Estate Planning: Estate and Legacy Investment in PA

Important Documents

Will

Sometimes referred to as a Last Will and Testament, is used to transfer property you hold in your name to the person(s) and/or organization(s) you want to have it. A will also typically names someone you select to be your Personal Representative (or Executor) to carry out your instructions and names a Guardian if you have minor children. A Will only becomes effective upon your death, and after it is admitted to probate.

We recommend that your will includes language creating a Uniform Credit Trust (UCT), also known as a Credit Shelter Trust (CST), that would be funded to the maximum amount allowed by law. The UCT allows you to pass your inheritances to your named beneficiaries outside of the formal, court-supervised probate process. This means your Trustee would be able to distribute your assets as you desire in a more efficient manner and, it is typically completed more quickly and at a lower cost to your estate.

Durable General Power of Attorney

A Durable General Power of Attorney permits the holder of the power to act on behalf of another individual (known as the grantor) and survives the incompetence of the grantor so that even if the grantor is no longer capable of acting for herself or himself, the trusted agent may exercise a power to act. The alternative to having a Durable General Power of Attorney is not desirable. In the absence of such a document, it would be necessary for a court-appointed guardian to be named.

Medical Directive

In some states, this document may also be known as a Living Will. In preparing a Medical Directive, you can articulate your beliefs on life-sustaining measures in the face of terminal illness or other life-threatening conditions. In this document, you can let your family, your doctors, and others responsible for your care know when life-support equipment should be disconnected and medical efforts should cease should you suffer permanent incapacity, such as irreversible coma. Without a Medical Directive, you would leave your family members to struggle with these decisions and, you would give the medical professionals no indication of your desires at a critical moment in your care.

Durable Power of Attorney for Health Care

May also be referred to as a Health Care Proxy. In some states, it is necessary to prepare a separate document to authorize an agent to act for you regarding medical and health care decisions in the event that you are unable to provide informed consent. These are sometimes called Health Care Powers of Attorney. In other states, it is possible to include the terms regarding health care decision making in the overall Durable General Power of Attorney. The key thing is that someone should be named to act for you concerning these matters so that you and your family retain control over these decisions at times when you want those you most trust to be thinking about your best interests.

Durable Power of Attorney for Property

The Durable Power of Attorney would allow someone to act on your behalf regarding your financial affairs if you are incapacitated. This can be very important for people who travel extensively or if you have not transferred assets to a trust.

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Titling Assets

An important, yet often overlooked, aspect of estate planning is ensuring that your assets are properly titled. Property is transferred at death by one of several methods. It can pass under the terms of a validly drawn will (transfers by will). Property may also be transferred or assigned by contract designation in, for example, life insurance policies and antenuptial and postnuptial agreements (transfers by contract). Finally, property may pass by operation of law. Jointly owned property with right of survivorship falls into this category as does property passing by intestate succession (transfers by operation of law).

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Estate Tax

Estate tax may apply to your taxable estate at your death. Your taxable estate is your gross estate less allowable deductions.

Gross Estate

Your gross estate includes the value of all property in which you had an interest at the time of death. Your gross estate also will include the following.

• Life insurance proceeds payable to your estate or, if you owned the policy, to your heirs.
• The value of certain annuities payable to your estate or your heirs.
• The value of certain property you transferred within 3 years before your death.
• Trusts or other interests established by you or others in which you have certain powers.

Taxable Estate

The allowable deductions used in determining your taxable estate include:

• Funeral expenses paid out of your estate,
• Debts you owed at the time of death,
• The marital deduction (generally, the value of the property that passes from your estate to your surviving spouse).

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