situation.   

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship. 

Essential Estate Planning - The Legal House Protecting Your Family

Essential Estate Planning: the legal house protecting your family

A house and a sound estate plan have tremendous similarities that do not immediately meet the eye. Both are comprised of a firm foundation to build on, solid walls to protect all sides, and a roof to shelter when the proverbial sky is falling. But a house is a legitimate structure and an estate plan is just a bunch of legal documents with no foundation, walls, or a roof.  What gives? The analogy unfolds below.

Foundation – The Will

Houses are built on a poured or laid foundation if they are truly built to withstand the constant surface shifts.  A foundation supports all of the structural weight of the home. Foundations prevent walls and floors from separating and shifting.  Essentially, they provide a control platform.

Similarly a Last Will and Testament functions as the foundation in an essential estate plan. How so? A Last Will and Testament gives the testator control of how their assets, both real and personal, are distributed after their death and probate process.  (More on the probate in later posts.)  Thoughtful planning with a will provides peace of mind for who retains custody of minor children, who takes the family home, how assets are divided, and other considerations.  It is the foundation of a compressive plan. Essentially a will is a control platform. 

So what happens if someone dies intestate (without a will)? Dying intestate subjects your assets to state distribution statutes.  A more thorough discussion of intestacy is planned for a subsequent post, but in short if you die intestate you lose control of everything you build during your lifetime. 

Walls – Durable Power of Attorney

With a firm foundation laid, the next step in building a house involves framing walls and expanding the home upwards. Walls protect against whatever, in most normal cases, the outside world can throw at a home. They are flexible enough to withstand high winds and other unpredictable weather. Security is a core human need.

A Durable Power of Attorney (POA) in many ways acts as the walls within your estate-plan. Having a POA in place protects and allows your interests to continue as normal should something catastrophic occur without having to go to court for the appointment of a guardian. As your Agent, the person must act and protect your best interest. Like walls on your house, a POA protects against the unpredictable nature of life and adds security.

Roof - Healthcare POA and Living Will

Atop every home is a roof.  Similar to walls, roofs protect against nature’s unpredictability. It also ties the walls together helping to hold them in place. Often out of sight and out of mind a roof provides protection from the proverbial “sky is falling” situations. 

In the simplest of terms, a Healthcare POA and Living Will serve as your last line of defense in crisis situations. Like the POA mentioned above, the Healthcare POA gives your Agent the power to make health care decisions that are in your best interest should you become incapable of doing so for yourself. The caveat with this set of documents is the Living Will portion that sets out specific instructions for how critical medical situations are handled. These combined documents are your last line of defense in any “sky is falling” situation.

Contact The Skeen Firm, at 724-550-6970 or info@theskeenfirm.com, today if you feel like your Estate Planning “house” is not in order. With free consultations and preliminary reviews of existing plans there is no better time than now to secure your family’s future. 

*Disclaimer: the advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship. 

Probate and Taxes and Fees, oh my!

Picture this for a brief second. We are all mid movie and a beloved character has tragically passed. What happens next? Everyone knows the answer. The family goes to some unknown attorney’s office to “read the will”. They all act surprised and furious when they are cut out of the decedent’s estate, the bulk of which went to charity and a beloved tabby. But is this an accurate construct in the real world? Keep reading for an explanation of why this is all Hollywood drama. Do not confuse this with meaning there might not be drama in what is better known as the probate process, but this is a preview of what to expect when a loved one dies. 

The scene described above in some ways describes an estate set up by a Trust. Those who die with an estate plan based on a will (testate in the legal world) are required to go through a process known as probating the will. For lack of better terms, filing a will with Register of Wills and petition for probate with the Orphans’ Court opens an action against the decedents’ estate so that their debts can be settled and remaining assets disbursed. Upon filing the petition, the court will grant Letters Testamentary enabling the listed executor/executrix within the will to begin gathering assets and acting on behalf of the estate.  At this point a whole list of beneficiaries, creditors, heirs, and even the public are given notice by the executor that probate is underway. 

