Presented by: Christine Brown Murphy, Esquire. Zacharia & Brown P.C. Elder Law Attorneys 724-942-6200 Offices in McMurray, McKeesport and Greensburg
DISCLAIMER NOTHING YOU HEAR IN THIS PRESENTATION CONSTITUTES AN ATTORNEY CLIENT RELATIONSHIP. THIS IS A VERY COMPLICATED AREA OF LAW DO NOT TRY ANY OF WHAT YOU HEAR IN THIS PRESENTATION ON YOUR OWN. THE MISTAKES CAN BE EXTREMELY COSTLY.
Documents Wills special provisions to protect benefits Importance of Beneficiary Designations Trusts Revocable and Irrevocable Powers of Attorney without it you may need a guardianship Deed Changes-transfer to a spouse; Life Estate Deed Taxes
Wills Appointing an Executor and Alternate Deciding on a Distribution Scheme and Hiers Do I have beneficiaries whose benefits I need to protect? Do I have beneficiaries who I feel may not be able to manage an inheritance?
Wills Q: What happens if I die without a will? A: My assets go to the Commonwealth of Pennsylvania, right? Intestate Succession See Handout
Non-Probate Assets Many valuable assets don t go through your will. Here are some examples: Property you ve transferred to a trust; Life insurance (Important: living beneficiary) Funds in an IRA, 401(k), or other retirement account; Securities held in a transfer-on-death account; Payable-on-death bank accounts; or Property you own with someone else in joint tenancy or tenancy by the entirety.
Beneficiary Designations Are my beneficiary designations in line with my Estate Plan? Do I have joint owners/ in trust for designations that will take priority over my will? Do I have deceased individuals listed as my beneficiaries? Do I have minors listed as my beneficiaries?
Probate What is it? Probate is the process of proving a decedent s Will at the appropriate county office (Washington); The Will is presented to the clerk and the executor takes an oath that he or she will faithfully carry out the instructions in the Will. The process takes generally no more than fifteen minutes. The costs charged by the court for the process is not expensive.
REVOCABLE LIVING TRUST Revocable living trusts function like wills--you use them to leave your property, and if you change your mind at any time while you're alive, you can change the terms of the trust or revoke it altogether. The advantage comes at your death. Property in the trust is controlled by the person you named to take over as successor trustee, and that person has the power to distribute the property to heirs without probate.
Four Main Components Grantor - the creator of the trust Trustee - the person or entity that distributes and manages the trust property according to the trust documents Trust Assets - property transferred into the trust Beneficiaries - those who receive the benefits of the trust
Reasons for a Revocable Trust Convenience Trustee has immediate access upon your death; Assets in several states Avoids probate and legal fees in multiple states; Children from a prior marriage Allows for inheritance to pass to children from prior marriage; and Control Provides protection for heir or spouse who is unable to manage assets
DEBUNKING REVOCABLE LIVING TRUST MYTHS AND HALF TRUTHS A Revocable Living Trust will help me avoid inheritance and estate taxes. False. A Revocable Living Trust will shelter my assets from my creditors. False. Creating a Revocable Trust is all you need to do in order to avoid probate. False. Nothing need be filed with the state if I have correctly set up my Revocable Living Trust. False. My estate won t need a lawyer if I have a Revocable Living Trust. Misleading.
Other Commonly Used Trusts Special Needs Trusts A trust for a loved one with a disability can both avoid probate and provide lifelong assistance--without jeopardizing eligibility for important government benefits. Gun Trusts Special trusts can let you pass on firearms safely and in accordance with state and federal law. Irrevocable Trusts When you make an irrevocable trust, you give up any right to terminate it. Irrevocable Asset Protection Trust Transfer assets into the trust to start the five-year clock to protect assets in the even of a nursing home admission Tax Saving Trust These trusts, used by wealthy couples concerned about estate tax, are much more complex than probate-avoidance living trusts.
Irrevocable Trust Asset Protection Planning for long term care Average cost of nursing home Care is $9,000/mth Revocable Trust provides NO asset protection Transfer appreciated assets to the Irrevocable Trust Five-year look back After five years, assets completely protected Attain eligibility for veterans benefits (no look-back) Do not ignore the real threat against your estate getting sick and requiring long-term care
Powers of Attorney - Financial Appoint an individual that you TRUST to make decisions for you in the event you are unable to do so for yourself. You do NOT have to be incompetent or incapacitated. The most important estate planning document you can have! Your spouse has no inherent right to make financial decisions for you, or to have access to your individual accounts (IRA, 401k, etc.) Guardianships are expensive, and the least beneficiary path for asset and estate planning protection.
Powers of Attorney Durable vs. General Powers of Attorney Springing Powers of Attorney Powers of attorney become void upon the principal s death.
Health Care Decision Making In Pennsylvania, you have the legal and ethical right to make your own decisions about your health care. If you are able to communicate these decisions to your physicians, they will directly involve you. However, if you are unable to make decisions, others will have to make these decisions for you.
