Disclaimer: The following information is provided for general educational purposes only. This does not constitute specific legal advice and each family and client's situation is unique. In reviewing this information, no attorney-client relationship exists between the Law Offices of Scott G. Hoh and the reader. Our firm only officially represents clients when a signed client engagement letter in in place. No one else may rely on this information or claim that in reviewing this general information, that an attorney-client relationship exists between the reader and our law firm. Obviously, the internet, websites, blogs, robots and internet legal companies are not a substitute for a properly licensed attorney. Accordingly, this information is for general informational purposes only.
WHY DO I NEED AN ESTATE PLAN?
Everyone who is concerned about what will happen in the event they become too sick to take care of themselves or what will happen to their property after they pass away needs a comprehensive estate plan. It is a tremendous gift for your family to have all of your affairs in order. Much confusion and stress can be avoided through a clear estate plan, and this provides peace of mind on knowing that personal affairs and wishes are in order.
WHAT IS THE COST OF AN ESTATE PLAN?
The Law Offices of Scott G. Hoh provides 2 Wills, 2 Powers of Attorney, 2 Living Wills (Advanced Care Directive), plus our 3-ringed binder which organizes important financial, real estate, insurance, funeral planning and personal wish with clear instructions to your family. The cost is only $400 for a couple, or $300 for an individual. More complex estate plan and trust documents are not included in this fee.
DOES THE LAW OFFICES OF SCOTT G. HOH PROVIDE HOME OR HOSPITAL VISITS?
Like an old-fashioned country doctor, Scott Hoh is an old-fashioned country lawyer. We pay home visits and make hospital visits, particularly in emergency situations or when someone cannot travel to our office.
WHAT IS THE LAW OFFICES OF SCOTT G. HOH COMPREHENSIVE ESTATE PLAN?
Attorney Scott Hoh has developed a Comprehensive Estate Plan (CEP), taking this from several different estate organization guides. Families gather information about financial holdings, real estate, life insurance, medical wishes, funeral planning, specific gifts, and personal wishes in an organized 3-ringed binder. The law office keeps a copy of these documents in our fire-proof Will vault. The client also has the 3-ringed binder at home for review with family. In the event of an emergency, no stone is left unturned and family members have the tremendous gift of having all wishes, instructions and financial information organized at one location.
WHAT HAPPENS IF SOMEONE PASSES AWAY WITHOUT A WILL?
If someone passes away without a Will, the die “Intestate.” In Pennsylvania, the Legislature has adopted an intestate statute, which means someone's estate will be distributed based on this law. It is still possible to file for Probate and for a family member to be appointed as an Administrator to oversee the inheritance process.
IN AN ESTATE PLAN ONLY FOR OLDER PEOPLE?
No – everyone needs an Estate Plan. Generally, people focus more on the end of life as they grow older and they accumulate more retirement assets as they age. However, in the event of an emergency, an emergency plan must be in place. Parents with younger children should have a Will to designate who will be the guardian of their children in the event of the death of both parents.
WHAT DOES MENTAL CAPACITY AND UNDUE INFLUENCE MEAN?
The law is concerned about improper Wills or someone exerting too much influence over someone so that they unfairly distribute an Estate or act as an Agent under a POA and fail to protect an older person's assets or unfairly disadvantage other family members. By law, there are formal requirements for adopting a Will or POA, and the person must have a reasonable understanding of what is going on and who is in their family. If one person has too much self-interested control and influence over an older person, the Will and POA can be challenged and nullified.
WHAT ARE THE FORMAL REQUIREMENTS IN ADOPTING A WILL?
Under Pennsylvania law, there are formal requirements for adopting or amending a Will. If someone could scribble anything, all Estates would be chaotic and tied-up in litigation. If sections of a Will are crossed-out or destroyed, there is a chance that the entire Will can be invalided. It is to prevent this type of mischief that Wills and POAs have formal requirements which include signatures, non-interested witnesses, notarization, etc.
DOES IT MAKE SENSE TO PREPARE MY WILL THROUGH A WEBSITE SUCH AS LEGALZOOM?