After clearing these initial hurdles, the executor/executrix will focus on valuing all estate assets for a basis from which to settle debts and pay taxes. Tax situations vary by estate, but most can plan on paying a PA inheritance tax for any transfer that is not between spouses or children under 21. Federal inheritance taxes are more difficult to pin down because they change periodically based on the party in control. There are ways to plan for these changes, should an estate value project out that high. This is one of many reasons to develop a plan that can change to meet your needs as these changes occur. Once the assets are valued and both creditors and taxes are paid, the executor/executrix can prepare a final accounting and distribute the estate. 

Sure a will costs less up front than some other estate planning methods, it might cost the family more in the end through taxes and attorney fees. These fees vary from .5% to 7% based on estate size. Also, worth consideration is the emotional toll the probate process will have on some. Trusts offer a viable alternative but cost significantly more to establish.  They do, in many cases, avoid the probate process all together. One thing is certain; neither provides a way to completely avoid estate taxes. At The Skeen Firm we are ready to help you decide which plan makes sense for your situation and provide custom tailored solutions. Contact us today at 724-550-6970 or info@theskeenfirm.com to get started on your plan!

*Disclaimer: the advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship. 

Essential Estate Planning - the legal house protecting your family’s future

A house and a sound estate plan have tremendous similarities that do not immediately meet the eye. Both are comprised of a firm foundation to build on, solid walls to protect all sides, and a roof to shelter when the proverbial sky is falling.  But a house is a legitimate structure and an estate plan is just a bunch of legal documents with no foundation, walls, or a roof.  What gives?   The analogy will unfold below.

Foundation – The Will

Most houses are built on a poured or laid foundation if they are truly built to withstand the constant surface shifts.   A foundation supports all of the structural weight of the home.  Foundations prevent walls and floors from separating and shifting. Essentially, they provide a control platform.

Similarly a Last Will and Testament functions as the foundation in an essential estate plan. How so?  A Last Will and Testament gives the testator control of how their assets, both real and personal, are distributed after their death and probate process.  (More on the probate in later posts.)   Thoughtful planning with a will provides peace of mind for who retains custody of minor children, who takes the family home, how assets are divided, and other considerations.   It is the foundation of a compressive plan. Essentially a will is a control platform. 

So what happens if someone dies intestate (without a will)?  Dying intestate subjects your assets to state distribution statutes.   A more thorough discussion of intestacy is planned for a subsequent post, but in short if you die intestate you lose control of everything you build during your lifetime. 

Walls – Durable Power of Attorney

With a firm foundation laid, the next step in building a house involves framing walls and expanding the home upwards.  Walls protect against whatever, in most normal cases, the outside world can throw at a home.  They are flexible enough to withstand high winds and other unpredictable weather.   Security is a core human need.

A Durable Power of Attorney (POA) in many ways acts as the walls within your estate-plan.   Having a POA in place protects and allows your interests to continue as normal should something catastrophic occur without having to go to court for the appointment of a guardian.   As your Agent, the person must act and protect your best interest.  Like walls on your house, a POA protects against the unpredictable nature of life and adds security.

Roof - Healthcare POA and Living Will

Atop every home is a roof. Similar to walls, roofs protect against nature’s unpredictability.  It also ties the walls together helping to hold them in place.  Often out of sight and out of mind a roof provides protection from the proverbial “sky is falling” situations. 

In the simplest of terms, a Healthcare POA and Living Will serve as your last line of defense in crisis situations.  Like the POA mentioned above, the Healthcare POA gives your Agent the power to make health care decisions that are in your best interest should you become incapable of doing so for yourself.  The caveat with this set of documents is the Living Will portion that sets out specific instructions for how critical medical situations are handled.   These combined documents are your last line of defense in any “sky is falling” situation.

Do not hesitate to contact The Skeen Firm today if you feel like your Estate Planning “house” is not in order.  With free consultations and preliminary reviews of existing plans there is no better time than now to secure your family’s future. 

*Disclaimer: the advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship. 

Having an estate plan is one of the best gifts you can give your family.