Exercise of Self-Determination Competent Individual. While you are still competent, you are entitled to make your own health care treatment decisions, including the choice to refuse any treatment and to refuse food and/or water.
Exercise of Self-Determination Incompetent Individual. If you are incompetent, the law allows for the exercise of your rights of selfdetermination through a surrogate, who is to follow a three-stage process described as follows: 1. First the surrogate is to look for evidence of your expression of intent, prior to incapacity, regarding health care treatment choices, including the withholding or withdrawal of life-sustaining measures, such as you may write in an advance directive (living will)
Exercise of Self-Determination 2. If there is insufficient evidence of such intent, the surrogate should next use substituted judgment to make decisions based on the evidence that is available as to your instructions, beliefs, preferences, and values that reflect your treatment choices. 3. Thirdly, if there is not enough evidence to use the substituted judgment standard, the surrogate should then make decisions based on what the surrogate determines to be in your best interest.
Legal Solutions Three Statutory Solutions. The three statutory solutions that have emerged from states efforts to protect the rights of incompetent individuals are: 1. Living Will laws that allow individuals to exercise their right of self-determination by specifying in writing their wishes about the use of artificial life-sustaining treatment in the event they become incompetent. 2. Health Care Durable Power of Attorney statutes that allow individuals to appoint another person to make decisions about health care matters for them if they become incompetent. 3. Surrogate/Family Decision-Making Laws that authorize certain family members or other persons to make decisions on behalf of an incompetent individual who has not executed a living will or health care power of attorney.
Health Care Representatives Act Authorizes: Health Care Agents to be appointed by the individual and empowered with significantly more authority than what was previously allowed, specifically the power to exercise substituted judgment and apply the best interest standard on behalf of the principal, which could include directing that life-sustaining treatment be withheld or withdrawn; and
Health Care Representatives Act Authorizes: Health Care Representatives to be appointed under the statute when there is no agent named by the principal who is able and willing to serve, who may also exercise substituted judgment and use the best interest standard on behalf of the individual.
Who is Eligible to Sign a Living Will A living will can be executed by an individual of sound mind who is: 1. 18 years of age or older; 2. has graduated from high school; 3. has married; or 4. is an emancipated minor. What is "Of Sound Mind"? The term is not defined in the statute, but at common law being "of sound mind" means having the capacity needed to enter into legal transactions, such as a commercial contract or lease.
When Does a Living Will become Effective A living will takes effect only if and when: 1. A copy has been provided to the attending physician; and 2. The attending physician has determined the individual to -- a. Be incompetent, and b. Have an end-stage medical condition, be permanently unconscious, or have an irreversible medical condition that leaves you unable to care for yourself.
So What Does This Mean? End Stage Medical Condition: you are dying from an incurable cancer, or you have an advanced state of congestive heart failure, or renal failure. Permanently Unconscious: you have no possibility or recovery from an unconscious state or regaining a meaningful quality of life. This could be due to severe stroke, or some sort of brain injury. Irreversible Medical Condition: you have advanced Dementia or Alzheimer s disease that leaves you unable to care for yourself or recognize loved ones.
Health Care Power of Attorney The purpose of a health care power of attorney under the Health Care Agents and Representatives Act is to both: 1. Appoint the health care agent, and 2. Declare that the principal authorizes the health care agent to make health care decisions on his or her behalf.
Health Care Representative The role of a health care representative is intended to fill in the gap that existed under prior law by designating certain family members to make health care decisions for incompetent patients who do not have a heath care agent who is able and willing to make decisions for them. In effect, the health care representative in most cases will be selected by the statute, not by the patient himself or herself.
Who May Act Oral or Written Designation by Individual; Statutory Designation: 1. Spouse of the individual (unless an action for divorce is pending) and the individual's adult children who are not the children of spouse 2. Adult child of the individual 3. Parent of the individual 4. Adult brother or sister of the individual 5. Adult grandchild of the individual
PA Inheritance Tax The inheritance tax is imposed when property is left by: a Pennsylvania resident, or a nonresident who owned real estate or tangible property located in the state. Several categories of beneficiaries pay no inheritance tax: The surviving spouse of the deceased person Parents or stepparents who inherit from a child who was 21 or younger Exemptions for Farms and Businesses (Restrictions) Charitable organizations and government entities
Inheritance Tax Lineal descendants, which means children and their descendants (whether or not they have been adopted by others) and stepdescendants Parents and grandparents The spouse of a child If a child is deceased, that child s surviving spouse, if he or she has not remarried Members of Class A pay a 4.5% inheritance tax on what they inherit. Siblings, including half-brothers and sisters, who are related by blood or adoption pay a 12% tax rate. All other inheritors are in Class B and pay the collateral tax rate, which is currently 15%.
Gift Tax Rules IRS Rules $14,000 annual exemption (2015) $5.43 million lifetime Gift Tax Exemption Gifts Over $14,000 reduce the $ 5.43 million exemption.