Generally, no. While all of us are interesting in saving money, computers and the internet are no replacement for a competent attorney. For normal Estate Planning appointments, we spend between 1 to 2 hours meeting with a family, learning important background information, discussing unique family situations, thoroughly explaining the Probate process, discussing the difference between Probate and non-Probate assets, and preparing an Estate plan that is uniquely tailored based on every family's different needs. Computer programs just cannot provide this type of thorough and analytical service.
WHAT EXACTLY IS A PROBATE AND NONPROBATE ASSETS, AND WHY SHOULD I CARE?
A probate assets is something that will come in to the Estate (each Estate has its own checking account), and after bills are paid, assets are distributed to beneficiaries as written in a Will. Typically (but not always) this includes assets owned solely by a decedent such as money in a checking or savings account, stocks and bonds, personal property, a home or real estate, a vehicle, etc. The bulk of many client's assets are nonprobate in nature. This means that, regardless of the Will, these funds are passed directly from a financial company to a beneficiary. Examples of nonprobate assets (although not always) include investment accounts, IRAs, 401(k) accounts, annuities, certain joint accounts, and life insurance. Clients often spend quite a bit of time preparing a distribution plan under a Will, but don't spend much time reviewing how nonprobate assets will pass to named beneficiaries. Frequently, clients are not aware prior to our meeting that the Pennsylvania Inheritance Tax rates apply to nonprobate assets as well as probate assets. Life insurance payments are exempt from this tax.
WHAT TAXES ARE DUE IN AN ESTATE? IS IT TRUE THAT THE GOVERNMENT TAKES EVERYTHING AFTER SOMEONE DIES?
For most Estates, including Estates valued at several million dollars, there is no federal gift and estate tax, however, we need to pay attention to lifetime gifting and certain investments under a deferred tax structure. In Pennsylvania, regardless if an Estate is valued at $5,000, $50,000, $500,000 or $5 Million Dollars or more, the Pennsylvania Inheritance Tax must be paid, for both Probate and Nonprobate assets. In other words, the Pennsylvania Department of Revenue monitors transactions and before funds can be inherited or passed on from someone who has passed away to someone who is living, there must be an accounting and taxes must be paid and a PA 1500 (PA Inheritance Tax Return) must be filed. Tax rates range as follows 0% - Spouse and Charities; 4.5% Children, Grandchildren & Parents; 12% Siblings; 15% Friends, Others, Nieces & Nephews, etc. Special attention must be paid to joint assets.
CAN I AVOID PROBATE ALL TOGETHER? – I DON'T WANT TO PAY ANY LEGAL FEES OR TAXES AFTER I PASS AWAY.
Many people don't like taxes, don't like paying fees and don't like dealing with attorneys. Wouldn't it be simpler if all of this could just be skipped? Probate is a necessary step in order to have a legal inheritance and for funds to pass from a deceased person to other family members. Even if 100% of an Estate is nonprobate in nature (all in an IRA fund), it is still necessary to hire an attorney, obtain a short certificate, file a tax return, and follow the mandatory steps in administering an Estate. The Pennsylvania Department of Revenue needs to ensure that appropriate taxes are collected and paid, and the State is diligent in its oversight.
WHAT KEY INFORMATION SHOULD I KNOW ABOUT FUNERAL PLANNING?
The typical cost of a traditional funeral and cemetery burial ranges from $5,000 to $15,0000, depending on the services provided by a funeral home. Similarly, the typical cost of cremation ranges between $1,500 to $6,000, again depending on the types of services provided. It is important that family members have clear instructions about funeral arrangements. Is it important to have some type of religious ceremony? What information should be listed in an Obituary? Should some type of celebration of life or family gathering occur? Who should be in charge of making arrangements? Is it important to you to pay for funeral services in advance? Did you know that funeral homes are regulated by law and must hold pre-paid funeral costs in a separate Trust account? When someone passes away and families are grieving, that is a difficult time to make key funeral decisions. You can alleviate the stress and provide a tremendous gift to your family by discussing your wishes in advance. There are many quality funeral homes who are happy to meet and provide planning services at no cost.
SHOULD I GIVE AWAY ALL MY PROPERTY BEFORE I DIE?
For some people, their estate plan is – I'll give away everything and die penniless. If only things were so simple – they are not. Under the Pennsylvania law that governs estate matters (Probate, Estates and Fiduciaries Code or “PEF” Code), any property that is given away or gifted 12 months prior to death is treated as if it wasn't gifted at all. Without such a rule, everyone would rush to give away all their property.