The popular quote often attributed to Benjamin Franklin “Failing to plan is planning to fail” is widely applicable to every aspect of life.   It is especially important when it comes to death.   Most families struggle to pick up the pieces after losing a loved one.  Coincidentally, this is also a time full of tremendous responsibilities in the state’s eyes.  While none of this information will help avoid the dreaded estate tax, at either the Federal or State level, it will focus on what each individual can and should do to remove some stress from an already traumatic situation. 

The Foundation

Regardless of whether you chose to use a Last Will and Testament or a Trust, the important thing is to have a plan.  Both of these documents deal with transferring your assets after death instead of relying on the State’s intestacy laws.  The major difference between the two documents is the approach in which the transfer occurs.   A Last Will and Testament goes through the probate process.  A Trust can undergo administration in an attorney’s office.    The technicalities will come in subsequent posts, but if you are interested feel free to Contact me for more information.  This document is the foundation of your plan and is purposely designed to carryout your desires.  

Financial Fix

It is also important to have a Durable Power of Attorney.   A Durable Power of Attorney appoints someone, either an individual or institution, known as an agent to handle your financial affairs if you become disabled or incapacitated.   This document helps keep your personal matters going, without unnecessary delays and costs of Petitioning the Court to have a guardian appointed.  

Healthcare Help

The next two documents work hand-in-hand and deal with medical decisions should you become disabled or incapacitated.   The first document is a Medical Power of Attorney, which similar to the Durable Power of Attorney appoints a family member or close friend, as your agent to make medical decisions.   What decisions will they make though?  That is determined by a Living Will.  A Living Will is the best way to complete any plan as it provides directions to your Medical Power of Attorney with decisions involving end of life care, at what point to stop resuscitation, and other difficult decisions.  

At The Skeen Firm we believe that solid estate planning is one last gift that you can give your family to express your undying love.Contact us today if you have any questions about your existing plan, would like more information, or would like to start working on your own plan.

Custody Conundrum – Both parents passed suddenly, now what?

The sobering truth about life is that sometimes the most unexpected situations arise that alters everyone’s life in a moment’s notice.  While losing a parent is traumatic for anyone, it can prove particularly life altering for minor children.   Consider a situation where both parents are in a fatal accident.  In this situation, who gets custody of the children?  The answer is, it depends.  Depends on what though?

The parents die intestate?

In the first “it depends” situation, both parents are assumed to pass intestate.  What does that mean?  In short they passed without a Will.  What happens to the children?  There is no predetermined schedule for custody for a court to follow. The first concern of the court is the safety and future care of the children.  To address this concern, they will look for close family members who are willing and able to take the children in.   But, what happens if the surviving family members fight over custody? The decision is left up to the court to determine what is in the best interest of the child.   At a certain age the child might have a say, however that is not always guaranteed.  

The parents die testate? 

A parent that dies testate, with a Will, can essentially give custody to whomever they chose.   The court will usually honor the parent’s decision within their will so long as the individual gaining custody is deemed fit.   Should the court deem the individual unfit, it will follow the same process it would if the parents passed intestate.   Under this “it depends” situation, the parents largely have more control over the future guardians.

Addressing the issue at hand.

It is unsettling that as few as 36% of parents with children under the age of 18 have a Will or some sort of directive for emergency guardianship in place. (see caring.com 2017 will survey)  In all fairness, the thought of leaving minor children behind is unpleasant for all parents, but a cohesive plan can start to provide some peace of mind. So, how does this plan come about?  Start by establishing a preferred list of guardians after discussing the possibility of guardianship with the individuals on that list.  Then include these individuals within your Will.   This is just one of many situations that highlight the importance of a comprehensive estate plan.  The Skeen Firm provides client tailored estate planning solutions to fit any need.  Let us help you address tomorrow’s tough questions so you can live for today.  

The Family Intellectual Capital Plan

When it comes to preserving a family’s intellectual capital, most estate plans are lacking at best. In reality, passing this particular asset class on is invaluable to shaping future generations. An effective Family Intellectual Capital Plan (FICP) will establish the accumulation and dissemination process of family knowledge to all family members. In short, the FICP is an integral part of a comprehensive estate plan and is a large driver of collective family wealth across all generational horizons. Don’t’ have a FICP as part of your estate plan or you don’t currently have an estate plan? Contact The Skeen Firm today!