DOES IT MAKE SENSE TO PUT MY HOUSE IN MY CHILDREN OR FAMILY'S NAME?
Like many legal questions, the answer is, it depends. My duty as an attorney is to best protect that party making the Will and we need to make sure someone has sufficient assets for their care. There are different look-back windows that can impact the transfer of real estate. In other circumstances, it may be a very good idea to record a new deed and place a property jointly in the owner's name, as well as in the name of other children or family members. We normally recommend a Joint Tenants with Right of Survivorship deed structure. This may reduce some inheritance and real estate transfer taxes, but not all. The bottom line is that finding the right solution depends on consultation with an experienced attorney.
WHAT DOES AN EXECUTOR OR ADMINISTRATOR DO?
The Executor (in the case of a Will), or the Administrator (no Will), is the person who is in charge of an Estate. They have a fiduciary duty to make sure bills and taxes are paid, funds and assets are properly accounted, and to make sure that assets are distributed to beneficiaries. Normally, a Will designates a spouse, child or multiple children or another close family member or friend to be the Executor of the Estate. The Executor selects which law firm will handle the Estate, and the law firm does 90% of the work and follows a step-by-step process.
I'M CONCERNED ABOUT MY GRANDCHILDREN, HOW TO I ENSURE THEY WILL INHERIT SOMETHING?
In some instances, a person may want some of their inheritance to go to specific children, grandchildren or other family members, but there may be very good reasons to exclude or disinherit other family members. Specific language should be incorporated into a Will to clarify this intent. Frequently, special educational funds can be designated for grandchildren. If a beneficiary is under the age of 18, the funds must be placed in a Trust and the requirements of the Pennsylvania Uniform Gift to Minors Act applies. In the event a parent or grandparent is concerned about safeguarding the inheritance of a younger child or grandchild, we typically incorporate a testamentary child trust into the Will.
I HAVE VALUABLE JEWELRY, ANTIQUES, A COIN COLLECTION, FIREARMS, STOCKS – HOW DO I MAKE SURE SPECIFIC PEOPLE INHERIT THESE ITEMS?
Specific valuable objects should be given special treatment in an estate plan. First, often for sentimental reasons, a person may want to give jewelry, an antique, a family heirloom, or a special cash gift to a child, grandchild, niece or nephew, or close friend. These items can be included as specific bequests in a Will. It is OK to give away objections during your lifetime, so long as you are preserving funds to support retirement cost of living. The Comprehensive Estate Plan binder also has a location to maintain a list of specific items to be given to family and friends. Special rules apply regarding gun registration and ownership and the inheritance of firearms requires added procedures.
WHAT IS THE BEST PROCEDURE FOR KEEPING MY WILL AND ESTATE PLANNING DOCUMENTS SAFE? WHAT IF I WANT TO CHANGE OR AMEND MY WILL – CAN I SIMPLY JUST WRITE IN A CHANGE OR CROSS OUT INFORMATION?
There is only one (1) original Will and it is important to keep this document safe for future probate. Some clients have fireproof safes at home. We generally do not recommend bank safe deposit boxes. We maintain a fireproof Will vault at the law office, and we also maintain an index of all wills and trusts on file. Pursuant to Pennsylvania law, there are specific requirements for how Wills and amendments are signed. Never cross out or tear a Will – this may result in the unintended outcome of invalidating the entire Will!
WHAT OTHER PROFESSIONAL ADVISORS SHOULD BE INVOLVED IN MY ESTATE PLAN?
Everyone should have a team of professional advisors in planning for retirement and preparing an estate plan. The attorney should be a trusted advisor who spends time learning about your family and wishes, and is the primary person responsible for preparing an estate plan and handling probate after death. A financial advisor is the best party to review retirement investment assets and determine how funds should be invested to sustain retirement income. Often, this same advisor can provide expert information about life insurance products. An accountant or CPA is the best party to provide tax advice, including tax planning decisions now, and after death. There are many reputable funeral homes and they are happy to meet and explain the funeral process, costs and options. Your team of trusted professionals are here to help you – part of developing a comprehensive estate plan means working with a full team of experienced advisors.